NATO’s and its allies’ share of global defense spending in the last 12 years went from 75 percent to 60 percent, according to a new study by the global consulting and business advisory firm AlixPartners.
However, the report says increased spending by NATO is expected, otherwise “Failure to do so may threaten global security.” With increased threats globally, NATO may need to spend from nearly 2 percent to 4 percent annually to “keep pace with the rest of the world,” says the study, AlixPartners Global Aerospace and Defense Outlook.
The firm’s report follows an expected commitment this week by NATO members to increase defense spending. Excluding the United States, spending on defense by NATO members declined for seven years before recovering in 2015.
The report says that defense spending by NATO members as a percentage of global defense spending went from 65 percent in 2000 to 51 percent in 2015.
American remains the top spender in defense by far, the report says, but second place China has been increasing its spending and U.S. ratio versus China has gone from 4.8 times in 2011 to 2.7 times in 2015. It notes that China and Russia respectively increased their defense spending 38 percent and 40 percent during that period but the question is whether that pace can be sustained in the face of weak oil prices impacting Russian and an economic slowdown in China.