Trump, NATO, and the Trade War with China

“For the United States, European countries are currently too heavy a burden to bear. The EU has become a troublesome economic competitor and, with its euro, a dangerous rival for the dollar.” Giancarlo Elia Valori analyzes Trump’s demand for NATO allies to boost defense spending

President Trump at a summit of heads of state and government at NATO headquarters (Photo: AP)

The last Summit of the Atlantic Alliance saw, at least initially, a clear divergence between the United States and NATO's European allies.

For President Trump, who is above all a businessman, budgets and investments count, rather than strategic doctrines, about which there was very little talk.

The US President, who arrived at the Summit with premeditated and carefully-considered delay, polemicized especially with Germany, saying that its low spending for defense makes it "prisoner" of Russia.

President Trump cannot get over and deal with the NORD STREAM pipeline, headed by Mathias Warnig, former director of STASI in Dresden where, at the time, Vladimir Putin worked for the KGB, the intelligence service that was the "master" of STASI.

He wants Europeans to buy the North American shale gas and oil – but it is a very difficult goal to reach.

Europe is disputed by two energy oligopolists.

Furthermore, President Trump ignored the long and irrelevant discussions about Afghanistan and Georgia, where the EU counts less than nothing, and warned NATO’s European members that if they did not increase their defense budget up to 2% of the GDP as from January 1, 2019, the USA would do on its own, by actually walking out of the Atlantic Alliance.

After some initial disconcertment, the NATO Secretary General organized a confidential meeting between the European members of the Atlantic Alliance, which made no concessions to the US requests.

Let us analyze, however, the data on defense spending within NATO.

As to the USA, by far the largest contributor to the Atlantic Alliance, the 2017 defense budget was equal to $686 billion, equivalent to 3.6% of GDP.

Again in 2017, the total defense spending of all the other NATO members amounted to $271 billion.

Only nine members of the Atlantic Alliance, except for the United States, spend over $10 billion per year, namely Great Britain, France, Germany, Italy, Canada, Turkey, Spain, Poland and the Netherlands.

Moreover, the United States must control other regions, such as the Pacific and South America, which are of no interest to NATO’s European members.

Currently, three European countries already exceed the 2% target, namely Great Britain, Greece, and Estonia.

Romania, Lithuania, and Latvia are very close to this 2% target and miss it by just 0.3%.

Hence, if all the Atlantic Alliance’s members spent 2% of their GDP in defense, we would have additional $114 billion available.

However, how much would be needed to make the European Armed Forces really efficient?

As to Germany, the very recent Bartels report informs us that – after years of budget cuts and total neglect on the part of politicians – the German soldiers have no sufficient protective devices, winter clothes, tents, etc.

In late 2017, the German Armed Forces had no available submarines for operations, and none of the 14 large transport aircraft was ready for flight, considering that the entire sea and air fleet was under repair.

Lack of spare parts and technological backwardness are widespread in the German Army, both for jets and ships, as well as for tanks.

21,000 posts of German officers are vacant – with obvious effects and repercussions on soldiers.

In fact, in 2017 Germany spent just 1.2% of GDP on defense and the results and consequences are before us to be seen.

There is still the complex of the defeated country. If all goes well, it will take decades to go back to the situation when the German General and military theorist, Erwin Rommel, wanted to engrave on a basalt plate in the Tunisian desert the following sentence: "The German soldier amazed the world, the Italian soldier amazed the German soldier."

The German Armed Forces (but this holds true also for the Italian ones) were designed for the first clash with the Warsaw Pact, so as to later give way to the nuclear attack, and still bear the brunt of the old strategy not permitting any defense of the now global German international interest.

As to France, its military system is much more efficient than the German one.

But the recent vote in favor of Article 14, which enables the Minister for Economy and Finance to veto the spending proposed by the Minister for Defense, as well as to impose a ceiling on all State spending for the current year (€106 billion), undermines the necessary renewal of the French military system.

The veto permitted under Article 14 comes just when France has become a member of the Permanent Structured Cooperation, i.e., the group of 25 European countries that is organizing an integrated and autonomous EU defense.

To replace NATO? To have an autonomous foreign policy from the USA? And what would be the current European foreign policy?

Italy, the third European Armed Force, has an almost perfect system of projection outside borders, not only in terms of empty peacekeeping, but a military system that is probably inadequate to defend the whole Italian territory from external attacks. And this applies to all European countries’ Armed Forces.

The Italian Armed Forces, however, are better trained and equipped than those of many other NATO’s European allies/competitors.

The Carabinieri Special Forces known as GIS trained the Navy Seals, the Shayetet 13 of the Israeli Navy and the Japanese SAT.

Hence President Trump's requests are made against the background of a largely obsolete European military system that is the primary victim of the various governments’ "budget cuts." Certainly, the US President has got a point there.

Nevertheless, without a good defense, there is no political and strategic credibility and probably not even commercial credibility.

Moreover, in private meetings, President Trump asked the European allies to rise not only to 2% but even to 4% as a new ceiling.

In this case, the US defense spending would amount to $762 billion, and all the other NATO European countries should spend $735 billion.

For President Trump, however, it all hangs and fits together from the fiscal and economic viewpoints: while traveling back from Brussels, he said that the European allies spend too little – hence, in his mind, there is an obvious connection with the issue of EU’s trade surplus. Europeans spend too little because they behave like pirates in international trade.

The core of the issue is mainly the German surplus which, coincidentally, is combined with an almost ridiculous military spending.

