NATO to boost military expenditures in fiscal year 2021

North Atlantic Treaty Organization members boosted expenditures last year, with 11 countries meeting a defense-spending target championed by the U.S.

The military budgets of NATO’s European nations and Canada increased to an estimated 1.73% of gross domestic product in 2020, up from 1.55% in 2019, the alliance said in an annual report released on Tuesday.

France and Norway joined the nations that meet NATO’s 2% goal, according to the report. Germany’s defense expenditure expanded to 1.56% from 1.36%. The U.S. led the group with 3.73%.

Relations in the alliance were strained during Donald Trump’s administration, with the former U.S. president frequently hectoring European countries for not spending enough on military outlays. Total spending on security topped more than $1 trillion for the second year.

Although the COVID-19 pandemic has massively reduced revenues of national governments in 2020, NATO allies significantly increased their military spending and eleven out of 30 alliance members reached the target of earmarking at least 2% of GDP for defence, according to NATO’s annual report released on Tuesday (16 March).

Over the past year, NATO’s European members and Canada increased spending to an estimated 1.73% GDP, up from 1.55% in 2019, according to the report.

In 2020, NATO members spent a total of around €930 billion on defence, an increase that came despite economic disruptions caused by the COVID-19 pandemic. Compared to the previous year, this corresponded to a real increase of 2.7%, according to the annual report.

The figures are particularly relevant to NATO because Washington has been calling for years for a more balanced burden-sharing within the alliance.

The US still remained by far the NATO member with the highest defence spending, accounting for 3.7% of GDP and thus making up 71% of NATO’s combined defence expenditure.

A total of eleven NATO members – in addition to the US, this includes Slovakia, Greece, Great Britain, Romania, France, Norway, Poland, and the three Baltic States, Estonia, Latvia and Lithuania – had defence expenditure of 2% GDP.

Inner-alliance relations were strained under former US President Donald Trump’s administration, who had been frequently scolding European allies for not spending enough on their own defence.

Germany, the largest European NATO member, had particularly been the target of Trump’s criticism, with him even accusing Berlin of “dishonest behaviour” and announcing plans to withdraw 12,000 US troops stationed in Germany.

All plans related to the Trump administration’s troop withdrawal from Germany have been put on on hold until new Pentagon chief Lloyd Austin will review the move, US European Command chief General Tod Wolters said Wednesday (3 February).

With a defence share of 1.56% of GDP, Germany was still well below the target last year, although Berlin’s expenditures rose from €46.9 billion in 2019 to €51.6 billion in 2020, according to the annual report.

Joe Biden’s new US administration has suspended the troop withdrawal plan and announced a thorough review.

In addition to Germany, NATO countries such as Spain (1.2%), Belgium (1.1%) and Luxembourg (0.6%) also remain far below the alliance’s spending target.

NATO Defense Spending

Eleven nations met the guideline of dedicated 2% of economic output to defense

Source: North Atlantic Treaty Organization Note: Canada (defense spending: 1.42% of GDP) and U.S. (3.73%) not displayed on map

Under President Joe Biden, relations between the the U.S. and the European Union have thawed, and the two sides agreed to suspend trade tariffs on billions of dollars of each other’s products earlier this month. At the same time, relations with Russia remain tense, with both the EU and the U.S. initiating sanctions on NATO’s old sparring partner. China is also becoming a growing threat for the institution.

“The threats and the challenges we face in this region are more and more global,” said Jens Stoltenberg, NATO’s Secretary General, told lawmakers in Brussels on Monday. “And the shift in the global balance of power caused by the rise of China is part of that.”

The U.S. still accounts for more than 70% of NATO’s combined defense expenditure, while total spending across the alliance increased 3.9% in real terms from 2019, according to the alliance.

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