NATO to increase non-US spending by 4.3 percent in 2017

⚔ NATO Defence Ministers met today (29 June 2017), taking stock of the Alliance’s work towards fairer burden-sharing, as well as NATO-EU cooperation.

⚔ In response to Trump’s pressure, allies who are not yet meeting a previously-agreed-upon target of 2 percent of annual GDP being spent on defense have agreed to step up efforts to move toward that goal.

⚔ Allies are also expected to announce individual figures for defense expenditures, after approval by NATO ambassadors, with the overall spending for 2017 at some $280 billion.

⚔ Stoltenberg on June 28 announced that NATO allies — with the exception of the United States — will increase defense spending by 4.3 percent this year, marking a cumulative $46 billion increase since 2014.

⚔ Currently, 25 out of 29 NATO allies plan to raise defense spending this year. NATO sets a goal of spending 2 percent of gross domestic product on defense for each member, but only the United States, Britain, Estonia, Greece, and Poland now meet that guideline, leaving the United States shouldering about 70 percent of the alliance’s expenditures.

© photocredit

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Defence Expenditure of NATO Countries

NATO collects defence expenditure data from Allies ona regular basis and presents aggregates and subsets of this information. Each Ally’s Ministry of Defence reports current and estimated future defence expenditure according to an agreed definition of defence expenditure. The amounts represent payments by a national government actually made, or to be made, during the course of the fiscal year to meet the needs of its armed forces, those of Allies or of the Alliance. NATO also makes use of up-to-date economic and demographic information available from the Directorate-General for Economic and Financial Affairs of the European Commission (DG-ECFIN), and the Organisation for Economic Co-operation and Development (OECD). In view of differences between the definition of NATO defence expenditure and national definitions, the figures shown in this report may diverge considerably from those which are quoted by media, published by national authorities or given in national budgets. Equipment expenditure includes expenditure on major equipment as well as on research and development devoted to major equipment. Personnel expenditure includes pensions paid to retirees.

The cut-off date for information used in this report was 26 June 2017. Figures for 2017 are estimates.

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Notes: Figures for 2017 are estimates. The NATO Europe and Canada aggregate from 2017 includes Montenegro, which became an Ally on 5 June 2017.

* Defence expenditure does not include pensions. -2-Graph 1 : NATO Europe and Canada – defence expenditure (annual real change, based on 2010 prices and excha
nge rates) Graph 2 : Defence expenditure as a share of GDP versus equipment
expenditure as a share of defence expenditure 2017e

** In December 2016, Turkey fundamentally changed the calculation methodology of GDP (to bring it in line with the European System of Accounts (ESA) 2010), resulting in significant increases from 2011. If one uses the previous methodology, then the corresponding percentage for 2017 is 1.86%.

Notes: Figures for 2017 are estimates.* Defence expenditure does not include pensions. -3-Graph 3 : Defence expenditure as a share of GDP (%)(based on 2010 prices and exchange rates)Graph 4 : Equipment expenditure as a share of defence expenditure (%)(based on 2010 prices and exchange rates)

** In December 2016, Turkey fundamentally changed the calculation methodology of GDP (to bring it in line with the European System of Accounts (ESA) 2010), resulting in significant increases from 2011. If one uses the previous methodology, then the corresponding percentages for 2014 and 2017 are 1.70% and 1.86%, respectively

Notes: Includes enlargements which took place in: 1999 (3 Allies), 2004 (7 Allies), 2009 (2 Allies) and 2017 (1 Ally). Figures for 2017 are estimates.

Notes: Figures for 2017 are estimates. The NATO Europe and Canada aggregate from 2017 includes Montenegro, which became an Ally on 5 June 2017.

NATO defence expenditure

NATO defines defence expenditure as payments made by a national government specifically to meet the needs of its armed forces or those of Allies. A major component of defence expenditure is payments on Armed Forces financed within the Ministry of Defence (MoD) budget. Armed Forces include Land, Maritime and Air forces as well as Joint formations such as Administration and Command, Special
Operations Forces, Medical Service, Logistic Command etc. They might also include “Other Forces” like Ministry of Interior troops, border guards, national police forces, customs, gendarmerie, carabinieri, coast guards etc. In such cases, expenditure should be included only in proportion to the forces that are trained in military tactics, are equipped as a military force, can operate under direct military authority in deployed operations, and can, realistically, be deployed outside national territory in support of a military force. Also, expenditure on Other
Forces financed through the budgets of ministries other than MoD should be included in defence expenditure.

