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World Europe

Trump’s NATO Demand Clashes With EU Budgets

Countries under pressure to narrow deficits are bracing for a U.S. call to spend more on defense

By Julian E. Barnes in Brussels and
Richard Boudreaux in Madrid
Updated Nov. 19, 2016 10:01 a.m. ET

Some governments already grappling with European Union pressure to tighten their budgets are bracing for a demand by the new U.S. administration to ramp up military spending.

The North Atlantic Treaty Organization calls for its members to spend 2% of their GDP on defense, with a fifth of that going to equipment. There are no sanctions for countries that fail to meet that goal.

But President-elect Donald Trump, during his campaign, suggested military support from the U.S. could be contingent on what its allies spend.

Some NATO and Republican Party officials said the Trump administration could step up pressure by offering more military cooperation to countries that meet the 2% goal, and withholding exercises, training or other support from countries that fall short.

Among European members of NATO, only Greece, the U.K., Estonia and Poland meet the 2% goal. The U.S. spends $664 billion a year on defense, or 3.61% of GDP, according to NATO figures.

NATO governments agreed in 2014 to adopt plans that would boost their budgets over time, and European military spending began to rise this year, after years of cuts.

Many in Eastern Europe and the alliance headquarters are praising Mr. Trump’s call for European countries to increase military spending, noting that if every country fulfilled the 2% of GDP spending pledge, allies would have an additional $100 billion a year for new capabilities.
“Let’s listen what was said by the president-elect about defense spending,” said Lithuanian Foreign Minister Linas Linkevicius, a former NATO ambassador. “He is right to say Europeans are not delivering.” Lithuania has plans to reach the 2% goal in coming years.

Many Western European countries are already facing challenges to meet the goal. This week the European Union warned eight countries, including NATO members Spain, Portugal, Belgium, Italy, Slovenia and Lithuania, that their deficit spending or overall debt was in violation of the bloc rules.

Spain, whose military spending is among the lowest in the alliance, is under extreme pressure to narrow its deficit. The country’s defense budget has grown every year since 2014, the first full year of recovery from a deep recession but now stands at 0.9% of GDP.

Defense Minister María Dolores de Cospedal said this week that Spain is committed to working toward that target and strengthening NATO but is constrained by pressure from the European Commission. To cut the deficit from a projected 3.6% of GDP next year to the 3.1% agreed with Brussels would require an estimated €5.5 billion in spending cuts or new revenue.

“It would be difficult for the government to present defense expenditure as a priority in the coming years because of the economic and social situation,” said Félix Arteaga, a defense analyst at Spain’s Elcano Royal Institute.

Javier Solana, who was NATO secretary-general from 1995 to 1999, said it would be “difficult but not impossible” for Europe raise its contribution to NATO defense.

But instead of targeting 2% of GDP for conventional military budgets, he said, NATO’s European members should shift defense priorities to assets that can both bolster internal security as well as provide for the common defense.

“Internal security for the EU and external security are not two separate things; they’re a continuum,” Mr. Solana said. Spending, for example, on such items as intelligence, satellites, drones, cybersecurity, special forces and helicopters would serve both purposes and be easier to sell to lawmakers and voters as essential to the national interest, he said.

Mr. Solana said he considers 2% an arbitrary figure. “What’s important is to have the capability to act,” he said.

The real problem for Europe isn’t its level of spending, but how it spends it, said Bruno Lété, a defense expert at The German Marshall Fund of the United States in Brussels.

“There’s enough money,” he said. “The problem is that the Europeans have been very ineffective. We have 28 navies, 28 air forces, and 28 armies…. The big problem is the issue of unity. There is no unity.”

Efforts to force more cooperation, both in NATO and the EU, have stumbled over disagreements over cost, control and priorities. U.S. officials have said that spending increases that target new equipment, particularly by large economies like Germany, which has a surplus, would be the easiest way to create new capabilities.

—Drew Hinshaw in Zagreb, Croatia and Viktoria Dendrinou in Brussels contributed to this article.