Taking Trump Seriously About NATO

by Jacek Rostowski Jacek Rostowski was Poland’s Minister of Finance and Deputy Prime Minister from 2007 to 2013. 06.09.2016

WARSAW – A Donald Trump presidency would be a catastrophe for NATO and the West. Aside from threatening to withdraw the United States from the North American Free Trade Agreement and to start a trade war with China, Trump praises Russian President Vladimir Putin and suggests that America should not honor its commitment to defend its NATO allies unless they pay more for that protection.

Although Trump’s chances are slipping away by the day, the European Union should consider his candidacy a wake-up call regarding its own defense. The EU’s total GDP is slightly higher than America’s, yet it contributes only 25% of NATO’s defense budget, while the US accounts for 72%, and Canada and Turkey supply the rest.

If Russia attempted a conventional incursion into NATO territory, and was defeated, it might consider launching a nuclear first strike in Europe. After all, unlike the Soviet Union, Russia has not ruled out the offensive use of nuclear weapons. In such a scenario, America’s nuclear umbrella would amount to Europe’s only credible protection. But if the US retaliated against a Russian nuclear strike, it would risk facing a Russian counterstrike on its own territories or forces. Such is the grim logic of mutually assured destruction.

Why should the US risk so much for a continent that gives short shrift to its own conventional defense capabilities? This is not an unreasonable question to ask, and where previous US presidents have feared to tread, a populist demagogue has rushed in.

One problem is that NATO members’ commitment to spend at least 2% of its GDP on defense is not nearly enough. The US spends 3.5% of its GDP on defense, and there is no reason why the EU should be spending less than the US, given the manifold threats it faces, from Russia to terrorist incitement by the Islamic State.

Moreover, most European NATO countries’ defense spending falls short of the obligatory 2% of GDP, with only the United Kingdom, Poland, Greece, and Estonia maintaining defense spending at or above that level. This complacency has become so entrenched that an agreement at the 2014 NATO summit in Newport, Wales, that no member would cut defense spending any further – and another agreement this year to meet the 2% target – was seen as a major breakthrough.

The problem is not that EU countries are inherently unreliable. It’s that they have tied their hands with fiscal austerity. I experienced this firsthand as Poland’s finance minister during and after the 2008 financial crisis. On two occasions when I suddenly had to cut spending to comply with the EU’s Stability and Growth Pact (SGP), a 1997 agreement among EU member states to enforce fiscal responsibility, I had few options other than to cut the defense budget.

Fortunately, Poland’s 1998 Public Finance Act requires that 1.95% of GDP be spent on defense. So, after the immediate crisis was over, Polish defense spending returned to its NATO-mandated level.

This points to a possible solution: the US should restructure the NATO collective-defense commitment so that it is self-policing – what economists call “incentive-compatible.”

For starters, EU countries’ defense spending should be excluded from the SGP. France has long pushed for this, but Germany – which spends a meager 1.2% of its GDP on defense – opposes it, claiming that it would open a Pandora’s box of other demands and exclusions.

In 2015, then-Polish Prime Minister Ewa Kopacz proposed that if the full defense budget could not be excluded from the SGP, at least increases in defense spending up to the 2%-of-GDP NATO commitment should be exempted for one year. Poland would not have benefited, because it had already fulfilled the NATO requirement; but the change would have made it easier for other European members to meet their commitments.

Germany rejected the Polish proposal – again on the grounds of Pandora’s box. But, if anything, Kopacz’s proposal was too modest. Global politics has become even more precarious since last year. With the US looking more toward Asia, where China’s unilateral assertion of territorial claims in the South China Sea has jeopardized regional stability, it may become stretched too thin to provide a credible deterrent to Russian aggression, especially when it takes the form of unconventional, hybrid attacks.

The EU should respond to these changing geopolitical dynamics by adopting the Polish proposal and extending it for more than one year. The SGP should exempt increases in general defense spending for five years, and increases in spending on equipment procurement for ten years. And that’s not all: the European Commission should be able to waive the 2%-of-GDP exemption limit for individual countries or for the EU as a whole, depending on external security risks and economic needs.

This change will not be easy, but the US must insist on it, despite continued German resistance in the name of supposed fiscal rectitude. Germany, which has loudly demanded that Greece keep its promises to the EU, is now standing in the way of NATO members’ ability to meet their commitments to collective defense. Worse still, Germany’s misguided imposition of austerity on the eurozone has undermined European political cohesion, thereby opening the door for Russian revanchism and aggression.

Trump is right about one thing: NATO allies should pull their weight. But that message should be sent to Germany, not Estonia. The US should tell Germany – in the same no-nonsense terms that Germany used with Greece – that it cannot defer to the US for its security while undermining Western unity to protect its taxpayers from possible intra-eurozone liabilities.

As the EU’s de facto leader, Germany should be making it easier, not harder, for NATO members to meet their obligations to collective defense. It can start by embracing the Polish proposal – and it should move forward from there.

Jacek Rostowski was Poland’s Minister of Finance and Deputy Prime Minister from 2007 to 2013.

Copyright: Project Syndicate, 2016.
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