Defence spending: A clear budget norm is necessary

After the Second World War it became clear that several European countries had failed to meet their defence tasks in the years before this war unfolded. In the Netherlands a broad consensus emerged that it was necessary to increase the level of defence spending. In the beginning of the fifties the share of defence in terms of GDP raised from around 4% to almost 5% GDP. However, in the late 1950s this share dropped to 3% GDP. In the thirty years of the Cold War the relative share of defence remained stable around the 3% GDP. After the fall of the Berlin Wall this share dropped sharply. Nowadays, Dutch defence expenditure is scarcely more than 1% GDP (1.1% GDP in 2013).

As a consequence Dutch defence is weak, and it remains to be seen whether we can contribute significantly to the necessary fight against the Islamic State (IS) or deliver a reasonable share for a new fast NATO force protecting the eastern border of Europe. And there is no room for other challenges that might occur in the (near) future.

However, except the USA, the Dutch situation of decreasing defence expenditures since the war is no exception. In figure 1 the share of defence expenditure as a percentage of GDP is shown for several NATO states as the Netherlands, Belgium, Germany, Austria, France, USA and UK.

Figure 1: Defence Expenditure level (% GDP) in NATO countries

It should be noticed that the defence expenditure share of Germany, Belgium and Spain are somewhat lower than the Netherlands. But also the level of France and UK, which have been important defence powers, have been decreased significantly. Nevertheless, both countries can still meet the NATO obligation to spend at least 2% GDP on defence. However, this is not case for the Netherlands (and Belgium, Germany and Spain also). For the USA the large shares of Korean-war (13%) and the Cold-War (6%) are already history.  Due to the war against terrorism the shares have been raised at the beginning of the 21st century.

Nevertheless, the Obama administration changed this policy and the level declined again, though remains well above the NATO norm. Recently, Obama delicately points out the imbalance within NATO. He stressed that Europe should do more to acquire its own safety guarantee. This also in the knowledge that many countries in Europe have further reduced their defence expenditures since the euro crisis.

In the Netherlands, recently, a policy change has been made. In 2015 the defence budget will raise with 100 million euro. However, this is hardly more than the estimated GDP increase of the current expenditure level, so that the Dutch share at most slightly increases. This is of course not sufficient at all. Therefore, I would suggest a clear budget norm for defence for the coming years not only for the Netherlands but for other EU countries as well. Also because the danger is considerable that when the current tension in the world will decrease or there will be a new budgetary crisis our territory protection will be placed at the bottom of the priority list again.

In my view, the trend rate of the defence spending should exceed GDP growth significantly because only on this condition the Netherlands (and others) will meet the NATO standard of 2% of GDP in due term.  If we really want to give priority to international peace and security, a significant impulse towards defence is necessary and also a clear budget norm to achieve it.

1. Data have been given since the moment that countries have joined NATO (see Military Expenditure Database van Stockholm International Peace Research Institute