NATO Foresees More Europe Defense Outlays as It Braces for Trump

(Bloomberg) -- The North Atlantic Treaty Organization forecast higher military spending by U.S. allies before a summit where President Donald Trump may repeat a demand for Europe to foot more of the common security bill.

NATO raised its projection of extra defense expenditure by European member countries and Canada in 2016-2020 to $130 billion in total from $100 billion. The alliance also produced its first forecast of these countries' combined increase for the period through 2024: $400 billion.

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In previewing a Dec. 3-4 NATO summit in London, Secretary General Jens Stoltenberg also said Bulgaria this year would join the group of member nations reaching a goal for military budgets to be at least 2% of their economic output. In all, nine NATO countries will hit the target in 2019, according to Stoltenberg.

“All allies are increasing defense spending, more allies are meeting the guideline,” he told reporters on Friday in Brussels. “It is making NATO stronger.”

With the U.S. accounting for more than two-thirds of defense expenditure by NATO's 29 nations and Trump pressing Europe to boost its share, transatlantic “burden sharing” will feature at the London meeting otherwise organized largely to celebrate the 70th anniversary of the alliance's founding.

At a 2018 meeting of NATO leaders in the Belgian capital, Trump upended the agenda when he insisted that a session with partner nation Ukraine be devoted instead to defense outlays by allies such as Germany.

German defense spending this year is projected at 1.38% of gross domestic product, up from 1.36% forecast in June by NATO and from 1.24% in 2018.

In a sign of how sensitive the question of Europe's financial contribution to transatlantic security has become, NATO countries agreed this week to reduce U.S. funding for the alliance's relatively small annual budget of about 2.4 billion euros ($2.6 billion).

The U.S. share will fall to around 16% from 22% while all European countries except France will increase their contributions to help make up the difference. Germany's share will rise to about 16% from almost 15%, putting the country on the same level as the U.S.

--With assistance from Jacqueline Gu and Demetrios Pogkas.

To contact the reporter on this story: Jonathan Stearns in Brussels at jstearns2@bloomberg.net

To contact the editors responsible for this story: Ben Sills at bsills@bloomberg.net, Richard Bravo, Nikos Chrysoloras

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