NATO’s budget virus: How the pandemic could slash military spending

President Trump’s 30-day travel ban on Europeans entering the United States angered the European Union, whose leaders had not been informed prior to his announcement. In fact, the ban initially was not directed at the EU per se, but rather at the 26 Schengen Area countries whose citizens can travel freely without passports anywhere within Schengen’s boundaries. Neither Switzerland nor Norway are EU members, for example — but they are part of the Schengen group, and their citizens now cannot travel temporarily to the United States. On the other hand, Britain and Ireland are not part of the Schengen area; hence, their initial exemption — now revoked — from the administration’s travel ban.

Health experts will debate whether an area-wide ban was called for. What is not debatable is the likely impact of the ban on the economies of the affected countries. 

Christine Lagarde, president of the European Central Bank and a former French finance minister, stated at a news conference that “the heightened uncertainty negatively affects expenditure plans and their financing” and that “even if ultimately temporary by nature, it [the coronavirus epidemic] will have a significant impact on economic activity, in particular it will slow down production as a result of disrupted supply chains and reduce domestic and foreign demand, especially through the adverse impact of the necessary containment measures.”

One of the first casualties of the virus may well be European defense spending, which long has taken a back seat to domestic spending in most EU states also are NATO members. This is especially the case in Western Europe. As Sławomir Dębski, director of the Polish Institute of International Affairs, puts it, “Defense budgets may be the first victims of [the virus], especially in so-called ‘old Europe,’ to use (Donald) Rumsfeld’s phrase,” referring to the famous description used by the U.S. defense secretary during the George W. Bush administration. 

On the other hand, Dębski adds, “In Central Europe, defense budgets are of high priority for obvious reasons — that is, close proximity of (an) aggressive Russia. Second, the economic situation of NATO Eastern Flank countries is in much better shape than that of their Western European allies. Poland, for example, for the first time ever, has (a) fully balanced budget for the fiscal year 2020. So if the coronavirus hits Poland’s economy, the government simply will make necessary budget corrections allowing some deficit, without cutting defense spending.”

While Poland’s defense budget may withstand the ravages of the coronavirus, that may not be the case elsewhere in Russia’s neighborhood. Spending on emergency measures to combat the virus — it is estimated that a European Central Bank bailout for Italy alone could exceed $500 billion Euros, or about $560 billion — could increase the pressure on European economies that have only just begun to show growth in their gross domestic products (GDP). Depending on how long the virus continues to ravage Europe, recovery could take years, not months. 

Coupled with ongoing immigration from the Middle East and North Africa, it likely will take the European NATO states considerably longer to reach their agreed goal of achieving defense spending that is equal to 2 percent of their respective GDPs by 2024.

NATO already is feeling the ravages of the virus in other ways. Major exercises such as Defender are being radically restructured and trimmed; others have been cancelled. At this time of worldwide crisis, it is crucial that Washington not further complicate Europe’s challenges by exacerbating tensions over defense spending. Moreover, it should lead the Alliance’s strategizing for the rapid restoration of all planned training, exercises and deployments immediately upon indications that the threat of the pandemic is beginning to wane. 

Unless Washington takes these steps, the major beneficiary of NATO’s travails will be none other than that soon-to-be constitutionally-engineered president for life, Russia’s Vladimir Vladimirovich Putin.

Dov S. Zakheim is a senior adviser at the Center for Strategic and International Studies and vice chairman of the board for the Foreign Policy Research Institute. He was under secretary of Defense (comptroller) and chief financial officer for the Department of Defense from 2001 to 2004 and a deputy under secretary of Defense from 1985 to 1987.