Defence Budget of NATO Members

[HaiderAfan]

NATO's Secretary General Mark Rutte has said in the short term, NATO member countries will need to spend "considerably more than 3%" of their GDP on defence. In an interview with BBC News on 14 February 2024, he said: a new target for military spending would be 'finalised by April or May'. This call for expanded spending is in line with growing security concerns in the world and the alliance’s continued desire to keep military force in place.

NATO has imposed minimum spending levels for its members for years. The previous target called for all members to spend at least 2% of their GDP on defence every year by 2024. As of now, 23 of NATO’s 32 member countries are at this rate, according to estimates. But the United States — NATO’s biggest financial backer — called on its partners to spend more on defence, proposing a target of 5% more.

Which Countries Spend the Most on Defence?​

In June 2024, NATO estimated Poland as the highest defence spender among member countries for the second year in a row. 4.1% of GDP: The country dedicated a remarkable 4.1% of its GDP towards military expenditure, due to its strong commitment to regional defence. 3.4% of GDP: Estonia3.4% of GDP: US For at least a decade, the US has kept up a similar rate of spending to hold its role as NATO’s backbone.

The UK was ninth on the list, with defence spending amounting to 2.3% of GDP. While the UK government has committed to increasing this figure from 2.5% there is no firm timetable for when this increase would actually take place. Other European NATO members and Canada spent an average 2% of their GDP on defence in 2024.

Updated spending estimates for 2024 are to be released by NATO in March 2025. In coming days, they will give a better sense of how states are reformulating their military budgets in compensation for changing security landscape.

The US and NATO Defence Spending​

It would be difficult for NATO to survive without the U.S. to play a major military role — and the U.S. already dominates NATO militarily and financially. By 2024, as the world’s largest economy, the US GDP was equivalent to that of all other NATO members combined. As a result, its military outlays made up about two-thirds of NATO’s entire defence budget.

Although the United States remains committed to NATO, its government has repeatedly urged European allies to take on a greater share of the financial burden. European NATO members’ and Canada’s defence spending has grown consistently over the past 10 years but a yawning gap between US spending and that of other allies persists.

NATO’s 2% Spending Target and Budget Increases​

The NATO guideline of 2% of GDP for spending was set in 2014, a response to an earlier decline in European allies’ military budgets. At the time, just three NATO members — the US, the UK and Greece — met the requirement. Since then, geopolitical tensions have prompted more countries to grow their defence budgets, and by 2024 most members had met or surpassed the goal.

Russia's geographic proximity and security concerns have propelled Poland ahead of the US in defense spending as a share of GDP. Eastern European countries such as Estonia have similarly worked to increase defense spending, citing a need to improve military readiness in the wake of perceived regional threats.

In addition to the goal to meet 2% of GDP, NATO has also required member states to spend at least 20% of their defence budget on obtaining and developing military equipment. This response ensures that those funds are not mainly utilized for non-combat costs, including pensions and administrative costs. Those numbers — which reflect a broader commitment to bolster military readiness — have increased to all NATO members meeting that requirement by 2024 except for Belgium and Canada.

NATO’s Operating Costs​

Aside from member states, NATO itself has a set budget that funds core military and administrative functions. In 2024, NATO’s annual budget was around €3.8 billion (£3.2 billion, or $4.1 billion). This pot is divided among members according to their national income and is used to pay for:

• NATO headquarters civilian staff and administrative costs
• Joint military operations, strategic commands, early warning systems
• Military communications, training venues, and infrastructure (airstrips, ports, and fuel depots)

The United States and Germany each cover 16% of NATO’s budget, making them the largest contributors. The UK ranks third among contributors, offering 11% of the alliance’s funding. In the past, the US paid more than 22% post of NATO’s budget, but came a new cost-sharing agreement was established in 2019. The shift came after the Trump administration complained that the US was bearing the financial burden of supporting the alliance.

U.S. Military Presence in Europe​

Besides financial support, the United States has a major military presence in Europe. Over 100,000 US troops are currently deployed across the continent, playing a crucial part in NATO’s defence strategy. Some American personnel in Europe also assist with non-NATO operations, and others move in and out as part of the alliance’s rotational deployments.

The largest presence of US forces in Europe is in Germany, followed by Italy and the UK. These deployments are vital to NATO’s ability to respond to threats quickly. But the biggest single overseas deployment of US military personnel is not in a NATO member state at all, but in Japan. The United States has some 50,000 troops in Japan as part of its wider security assurances in the Asia-Pacific.

The Future of NATO Defence Spending​

With global security challenges changing, NATO members should open their wallets and raise their defence budgets year-on-year. Our numbers are going up in productivity; so is European productivity; so is American productivity; so is Russian productivity; so is Chinese productivity.

NATO’s budget will be shifting dramatically with new spending targets expected to be released in the next few months. It remains to be seen if member states will hit this potential new target of 3% or above, but one thing is clear, defence with NATO is going to be a major topic of discussion in the years to come.

With geopolitical tensions rising, the alliance's spending and arms contributions will serve as a linchpin for security and stability in the region. The future of NATO will depend on how well its members adapt to these new challenges and the extent to which they are willing to invest in collective defence.