Title: Germany’s Defence Contribution: Is Berlin Underperforming? Author(s): Lawrence, Tony; White, Gabriel Publication date: July 2018 Category: Analysis Cover page photo: A German Panzerhaubitze 2000 (PzH 2000) during exercise Iron Wolf II in Lithuania. © NATO on Flickr, made available under an Attribution-NonCommercial-NoDerivs 2.0 Generic (CC BY-NC-ND 2.0) License. Keywords: Germany, NATO, defence spending, burden sharing Disclaimer: The views and opinions contained in this paper are solely those of its author(s) and do not necessarily represent the official policy or position of the International Centre for Defence and Security or any other organisation. ISSN 2228-2076 ©International Centre for Defence and Security 63/4 Narva Rd., 10152 Tallinn, Estonia [email protected], www.icds.ee “In particular, Germany must demonstrate a contentious NATO Summit in Brussels on 11-12 leadership in the Alliance by addressing its July, we examine Germany’s defence spending longstanding shortfall in defense and defence posture. contributions. Germany has not contributed what it should be contributing, and it’s a very big beneficiary — far bigger than the United States, frankly.” NATO’s target that Allies should spend 2% of Donald Trump, May 20181 GDP on defence is an unsophisticated measure of defence contribution – largely because it assesses input, rather than output or outcome. Meeting NATO Secretary General Jens But it is an easily calculated and easily digestible Stoltenberg in Washington DC in May 2018, indicator that will likely continue to command, Donald Trump returned to a favourite theme: political attention. The commitment that the NATO burden sharing and its alleged unfairness Allies made in Wales in 2014 has three parts: to the US. Noting that 20 Allies spend less than that they should halt any decline in defence NATO’s target of 2% of GDP on defence, Trump expenditure, aim to increase defence nevertheless again singled out Germany for expenditure in real terms as GDP grows, and particular reproach. Trump has been critical of “aim to move towards the 2% guideline” by German defence spending since at least his first 2024.3 While Germany has succeeded in the first meeting with Angela Merkel in March 2017, two – Figure 1 – it has made little progress on the when he reportedly presented the Chancellor third, even according to a very literal with a multi-billion Euro bill for Germany’s interpretation of the text of the agreement. defence underspend, later claiming on Twitter Figure 2 illustrates that Germany is by no means that Germany owed “vast sums of money to the weakest performer in defence spending NATO and the United States must be paid more among Europe’s top five economies, either in for the powerful, and very expensive, defense it terms of real expenditure or expenditure as a provides to Germany.”2 percentage of GDP. It is, however, by some margin, the lowest spender among the big three In his attacks, Trump has repeatedly – France, Germany and the UK – who might be misunderstood, or deliberately misrepresented, expected to shoulder greater responsibility for the way in which NATO is funded and refused to security in keeping with their larger economies acknowledge any benefits of the Alliance to the and their claims to leadership of the continent. US. It is also likely that his focus on Germany is not just motivated by defence To meet the 2% target, Germany would have to spend questions, but also by his close to €70 billion belief that the EU, and its largest economy in particular, has spent many years taking To meet the 2% target, Germany would have to economic advantage of the US. Putting these spend close to €70 billion, more than one-and-a- issues aside, is his criticism of German defence half times current defence spending levels. The spending fair? In this analysis, written as a German government claims broad consensus 4 backgrounder for what will probably prove to be that this is neither realistic, nor desirable. 1 The White House, “Remarks by President Trump and NATO https://twitter.com/realDonaldTrump/status/8430905162837237 Secretary General Stoltenberg Before Expanded Bilateral 76, accessed 24 May 2018. Meeting,” 17 May 2018, https://www.whitehouse.gov/briefings- 3 NATO, “Wales Summit Declaration,” 5 September 2014, statements/remarks-president-trump-nato-secretary-general- paragraph 14, stoltenberg-expanded-bilateral-meeting/, accessed 23 May 2018. https://www.nato.int/cps/ic/natohq/official_texts_112964.htm, 2 Bojan Pancevski, ” Germany slams ‘intimidating’ £300bn White accessed 18 June 2018. House bill,” The Sunday Times, 26 March 2017, 4 Arthur Beesley, “German Foreign Minister Hits out at Tillerson’s https://www.thetimes.co.uk/article/germany-dismisses-white- Demand for more NATO Spending,” Financial Times, 31 March houses-intimidating-300bn-bill-for-defence-dl7dk629k, accessed 2017, https://www.ft.com/content/0f90d14d-474b-3290-ab96- 25 May 2018; Donald J Trump, Twitter Post, 18 March 2017, 561e4c61a5e1, accessed 11 July 2018. 