Yet another news headline declares “Canadian defence spending among lowest in NATO despite small increase last year.” The Canadian Press/CBC story then opens with a reference to the NATO Secretary-General’s annual report for 2016 which is said to show “Canada lagging behind most of its allies.” In reality, Canada’s defence spending is well ahead of most of its allies – check the 2017 edition of The Military Balance (International Institute for Strategic Studies) and you will find Canada listed as the sixth highest military spender in NATO and the 16th highest globally. That is, in actual dollars spent, only five NATO countries spend more on defence than does Canada (US, UK, France, Germany, Italy), and globally only 15 countries have larger defence budgets than does Canada. NATO, however, prefers to ignore actual expenditures and to focus instead on defence spending as a proportion of national wealth or gross domestic product (GDP). The following challenges the relevance of linking defence spending to national wealth (a version of this article appeared last year in OpenCanada).
More than a decade ago, in 2006, NATO states all pledged to expand their defence expenditures to a minimum of 2 percent of gross domestic product. And ever since then, each NATO Secretary-General and US President has regularly lamented the failure of NATO states to meet that 2 percent target. While the commitment was obviously intended as a declaration of political resolve regarding security, states also have a way of being serious about public expenditures, and the arbitrariness of the 2 percent figure meant it was never likely to make the transition from the declaratory to the practical. The practical matter for Canada, for example, is that honoring the 2 percent commitment would mean a 100 percent increase in defence spending – going from the current $20 billion budget which amounts to 1 percent of GDP, to $40 billion. No politician could make a credible national security case for that level of expenditure, and it’s not going to happen.
A parallel spending target is the UN’s 1970 proposal that the world’s more prosperous states raise their official development assistance (ODA) to at least .7 percent of GDP. That would mean a 200 percent increase for Canada – going from the current $5 billion per year which amounts to about .25 percent of GDP, to $15 billion. Unfortunately, that’s also not likely to happen, but there is in fact a compelling case for linking ODA levels to national wealth, and .7 percent is a worthy goal that is relevant to Canadian international economic and security objectives.
Linking defence and ODA spending levels to national wealth or income obviously invokes an ability-to-pay principle, and while that makes good sense when it comes to development assistance, there is little logic in linking defence spending to national wealth.
Inasmuch as development assistance is a wealth transfer mechanism analogous to Canada’s inter-provincial equalization payments, the link to GDP makes eminent sense. Relative national wealth is a credible, concrete way to measure a state’s financial obligations to the rest of the world. With the enormous benefits of wealth come obligations, and the UN General Assembly action in 1970 confirmed a broad global consensus around the .7 percent ODA target (a target which some states actually meet).
But national defence spending obligations are logically tied to security requirements, not to wealth and the ability to pay. No state’s national defence requirements rise because their GDP has risen. There is of course an obligation on all states to contribute to international peace and security, and high income states should be more forthcoming than those with more limited means, but states obviously are more likely to set military spending levels based on national defence requirements, for which the link to GDP is irrelevant.
Canada has a range of enduring defence responsibilities, but these are in no way conditioned by the size of our GDP. Monitoring Canadian frontiers and approaches to Canadian air, sea, and land spaces for unauthorized intrusions is an ongoing obligation, but the job doesn’t get bigger or smaller, or more or less expensive, just because our GDP rises or, very occasionally, declines. The same goes for the military’s responsibility to aid civil authorities in search and rescue and disaster response.
In Canada, the near universally accepted threat assessment is that we face no – or very little — military threat. In the Arctic, where much remains to be decided about continental shelf boundaries and thus access to sea resources, all Arctic states formally and informally agree that none of those issues will be mediated through military force.
So, just as surely as the presence of imminent military threats is expected to affect military planning and preparedness, and thus costs, so too should the absence of threat. Why would states not facing significant threats choose to spend as much on defence as those under credible threat?
Counting other contributions
Peace and security obligations beyond national borders might arguably be linked to a state’s ability to pay, but a direct link between military expenditures and GDP misses what should be the critical link, namely the correlation of spending to threat levels. And the GDP measure is irrelevant on two further counts. First, only a small portion of a state’s military capacity is intended and available for meeting international obligations (obligations that could be logically linked to ability to pay), and second, direct military engagement internationally is not the only, and usually not the most effective, way to contribute to international peace and security.
Two inescapable realities point toward greater concentration of spending on security measures that reach beyond fixations on military capacity: the increasing acknowledgement of the need to address and ameliorate the roots of armed conflict; and an almost universal acknowledgement that deeply rooted political conflicts like those now devastating Iraq, Syria, South Sudan, and other parts of the Middle East and Africa, do not ultimately have military solutions.
While there will inevitably be military dimensions to confronting the kind of extremism manifest by ISIS, the economic, social, and political drivers of conflict and non-military dimensions of conflict resolution and prevention demand the kinds of peace building and war prevention initiatives that have been sorely neglected and chronically underfunded in comparison with military preparedness. Heightened attention to economic development (the focus of ODA), diplomacy, good governance, and arms control is key to ending and preventing armed conflict – so if peace and security spending was to be guided by the ability-to-pay principle, those four dimensions should obviously be prominently included in the calculations.
When the Cold War ended, there was genuine hope that the world would be paid significant peace dividends. And, indeed, there have been some. Military spending relative to GDP has certainly declined in Canada and some wealthy European countries in response to reduced threats and tensions. And to their credit, countries like the Netherlands, Belgium, Denmark, and Germany, continue to ignore NATO’s 2 percent formula and set their defence spending at around .9 to 1.2 percent of GDP – with Canada toward the middle of that range at 1 percent. Norway is slightly above that range, but well below the NATO target, at 1.5 percent of GDP.
Notably, some of those same countries have put their peace dividend to good use – especially Norway, with foreign aid contributions raised to just over 1 percent of GDP and well above the UN development assistance target. The Netherlands and Denmark both meet the .7 percent development assistance target, as has, the United Kingdom (the only permanent member of the Security Council to do so). It is in ODA spending that Canada is an undisputed laggard. We have demonstrably not steered any of our peace dividend toward increased development assistance – which languishes at .25 percent of GDP. Put another way, we’re not making those legitimately expected global equalization payments.
The Secretary General of NATO and US Presidents will no doubt continue their cajoling and lamenting around the declared target of military expenditures at 2 percent of GDP, but rational policy-making will insist instead that any changes to military spending be justified by clear assessments of defence needs, and that security spending will include support for the myriad of proven non-military measures that are essential to building durable international peace and security.