The prospect of NATO-sceptic Donald Trump returning to the US presidency after next month’s election has stimulated much discussion of how to ‘Trump-proof’ European collective security. Ian Davis argues that the solution lies in funding global demobilization, not rearmament.
There is intense lobbying going on in Brussels that attempts to seek novel means to insulate NATO funding from a potential Trump Presidency and facilitate expansion in military spending across Europe. The latest example of this is a new report by the UK-based New Diplomacy Project, written in partnership with a German think-tank, the Friedrich-Ebert-Stiftung, which calls for the creation of a NATO bank to aid defence spending, as part of a range of measures to “Trump-proof” European collective security.
The report says that Europeans must face the reality that if Donald Trump wins next month’s presidential election, the US could withdraw troops and military assets from Europe or even withdraw from NATO, and a peace deal might be imposed on Ukraine that leaves some of its territory in Russian hands. The report claims that such steps would have huge consequences for intelligence sharing and the viability of NATO’s Article 5, collective defence clause.
The headline recommendation, however, is that NATO countries should support the creation of an allied multilateral lending institution, in practice a NATO bank, to mitigate the impact of a second Trump presidency. This could “save nations millions on essential equipment purchases, offer low interest rates on loans to alliance members and introduce a new line of financing with longer repayment timeframes. The bank would be funded with initial subscriptions from NATO members in return for authorised capital stock”, the report says.
Banking on rearmament
The call to establish a NATO bank is not new. A report from the Washington-based Center for American Progress in January 2021 called on the incoming Biden administration to support the creation of a NATO bank in London, while an opinion piece in the Financial Times in April 2023 also set out the case for such a bank.
The New Diplomacy Project is a self-styled ‘progressive’ think-tank but regurgitating the idea of a NATO bank is the antithesis of progressive thinking. Let’s be clear about one thing: NATO and its member states are not short of money for weapons.
European NATO states and Canada are collectively forecast to spend $506.7 billion in 2024 and the United States $967.7 billion. Hence, total NATO military spending is expected to reach $1.47 trillion, up 14% from $1.29 trillion in 2023. Independent estimates suggest that in 2023 NATO accounted for 55 per cent of the global total in military spending. This raises questions as to how much military spending is enough to provide security for NATO member states.
Moreover, higher levels of military spending than adversaries are no guarantee of effective deterrence or military success. The United States spent more than $8 trillion on its wars in Afghanistan and Iraq after 2001, but these wars had devastating outcomes for the people of those countries and yielded few if any security gains for the United States itself. Within Europe, NATO countries have consistently spent more than Russia, spending 15 times more in 2020, for example. Yet, it is still often claimed that Russia would not have dared to launch its full-scale invasion of Ukraine in 2022 had NATO countries committed more to military spending and that the only rational response going forward is further militarization. In 2023, the ratio of NATO-Russia spending was closer to 12:1. While NATO’s spending did not deter Russian aggression against Ukraine (a non-NATO member) in 2022, would another 0.5 per cent, or even 3.0 per cent, have done so? Indeed, there is an argument that it could have had the opposite effect, as it would have played into Russian fears that it would need to strike now before Ukraine joined the alliance.
Preparing for war
Another question is whether the threat from Russia to NATO member states justifies further increased levels of military spending. This year a growing list of prominent officials or leaders within NATO countries have warned about the potential of NATO being pulled into a war with Russia. For example, Germany’s defence minister, Boris Pistorius, warned in January of a Russian attack on NATO possibly occurring within the next ‘five to eight years’. Similarly, the head of the British army, General Sir Patrick Sanders, said that Britain needed to ‘train and equip’ a new ‘citizen army’ that would be ready to fight a land war against Russia, and to take ‘preparatory steps to place our societies on a war footing’.
The international situation has undoubtedly darkened and is set to get darker. But while the risks Russia poses are significant, these are of a different magnitude compared to those of the Cold War. Despite Russia’s military performance and production capacity improving significantly since 2022, it has still struggled to overcome the smaller and less well-armed Ukrainian forces. As a response to Russia’s full-scale invasion, NATO has already hardened its military posture, doubling its multinational battlegroups from four (in Estonia, Latvia, Lithuania and Poland) to eight (with four more in Bulgaria, Hungary, Romania and Slovakia), that now stretch from the Baltic to the Black Sea. Other Russian threats—like election tampering, false information and cyber security issues at one end of the spectrum, and missiles and nuclear forces at the other end—raise greater uncertainties, but it is unclear as to how increased military spending within NATO will help to mitigate them.
The most likely consequence of further military spending increases in NATO will be reciprocal increases in Russia and China, given NATO’s recent pivot to the Asia-Pacific region. In such a spiral of action and reaction, everyone loses, including the planet through increased greenhouse gas emissions, and our collective capacity to tackle the worsening polycrisis is destroyed.
Banking on demobilization
If NATO is looking for a bold idea it could do worse than dust down Nobel Peace Prize laureate Óscar Arias’ proposal from the mid-1990s to establish a Global Demobilization Fund. He called for the nations of the world to commit themselves to at least a 3 per cent a year reduction in their military spending over five years, with the rich nations earmarking at least one-fifth of these savings towards the proposed Global Demobilization Fund. More recently the UN Secretary-General has been at the forefront of calls to reduce military spending and to invest instead in social infrastructure, climate action and human security. A contemporary version of a NATO Demobilization Fund could be established, perhaps in cooperation with Russia and China, to fund a climate change mitigation roadmap.
When alliance leaders meet in the Netherlands in July 2025 for the next NATO Summit, irrespective of who is in the White House, a revaluation of military spending and a plan for ceilings on spending or even coordinated global reductions should be a central part of the summit agenda.
Dr Ian Davis is the founder of NATO Watch, a website platform to promote a more transparent and accountable NATO. He is also the Executive Editor of the Stockholm International Peace Research Institute (SIPRI) Yearbook and an Associate Senior Fellow within Conflict and Peace at SIPRI. Prior to joining SIPRI, he held several senior positions, including Executive Director of the British American Security Information Council (BASIC), 2001-2007.
The views and opinions expressed in posts on the Rethinking Security blog are those of the authors and do not necessarily reflect the position of the network and its broader membership.
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