Pension payments made directly by the government to retired military and civilian employees of military departments should be included regardless of whether these payments are made from the budget of the MoD or other ministries.

Expenditure for peacekeeping and humanitarian operations (paid by MoD or other ministries), the destruction of weapons, equipment and ammunition, and the costs associated with inspection and control of equipment destruction are included in defence expenditure.

Research and development (R&D) costs are to be included in defence expenditure. R&D costs should also include those for projects that do not successfully lead to production of equipment.

Expenditure for the military component of mixed civilian-military activities is included, butonly when this military component can be specifically accounted for or estimated.

Financial assistance by one Ally to another, specifically to support the defence effort of the recipient, should be included in the defence expenditure of the donor nation and not in the defence expenditure of the receiving nation.

Expenditure on NATO Common infrastructure is included in the total defence expenditure of each Ally only to the extent of that nation’s net contribution.

War damage payments, payments and benefits to veterans, and spending on civil defence are excluded from the NATO definition of defence expenditure.

NATO uses United States dollars (USD) as the common currency denominator. The exchange rate applied to each Ally is the average annual rate published by the International Monetary Fund (IMF) and estimates from the OECD for the current year. The values for defence expenditure are expressed in current prices; constant prices; current prices and exchange rates; as well as constant prices and exchange rates.

Note to readers:

Iceland has no armed forces. For nations of the Euro zone, and Montenegro, monetary values in national currency are expressed in Euros for all years. Estonia adopted Euros from 2011, Latvia from 2014, and Lithuania from 2015.

To avoid any ambiguity, the fiscal year has been designated by the year which includes the highest number of months: e.g. 2016 represents the fiscal year 2016/2017 for Canada and United Kingdom and the fiscal year 2015/2016 for the United States. Because of rounding, the total figures may differ from the sum of their components.

Conventional signs:

e estimated
– nil
.. not available
| break in continuity of series
. decimal point

Nomenclature of NATO defence expenditure:

1 Operating costs

1.1 Military personnel 1.1.1 Pay and allowances
1.1.2 Employer’s contributions to retirement funds
1.1.3 Other
1.2 Civilian personnel
1.2.1 Pay and allowances
1.2.2 Employer’s contributions to retirementfunds

1.3 Pensions

1.3.1 Paid to military retirees
1.3.2 Paid to civilian retirees
1.4 Operations and maintenance
1.4.1 Ammunition and explosives (excluding nuclear)
1.4.2 Petroleum products
1.4.3 Spare parts
1.4.4 Other equipment and supplies
1.4.5 Rents
1.4.6 Other operations and maintenance

2 Procurement and construction

2.1 Major equipment
2.1.1 Missile systems
2.1.2 Missiles (conventional weapons)
2.1.3 Nuclear weapons
2.1.4 Aircraft
2.1.5 Artillery
2.1.6 Combat vehicles
2.1.7 Engineering equipment
2.1.8 Weapons and small arms
2.1.9 Transport vehicles
2.1.10 Ships and harbour craft
2.1.11 Electronic and communications equipment
2.2 National military construction
2.3 NATO common infrastructure
2.3.1 Expenditure as host nation
2.3.2 Payments to other nations
2.3.3 Receipts from other nations
2.3.4 Land and utilities

3 Research and development

3.1 Devoted to major equipment
3.2 Other
4 Other expenditure
5 Total
6 Statistical discrepancy
7 Adjusted total

Main categories of defence expenditure:

– Equipment (Table 6a) – lines 2.1 + 3.1
– Personnel (Table 6a) – lines 1.1 + 1.2 + 1.3
– Infrastructure (Table 6b) – lines 2.2 + 2.3
– Other (Table 6b) – lines 1.4 + 3.2 + 4 [Full pdf format]

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