Memo to Trump: NATO is a bargain
Donald Trump’s property company doesn’t own any real estate in continental Europe, which might explain why the former president seems to consider it a backwater. But Trump’s willingness to abandon Europe, should Russia become even more hostile or territorial, is penny-wise foolishness mislabeled as self-interest.
Trump set off fresh alarm bells in Washington and European capitals with his latest rant about the NATO military alliance and an apparent green light to Russian expansionism. At a South Carolina rally on Feb. 10, the leading Republican presidential candidate said that if Russia attacked a NATO member country that didn’t meet the NATO target for defense spending, he’d keep the United States out of it and let Russia have its way.
“You didn’t pay … no, I would not protect you,” Trump said. “In fact, I would encourage [Russia] to do whatever the hell they want.”
Trump is a longtime critic of NATO because some of its 31 member nations spend less on defense than the alliance calls for them to do. That’s a legitimate problem Trump highlighted as president. As with other things, however, Trump identifies a problem and then instead of working to fix it, he vows to trash the whole thing without much of a backup plan.
What Trump doesn’t mention is that the United States benefits mightily from an enormous amount of trade with Europe and NATO protects that. US trade with the European Union, which doesn’t include England and some other European nations, totaled $1.3 trillion in 2022. That’s 71% more than US trade with China. Trade with the UK totals another $296 billion.
On top of trade, American firms and investors have $3.3 trillion invested in 11 European nations that report such flows. The trading bloc including Canada and Mexico is America’s biggest, but Europe is right behind it.
A big part of the nation’s $860 billion defense budget is devoted to protecting US economic interests. The United States has spent trillions on military activities in the Middle East — and gone to war there — almost entirely to assure the availability of oil. One of the Navy’s core missions is to “preserve economic prosperity” by keeping global waterways open for trade. The US military serves many purposes well beyond protecting the homeland.
NATO is a collective effort to protect Europe’s territorial integrity and the prosperity that goes along with it—and it’s cheap compared with what the United States spends to protect its interests elsewhere. The total budget for NATO as an organization is about $3.6 billion. The United States pays 16% of that, or about $570 million per year. That’s 0.6% of the nation’s defense budget. Puny.
The biggest contribution to NATO is the military spending of its member states, which pledge troops and other resources to each other in the event of an attack on one member state or some other common cause. In 2021, Massachusetts Institute of Technology political scientist Barry Posen argued that reformulating NATO so that Europe bore more responsibility for defending itself could save the United States at least $70 billion per year. Under his proposal, NATO would remain, and the principal US contribution would be its nuclear weapons capability. But the United States would withdraw its extensive Army, Air Force, and Navy assets from Europe, which is where most of the savings would come from.
There are two catches with Posen’s proposal. The first is that the savings would only accrue if Congress voted to reduce defense spending by the amount the forces withdrawn from Europe cost. That’s hard to imagine, because very few politicians these days are willing to cut military spending and risk being tarred as “soft on defense.” Trump certainly never talks about slashing the defense budget when he bashes NATO. Far more likely than any big cut in the defense budget is the use of the money for something else that keeps the federal funds flowing to hundreds of congressional districts.
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The second catch is that Russia turned out to be far more dangerous and reckless than most people guessed. In 2021, Posen wrote, “the threat of a hostile power controlling Europe is now very low,” while pointing out that Russia’s military power is less than half what the Soviet Union had before it. But that was before Russia invaded Ukraine in 2022, igniting the biggest European conflagration since World War II. The invasion roiled global energy markets and sent oil, natural gas, and food prices skyrocketing, proving that Russia doesn’t have to control Europe to wreak havoc. Waging war in just a corner of it will get the job done.
Putin has indicated that his territorial desires go well beyond Ukraine. Some analysts think that if Putin succeeds in Ukraine, he will eventually menace or invade other nations that once belonged to the USSR, such as Latvia, Lithuania, or Estonia, and perhaps Poland or Romania. All are now NATO members. As a hint of Putin's animosity, the Kremlin recently said Estonian Prime Minister Kaja Kallas is wanted in Russia for unspecified criminal charges.
This is another area where Trump’s NATO bashing breaks down. Trump’s beef is that 19 of the 31 member nations spend less on defense than NATO’s target, which is 2% of GDP. But the five countries that border Russia or its puppet Belarus—Poland, Latvia, Lithuania, Estonia, and Finland — exceed the defense spending target, as the map above shows. So the nations most vulnerable to Russian aggression pay their share, and they’re not the deadbeats Trump complains about.
If the United States could save the full $70 billion Posen posits, then it might be worth abandoning NATO, as long as there were no Russian actions or any other developments that threatened that much in American economic interests related to Europe. Since any real savings would likely be far smaller than $70 billion, America’s contribution to NATO is a very small fraction of an economic stake in the trillions of dollars.
Instead of ditching NATO, the way to deal with under-payers such as Germany, Spain, and Italy is simply to keep the pressure on for them to boost defense spending. Even Putin seems to grasp the value of imperfect alliances. While Trump is fulminating about NATO, Putin is busy forming a new axis of nihilist nations with Iran, North Korea, and China, who have disparate interests but share one goal: weakening the United States and its allies. If bullies need partners, maybe everybody else does, too.
Rick Newman is a senior columnist for Yahoo Finance. Follow him on Twitter at @rickjnewman.
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