Allies Slow the Fiscal Bleed

NATO allies reduced defense cuts for the first time in several year, largely in response to increased tensions with Russia following its aggression in Ukraine. The year 2015 marked a “dramatic slowing of cuts to defense spending among most European allies and Canada, and the greatest strengthening of NATO’s collective defense since the Cold War,” NATO Secretary General Jens Stoltenberg stated in his annual report, released on Jan. 28. NATO allies pledge to spend at least two percent of Gross Domestic Product (GDP) on defense, of which 20 percent should fund equipment, research, and development. As of 2015, “five allies now meet our guideline,” he noted. As a whole, 16 allied countries increased defense spending last year, 12 of which actually boosted defense expenditure as a percentage of GDP. A total of eight countries actually managed to allocate the statutory 20 percent on military hardware and technology. The United States currently accounts for 72 percent of overall allied defense spending, amounting to slightly more than 3.5 percent of national GDP. “While cuts did occur, they were significantly smaller than in the preceding years,” noted Stoltenberg. “NATO cannot do more with less indefinitely. Given the challenges to Euro-Atlantic security, it is essential that NATO members remain committed to investing in defense,” he said. (View the full report here; Caution, large-sized file.)