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Malcolm Chalmers
Newsbrief, 11 July 2018

NATO’s latest data reveals important new trends in patterns of defence spending across the Alliance that have occurred since Russia’s 2014 intervention in Ukraine.

On the eve of its summit in Brussels, NATO released the latest figures on spending levels across the Alliance. An analysis of 28 of the 29 member states (excluding Iceland) shows that since Russia’s intervention in Ukraine in 2014, most member states have significantly increased their levels of defence spending in real terms. The figures also show a significant convergence in spending levels between member states, with the largest increases taking place in those countries that have historically spent less on defence, especially in Central and Eastern Europe.

In particular:

  • Every one of the 28 member states has increased its defence budget in real terms since 2014 (see Table 1 below). This is the longest, and most broadly based, period of defence spending growth for NATO members since the early 1980s.
  • Fifteen member states have increased spending by 20% or more over the past four years, with a median spending increase, across the Alliance as a whole, of some 20% in real terms.
  • Increases have been less substantial in the Alliance’s largest military spenders, with the US increasing its spending by only 2%, the UK by 4% and France by 6%. As a result, total NATO spending has risen by only 6%, and total spending by NATO’s European members by 14%.
  • Spending has grown sharply in Central and Eastern Europe, with thirteen new member states (those joining since 1999) recording a median increase of 36% in real terms since 2014.
  • Much new spending has been used to buy more equipment, with a median increase in equipment spending across the Alliance of some 83% in real terms. Among thirteen new member states, the median increase in equipment spending was 166% in real terms.
  • Among NATO’s oldest members, there have been sharp increases in spending in Turkey (42%), the Netherlands (32%) and Canada (31%), with significant increases also in Spain (15%), Norway (14%), Denmark (14%), Germany (13%) and Italy (11%).
  • Eight member states are expected to meet the target of spending 2% of their GDP on defence in 2018. The US, UK and Greece – all of which have consistently spent more than 2% since NATO was formed – are now joined by five Central European states (Estonia, Latvia, Lithuania, Poland and Romania) in meeting the 2% target. Only three other member states – France, Norway and Turkey – spend more than 1.6% in 2018. However, it may be some time before more than half of member states achieve the 2% objective.
  • Fifteen member states are expected to meet the target of spending 20% of their defence budgets on equipment in 2018, compared with only seven in 2014.

Table 1: Real % Changes in Total and Equipment Spending for NATO Members (Excluding Iceland), 2014–18

Note: Percentages are rounded to the nearest whole number. Figures for 2017 and 2018 are estimates provided by the original source. All calculations are in national currency units at 2010 prices.

Source: Author’s calculations based on NATO, ‘Defence Expenditure of NATO Countries (2011–2018)’, Communique, PR/CP(2018)091, 10 July 2018.

Table 2: NATO Members (Excluding Iceland) Meeting NATO 2% Target

Table 3: NATO Members (Excluding Iceland) Meeting 20% Equipment Target

Malcolm Chalmers is Deputy Director-General of RUSI.