Burden-sharing and budgets

NATO and the Americans

NATO heads of government met in The Hague, June, 2025 and agreed that each member of the North Atlantic Treaty Organization would spend each year the equivalent of five percent of its gross domestic product on defence. So what? (Image: North Atlantic Council)

Stupidity survives.

Stubbornly.

Almost in defiance of Darwin.

Stupidity survives despite being nakedly stupid.

Stupid as in wrong.

Meaningless.

Take the unending talk of the amount each member of NATO spends on defence related to the value of all goods and services produced in its national economy.

Despite all the words written or spoken about this issue over decades and perhaps none more than since Donald Trump’s rise to political influence in the United States more than a decade ago, no one has yet shown a connection between defence spending as a share of GDP and actual military capability.

No one has even tried, as it seems, likely because there is none.

Yet everyone talks about it as if it were real.

And as often as Americans like Trump talk about NATO welfare bums sponging off the magnificence of the United States and its “greatest [insert name of military force] in the world” the Americans actually show us by the fiasco in Iran that the amount a country spends on defence as a share of GDP doesn’t mean a damn thing.

Despite outspending NATO partners - measured as a share of GDP - consistently over decades, the United States is now locked in a brutal attrition battle with Iran that the Americans are not winning. Despite countless claims about tons of explosives dropped on thousands of targets, the United States has not achieved any of its many constantly shifting strategic or even operational objectives despite flinging high explosive onto the same spots on the ground thousands of times with unimaginable precision each time.

The Americans have run out of ammunition faster than targets. Unable to do any more - literally unable both for a lack of political will and military capability - the United States now has a few ships sailing back and forth well outside the range of Iranian drones and missiles in what they call a blockade. The goal is to force Iran to accept surrender terms but the United States is not able to block the landward ways to resupply Iran and to export its crude. The blockade is more of a charade then.

The United States Navy is a shadow of its former self. It has the same strategic goals now that it did 35 years ago but faces that task with half the number of hulls now as then and without significant, basic capabilities like smaller warships and mine counter-measures needed to keep open sea lanes. The navy can deploy at best only two of its 11-carrier fleet at any one time and even then for physically exhausting terms of a year.

Many of these deployments, even the ones without shooting are marked by persistent failures of logistics. Food is the one that hits sailors hardest and they are quick to share pictures on social media of the crud they are fed. To prove the sailors’ boasts are true the United States navy posted carefully-staged pictures on line of sailors getting good food from the galleys of the two ships whose sailors’ own pictures showed the opposite. The Americans are trolled on social media in this war not only by the Iranians but by their own sailors and by those severely wounded or otherwise shagged up the fiasco.

The American navy is merely one example of what is a chronic and plain decline in American military capability. Despite spending all that money, the Americans cannot do the jobs they need to do. On the face of it, Donald Trump is proof against his own claims that NATO countries are laggards, cheats, and welfare bums because they do not spend enough. Donald’s country spends an ungodly amount of cash. He wants to spend more still and yet the Americans cannot manage to defeat Iran.

Note that US spending on defence as a share of GDP declined during the Trump and Biden administrations and that the US is not outspending its NATO partners using the American’s own favourite measure. With the Russian threat alive for them but not for the Americans under Trump, frontline countries outspend the US on defence measured in the traditional NATO way. (Image: NATO)

This point about GDP and defence spending is so obvious that we need not drag it on. The relationship is meaningless, at least as far as military capability is concerned. The idea is a distraction for bureaucrats and politicians within NATO just like it is a distraction from other things for Trump. The United States keeps bases in the Middle East to shore up its nervous allies and keep itself in the midst of a conflict long after America’s economic and other reasons for being armpits deep in the region shifted. Trump claims otherwise. He’s wrong. Obviously so.

The American reason for keeping soldiers and sailors in Europe ended 35 years ago. The old purpose of NATO - to keep the Americans in, the Soviets out, and the Germans down - no longer mattered. The Soviet empire imploded. NATO and the European Union welcomed former Soviet bloc countries into their family. The two Germanies became one. The Americans stayed because the few of their bases they kept in Europe were helpful for reaching other parts of the world.

