NATO’s Spending Slumber

The Alliance boosts staff benefits while Putin buys guns.

June 22, 2015 9:19 p.m. ET

Flags of member countries in front of NATO headquarters in Brussels. Flags of member countries in front of NATO headquarters in Brussels. Photo: Virginia Mayo/Associated Press

NATO released its annual report on defense spending Monday, including 2014 expenditures and 2015 projections. The numbers show that the Atlantic Alliance is still asleep to the threat from Russia, more than a year after the invasion of Ukraine.

Only five of NATO’s 28 members—Britain, Estonia, Greece, Poland and the U.S.—are on track this year to spend 2% of GDP on defense, a figure that is supposed to be a requirement for membership. France and Turkey come close with 1.8% and 1.7% of GDP, respectively.

Among NATO’s larger economies, the 2014 hall of shamers include Germany (1.2%), the Netherlands (1.2%), Italy (1.1%), Canada (1%) and Spain (0.9%). Last year the U.S. accounted for 70% of all spending in NATO. Yet American defense spending is also on a downward slope. In 2015 U.S. defense outlays will amount to 3.6% of GDP, according to NATO, down from an average of 4.4% in George W. Bush’s second term.

The numbers look worse once you consider where the money is going. Most NATO members are devoting half or more of their total defense budgets to personnel costs at the expense of equipment modernization. Nearly 70% of Spain’s military spending in 2014 went to people and only 13.5% to equipment. In Italy the proportions were 76% and 11%. In the U.S. personnel costs amounted to 36% of the Pentagon budget.

This would be fine if the greatest threat to NATO was arthritis. In reality, it’s a Russia that is spending around 4.2% of GDP on its military, according to a World Bank estimate for 2013. Though last year’s fall in oil prices has hit the Kremlin’s budget hard, Moscow continues to develop and field sophisticated new weapons, including the S-400 air-defense system, the Su-34 jet and an upgraded fleet of military-transport aircraft.

A U.K. parliamentary report concluded last year that “NATO is currently not well-prepared for a Russian threat against a NATO Member State.” A year on, the leaders of the Alliance are still pressing the snooze button on the alarm. 

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