Defence Expenditures of Nato Member States in the Times of Covid and the New US Administration: Selected Observations

Abstract

Abstract NATO member states have been steadily increasing their levels of defence expenditures since 2015. In 2020, already ten member states met the NATO financial guidelines of spending at least 2% of their gross domestic product (GDP) for defence, including 20% for major equipment. In addition, many other countries were planning to achieve this target by 2024. There are two factors, however, which could slow down this process. First, economic recession as a follow up to COVID-19 will have a negative influence on the state budgets. Defence spending could start decreasing in nominal terms, followed by the challenges in meeting NATO financial guidelines. Second, while President Donald Trump put the Alliance's burden-sharing in the centre of his policy vis-à-vis European allies, the current US administration, represented by the Democratic Party, will put more emphasis on multilateral cooperation as well as soft security instruments, including development and diplomacy. In consequence, even if the White House is going to stand strongly with 2/20% rule, it might lessen the pressure on European allies, especially Germany, to significantly accelerate defence spending, seeing transatlantic relationship in a broader division of risks and responsibilities. In this article, it is suggested that due to the economic crisis of the 2020s and the shift in the policy of the US Government, NATO member states would slow down, in short and mid-term perspectives, the process of increasing defence expenditures.