6:23AM, Figure 1. Historical Defence Expenditures, Constant 2010 Prices and Exchange Rates (2018 Estimates).5 Figure 2. Estimated 2018 GDP and Defence Expenditures, 2010 Prices and Exchange Rates.6 5 NATO, “Defence Expenditure of NATO Countries (2011-2018),” Communiqué PR/CP(2018)091, 10 July, 7-8 6 Ibid, 7-9. Figure 3. Defence Expenditure Breakdown (2018 Estimates).7 Figure 4. Military Personnel and Equipment Expenditure per Military (2018 Estimates), 2010 Prices and Exchange Rates.8 7 Ibid, 12-13. 8 Ibid, 7, 11. Short term defence spending plans expect real defence ministry’s present spending plans have annual defence expenditure to increase by no room for investment growth.13 around 15% compared to current levels by 2021, but to remain approximately constant in terms Defending her ministry from Donald Trump’s of GDP share at 1.2%. This would, according to attacks, German Defence Minister Ursula von Hans-Peter Bartels, Germany’s Parliamentary der Leyen has argued that defence spending Commissioner for the Armed Forces, “mean against NATO targets is not the only indicator of missing the targets agreed within NATO and defence contributions, and that participation in among the PESCO nations in the European UN and other foreign missions and the fight Union.”9 More recently, Germany has against ISIS terrorism, for example, should also 14 announced a goal of reaching a level of 1.5% of be taken into account. Others have suggested GDP by 2024.10 that defence is too narrow a measurement of a state’s contribution to security and that a range Drilling deeper into defence expenditure of factors should instead be considered. Director statistics, Figure 3 illustrates that Germany also of the Munich Security Conference, Wolfgang falls some way short of NATO’s less well known Ischinger, for example, has suggested that states Wales Summit defence expenditure target – that should aim to spend 3% of their GDP for “crisis Allies should spend 20% of their defence budgets prevention, development assistance, and on equipment.11 By this indicator, which is a defense.”15 Von der Leyen and others have better proxy for military capability than the 2% defended Germany’s record by pointing to less target, Germany is clearly lagging by comparison quantifiable factors such as its role as a with the other large European states – it is the only one not expected to Germany has announced a goal of reaching a level of meet this target in 2018. 1.5% of GDP by 2024 Germany thus spends considerably less on equipment per military framework nation in the enhanced Forward personnel than do France or the UK despite Presence battlegroup in Lithuania, or its having armed forces of comparable size (Figure advocacy of the Framework Nations Concept as 4). Germany spends the largest proportions of its a tool to encourage military capability defence budget on personnel (although this development in Europe.16 share is not large by comparison with other big European Allies), and on ‘other’, which NATO defines as including operations and Figures 5 and 6 compare Germany’s maintenance expenditure, other R&D contributions in some of these areas with those expenditure and expenditure not allocated of the other large European Allies. While Figure among the other categories.12 While some 5 presents only selected snapshots, and while it analysts have suggested that Germany plans to should be recognised that nations select the meet the 20% investment goal by 2020, others, operations to which they will contribute notably Hans-Peter Bartels, claim that the according to their particular niches and strengths, Germany does not especially 9 Hans-Peter Bartels, “Information from the Parliamentary NATO, “Wales Summit Declaration,” paragraph 14. A parallel, Commissioner for the Armed Forces. Annual Report 2017 (59th albeit collective, 20% target also exists in the EU. Report),” German Bundestag Printed Paper 19/700, 20 February 12 NATO, “Defence Expenditure“, 13. 2018, 20. Available from 13 Bartels, “Information from the Parliamentary Commissioner“, https://www.bundestag.de/en/parliament/commissioner, 20. accessed 25 June 2018. 14 Nicholas Vincour, “Trump handed Merkel ‘outrageous’ NATO 10 Joshua Posaner, “German defense minister strikes back on bill: report,” Politico, 26 March 2017, NATO spending target,” Politico, 4 July 2018, https://www.politico.eu/article/donald-trump-handed-angela- https://www.politico.eu/article/german-defense-minister-ursula- merkel-outrageous-nato-bill-report/, accessed 24 May 2018. von-der-leyen-strikes-back-on-donald-trump-nato-spending- 15 Wolfgang Ischinger, "More EU Foreign and Security Policy," target/ , accessed 9 July 2018. Munich Security Conference, 11 “Allies … will aim, within a decade, to increase their annual https://www.securityconference.de/en/news/article/more-eu- investments to 20% or more of total defence expenditures.” foreign-and-security-policy/, accessed 24 May 2018. 16 Posaner, “German defense minister strikes back.” Figure 5.