NATO became something different from its original version. It remained a defensive alliance, a solid basis for co-operation among like-minded countries. NATO became not only part of the foundation of western economic and political dominance globally but a potent symbol of it as well. Part of the lure of western Europe to the recovering Soviet satellites after 1991 was the combination of economic, political, and military power represented by the European Union and NATO, with the Americans and Canadians along as well. Other alliances built to encircle the communist world shrank noticeably in significance, but NATO endures and thrives.

Like its other NATO partners, the United States collected its so-called peace dividend 35 years ago, slashing military budgets, closing bases across Europe, and spending that money on other things. Like the Argentinians a decade earlier in the Falklands, had Saddam waited a couple of years NATO countries would not have been able to send an army to oust him from Kuwait. There was enough of it left to finally get rid of Saddam in 2003 but the peace dividend took its toll. The United States military today reflects that steady decline, but it also reflects a shift in defence priorities to ones that had more to do with local pork both in communities and industry than actual military, naval, and air power.

If you haven’t figured it out by now, defence spending comes from a lot of pressures and the result of that spending does a lot of things beyond merely buying people and ships and airplanes and tanks and the ammunition they might shoot at other countries’ tanks, and ships, and airplanes, and people. A simple and better way to look at defence spending than the GDP thing is to look at the share it occupies of an annual budget, particularly the spending that goes to day-to-day operations (opex) and to capital (capex). That’s where governments tell you what’s important to them.

Let’s look specifically at the United States and Canada. Canada is a European country in more ways than it is an (North) American one and from the American perspective is also chronically failing to do its fair share of defence, whether through NATO or through the continental air defence agreement that dates from the 1950s. It makes a workable stand-in for the European bits of NATO.

In both Canada and the United States in 2025, defence consumed 13% and Canadian defence spending was 24% of opex and capex. We can drop Canadian spending down to 15% of all that isn’t transfers of one kind or another largely since the United States doesn’t do the sorts of transfers Canada does. The US has global defence needs and a much bigger economy but relatively Canada and the United States are on par. Incidentally, Donald Trump’s new budget for 2026-27 will take that 13% figure to just under 21%, which, while still short of Canadian defence spending as a share of operational and capital spending each year, is shocking many Americans. Do the same thing for the rest of NATO and you will likely find something similar. Bit of challenge to make sure it’s a fair comparison but at the end you’ll have something way more useful than comparing spending to GDP.

The NATO countries are getting set for a future of the alliance without the United States. That’s a sensible thing since the Americans themselves don’t know what’s next but the anti-NATO rhetoric from the United States is both strong and ungrounded in reality. Besides, the United States’ national security plan unveiled in January targets NATO Europe as the only threat to American security deserving any action. Plus, Donald Trump didn’t come up with the anti-NATO screed on his own. There are other Americans who look at the United States’ position in the world and want to change it. NATO and the Europeans are not part of that future, as far as they see it.

These people like things the way they imagine they used to be. There’s comfort in an imaginary past rather than the actual past or actual present. Nostalgia is a psychological defence not a real one. What’s striking about the way these folks talk is that they are in the past and not the present and future. Trump on tariffs was about the isolationist American of the 1890s. Trump on NATO bases is the 1950s. That includes Greenland. Give me what I want or I will haul-ass out. Worked in 1953 when Europe was still coming out of the Second World War slowly. Not so easy in 2025 when the Europeans, Canada, and other allied nations collectively have an economy on par with the Americans.

That may be part of why NATO would not fit with a Trumpish universe. The Board of Peace on the other hand fits the bill very well. No one there is really going to challenge American dictation like NATO countries will. Far easier as a diminished power with an inferiority complex to feel great leading such a mob than to show up at a G7 or NATO meeting and not feel the adoration or fawning the Yanks think they are due. As with Trump, so with the American elites behind him.

The attack on Iran is a good example of American military and strategic decline, of the country’s sclerotic leadership, and of a country struggling to figure itself out. Trump’s lightning-paced shifts from one topic to another, one idea to another, is a metaphor for the country. Elected as an isolationist who wanted to get out of foreign entanglements, frustrated by endless failures at home and abroad, he is now the King of the easy headline. A few speedboats. A snatch and grab heist in Venezuela. The Board of Peace and now the Bored of Peace. It’s telling that the Israelis sold Iran to him and Trump himself admitted he thought Iran would be as easy as Venezuela. Trump has a short attention span. Americans have short attention spans. He is now back at hitting NATO. Talking of an invasion of Cuba, even though there is no good reason to invade Cuba any more than attack Iran.