Meanwhile, China has decided to increase its military spending by 8.1% in 2019, which is – in volume – slightly lower than the US one.

It amounted to $151 billion in 2017. Nevertheless, the Chinese budget must be studied carefully.

Many resources of Ministries such as the Transport, Education, and Communications Ministries are closely connected with the People's Liberation Army.

Moreover, President Xi Jinping has recently established a new "Central Commission for Integrated Military and Civilian Development" – a clear sign of the strong permeation and interpenetration between these two sectors.

This will probably be the policy line that will enable NATO’s European countries to spend what is needed for defense, even with a significant impact on "civilian" spending.

The Russian Federation is spending $1.35 billion for the current year, with an 8% increase compared to the previous forecasts for the same year.

The 2% target of desirable military spending by NATO’s European countries dates back to long time ago. It was first discussed at the NATO Summit held in Prague in 2002, but it was only a gentleman's agreement.

At the meeting of NATO’s Defense Ministers held in 2006, mention was still made of the "willingness" to spend "at least" 2% of the State's yearly budget. But it was only lip service. Just hollow words, as usual.

At the NATO Summit held in Wales in 2014, the heads of state and government raised again the issue of spending at least 2% of public budgets for defense.

As already noted, only four Western countries spend 2%, namely the USA, Greece, Great Britain and Estonia. Greece, however, spends most of its military budget on salaries and pensions.

Ukraine is the only country exceeding 2% and reaching a "US-style" rate of 3.57%, while Georgia and Poland are just below the 2% level.

With specific reference to equipment, NATO's "policy line" requires at least 20% of defense budget spending. Currently, we are at a much lower level.

In 2018, Luxembourg, Romania, Latvia, Turkey, Lithuania, Bulgaria, the United States, Norway, Holland, Poland, France, Spain, the United Kingdom, Italy, Slovakia, and Estonia have spent over 20% of the amount recommended by NATO for equipment. The list has been provided according to the amount of spending for equipment in decreasing order from the maximum to the minimum.

Canada, Hungary, Germany, Denmark, Croatia, Portugal, Greece, the Czech Republic, Albania, Montenegro, Slovenia, and Belgium have spent less than 20% for equipment. It is worth noting, however, that the states that have not reached the 20% level have increased spending on equipment and armaments. Germany, the country that in 2019 should lead the Very High Readiness Joint Task Force, invests only 14% of its defense budget in materials and equipment.

Conversely, three nations of the former Warsaw Pact spend according to the target set by NATO’s policy line, namely Romania, Lithuania, and Bulgaria.

Slovenia and Belgium are at the bottom of the list, with only 4-5% of spending on equipment.

Although it is not possible to know in advance how much Russia will spend on defense in 2018, the expected amount of 2,768 trillion rubles has already risen to 2,963. In 2019 the planned annual spending will amount to 2,815 trillion rubles. Nevertheless all forecasts shall be adjusted upward. While its military spending, as share of Russian GDP, is slowly decreasing, according to the plans adopted by President Putin in 2015. If the GDP increases, everything will work well.

Obviously, the problem raised by President Trump is only quantitative and not qualitative.

In fact, so far NATO has carried out many peacekeeping operations – a sort of strategic refrigerator that preserves regional tensions for a long time – or has supported the weak and fragile democracies resulting from Eastern Europe and the former Warsaw Pact.

Moreover, Europeans cannot afford to arm and train the European Rapid Operational Force (EUROFOR) – initially by France and Great Britain with 60,000 soldiers – which will be hard to put together, but always for peacekeeping and peace enforcement purposes and for humanitarian missions.

Currently, EUROFOR is composed of forces from France, Italy, Spain, and Portugal. According to plans, there are 60,000 soldiers available, but readiness is to be verified.

So far it has carried out operations in Albania, Macedonia, Chad and the Central African Republic.

EUROFOR also has an intelligence service provided only by the United States.

The EU battlegroups, military units that each EU country provides, are financed only with ATHENA funds – a pool of funds already allocated by European countries. Will they be enough?

What happens, however, if – with specific reference to the use and deployment of EUROFOR and EU battlegroups – there are differences between EU countries on foreign policy?

Furthermore, President Trump's request to European countries for more defense investment actually means only one thing.

For the United States, European countries are currently too heavy a burden to bear. The EU – initially supported by the United States during the Cold War – has become a troublesome economic competitor and, with its euro, a dangerous rival for the dollar.

If the United States reaches a sort of "cold peace" with Putin’s Russia – which wants to rebalance power in peripheral regions, but also in Europe – the EU will have no longer meaning for the USA.

Indeed, the European Union could become a competitor or even an enemy.

It would be possibly better to share it out with Russia and put an end to NATO as a collective security organization.

President Trump thinks that, if they wish so, Europeans can continue their wars of the buttons in the Balkans or in countries that apparently need the cosmetic exercise called peacekeeping.

In the future, however, without the NATO umbrella mostly paid by the United States.

If the agreement with the Russian Federation goes on, President Trump will claim for the United States not just a part of the EU, but a political stake in all EU countries, i.e., by buying a traditionally Atlantic political region which is currently vaguely and vocally pro-European.

President Putin will take possession and control of the so-called "anti-establishment" or "nationalist" parties, which will undermine the EU mechanisms. The United States will enjoy the spoils, without having to bear any longer the huge cost for NATO defense to the benefit of economic competitors, as well as for very harsh European tariffs and duties, and finally for the euro.

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