The Economics of NATO Expansion

After the last expansion in 2009, NATO’s defense expenditures per capita increased 2 percent, and spending per square kilometer decreased by 11 percent: The organization currently has 50 cents to spend per person it defends, while it has $61 to spend per square kilometer of the combined total area of European members of NATO. Before expansion, NATO had 51 cents to spend per person and $68 per square kilometer, whereas after the expansion, it gained 1 cent more to spend per person, but lost $7 in spending per square kilometer. In 1990, the 14 European members of NATO spent around $314 billion on defense, but in 2015, the 28-member organization spent only around $227 billion on defense (before adjusting for inflation).

According to the Carnegie Endowment for International Peace, while European membership in NATO nearly doubled, defense spending by member states decreased 28 percent.That means the United States picked up the tab. NATO says in a discussion of indirect funding that “the volume of the US defense expenditure effectively represents 73 per cent of the defense spending of the Alliance as a whole.”

Europe’s combined GDP and population is $19.79 trillion and 552 million, compared to $17.95 trillion and 323 million for the United States. The United States has always contributed more than others, and that gap has only increased since 1999.

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