But there is more to this than Trump’s dementia. There is a country that needs to change but cannot. It repeats the same mistakes over and over but blames others. “American attempts to reshape [the Middle East] have too rarely achieved stated goals,” Emma Ashford - then a research fellow in defence and foreign policy at the Cato Institute - wrote in 2018 based on her chapter in a book on American grand strategy in the 21st century. “The regional strategic environment has shifted, and the current US approach to the region carries increasing risks: it enables dangerous behaviours by US allies, engenders moral hazard in local nondemocratic states, and ignores the regional interests of other great powers.”

Ashford recounts the history of the region and American involvement, which coupled with changes globally point to another path. It “is time to try something different,” she suggests, “a return to offshore balancing.” Define American interests more narrowly. Focus on key American interests. Allow that regional “hegemons” might arise but also that the regional leaders are capable of sorting themselves out peacefully. Such a world would require less direct American involvement and it would allow the United States to deal more effectively and constructively with its own rivals globally rather than make the region - as it is now - a local flashpoint of a global confrontation reminiscent of the Cold War.

Trump’s folly in Iran reinforces Ashford’s assessment a couple of years into Trump’s first administration as Ashford warned. It’s not achieving goals. It’s enabled a dangerous regional ally. It’s caused wider economic chaos and problems for the Americans themselves and, worst of all, it has created an unnecessary and complicated conflict with China.

Ashford uses the word burden-sharing, which has been an American word to use with NATO as well. In the past, when dealing with the Soviets, it may have meant something - “may” does a lot of work there - but today, since 2022, NATO has reflected the threat posed by Russia to the alliance and its regional neighbours. The United States has not. Even allowing the Americans may want to shift their attention and scarcer resources from Europe to somewhere else, the attack on NATO by Donald Trump is something else. What it means remains for the Americans to sort out. There is talk of getting out of NATO altogether while other Americans talk of shifting bases within the alliance further east against an adversary the Americans don’t think of as one at the moment, or just outside the alliance. It makes no sense, objectively, but NATO must be prepared for Americans to do more irrational things.

The European and Canadian message to the United States as been that as much as the Americans are important to NATO and NATO to the United States, the alliance can and would survive without the Americans. This is not the U2 song lyric “I can’t live, with or without you.” It is another from the same time: “With you or without you, I will carry on. With you or without you, we stand alone [against Russia and other threats].” NATO can and would survive without the United States. With no Soviets to keep out of western Europe any more and the reunification of Germany, keeping the United States in is not as important as it might have been even 35 years ago.

Economically, the non-US NATO nations have a comparative gross domestic product and defense capability for NATO purposes to the Americans. That’s not a static state. Whatever is not there now can come along very quickly, as it will be with defence industries. NATO can more readily build strong naval forces from its own yards than Americans can. NATO can get steel and critical minerals from its own member states and other allies than the United States can or will.

With the United States looking to abandon the old order for some unknown new one, the current metrics are just a starting point for both sides. Americans can assume they are in a good spot and things will get better but they cannot really count on that. Nor can Americans count on Canada staying as close as it currently is militarily or economically to the United States. It will stay close to the United States - geogrpahy matters - but NATO represents significant strength with which Canada can counterbalance the United States, as it does now with the United States inside NATO councils, and much more so should the Americans leave the alliance.

Burden-sharing in the way Americans speak of it is colonial and condescending, which is why most countries like Canada, those of Europe, Japan, Australia, and others have rejected the American blustering and bullying. Ashford’s idea of the Middle East is akin to NATO in the sense that sovereign states sort themselves out while the United States does the same thing. Ashford’s idea reflected American power and strength even as it was in 2018. It was and may again be a way ahead in the Middle East. But these days - with Trump’s economic and domestic agenda shattering the country - the United States is tossing aside NATO and its associated economic and political relationships to get dragged into a foolish Middle Eastern adventure that is far from over.

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