NATO Burden-Sharing: Past and Future
| Author | Todd Sandler,Keith Hartley |
| Published date | 01 November 1999 |
| Date | 01 November 1999 |
| DOI | http://doi.org/10.1177/0022343399036006004 |
| Subject Matter | Articles |
NATO Burden-Sharing: Past and Future
KEITH HARTLEY
Centre for Defence Economics, University of York
TODD SANDLER
Department of Economics, Iowa State University
NATO is facing major changes and challenges: enlargement, new threats, new missions, new tech-
nology, and declining defence budgets. These developments raise the question of who will pay for the
changes and hence the possibility of new burden-sharing debates. burden-sharing was a focus of con-
troversy in the past and it could re-emerge in the future. A variety of burden-sharing measures are
reviewed. These range from such traditional indicators as the share of defence in GDP to a range of
alternative military measures as well as civil indicators, such as contributions to UN humanitarian oper-
ations and economic aid. Burden-sharing debates are affected by choice of indicator. Different indi-
cators give different rankings and results. Nations will select the indicator(s) which show that they are
bearing an ‘unfairly’ high burden of the collective defence effort. The final part of the article examines
the likely developments in burden-sharing over the next decade (e.g. new missions, new technology,
enlargement). On enlargement, emphasis is placed on the need to assess both the benefits and costs of
NATO expansion and the conclusion focuses on the optimal size of NATO.
NATO’s New Role
NATO survived the Cold War and has
responded to the new strategic environment
by developing new roles, new missions, and
accepting new members. Future threats to
the national security of member-states are
likely to emerge outside of the traditional
NATO area and might take the form of ter-
rorism, ‘rogue’ nations with weapons of
mass destruction, civil wars, disputes over
natural resources (e.g. oil, water), famines,
and natural disasters. NATO has also to
respond to the impact of new technologies
(e.g. the revolution in military affairs) and
reductions in national defence spending (the
search for a peace dividend). The expansion
of NATO’s peacekeeping, peacemaking,
crisis management and disaster–humani-
tarian relief roles, together with enlarge-
ment, raises questions about who will pay
for the changes and hence the possibility of
new burden-sharing debates. NATO
enlargement involves benefits and costs for
both existing and new members, and agree-
ment is needed on the distribution of
enlargement costs between all members.
Burden-sharing has been a recurring
theme in NATO and was a focus of
* This article was originally presented to a meeting of the
Trans-Atlantic Policy Network, Paris, 1997. Todd Sandler
also acknowledges support from his NATO Fellowship
1998–2000. The authors gratefully acknowledge the
helpful comments of two anonymous referees and,
Michael Brzoska, the Associate Editor of JPR. The data
used in this article can be obtained from:
http://www.york.ac.uk/depts/econ/res/centres.c_house.
htm#cde.
665
journal of
peace
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ESEARCH
© 1999 Journal of Peace Research,
vol. 36, no. 6, 1999, pp. 665–680
Sage Publications (London, Thousand
Oaks, CA and New Delhi)
[0022-3433(199911)36:6; 665–680; 009678]
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controversy in the past. Previously, interest
in burden-sharing arose when member-
nations perceived major differences in
defence burdens and a widening of the gap
between defence costs and benefits
(Kennedy, 1979). With NATO enlargement
and its new missions, the issue could re-
emerge in the future. If so, questions need to
be asked about the contribution of existing
and new allies to NATO’s defence effort;
who benefits and who pays; are the arrange-
ments for sharing costs ‘fair’ or do a few
nations bear most of the costs leading to
complaints of free-riding with some old
and/or new members failing to pay their
‘fair’ share? What is known, what is not
known, and what is it necessary to know for
sensible debates and policy decisions on
future NATO burden-sharing? This article
addresses these issues by considering the
contribution of the economic theory of
alliances to understanding the debate and by
outlining some general principles for mea-
suring burden-sharing. Evidence on a variety
of burden-sharing indicators is presented
and evaluated; and finally, future problems
and prospects are assessed.
Economic Theories of Alliances
NATO is a voluntary international club
which specializes in providing collective
defence (a public good). Nations will join
the club and remain members so long as
membership is expected to be worthwhile
(benefits exceed costs). On this basis, NATO
survives so long as it offers more protection
or lower defence costs at an affordable cost
of membership compared with non-mem-
bership (national independence). The ben-
efits of membership take the form of
collective defence, including the protection
offered by the US strategic nuclear umbrella.
Under the North Atlantic Treaty of 1949,
members agree to regard an armed attack on
any one or more of their fellow-members as
an attack against all of them (Article 5). The
costs of membership include a financial con-
tribution to the funding of NATO’s
common infrastructure (e.g. airfields, com-
munications, pipelines), acceptance of
NATO defence strategy, the provision of
bases for forces from other NATO states, a
commitment of national forces to the
alliance, and a willingness to abide by the
rules of the club. Significantly, the NATO
club has survived new weapons technologies,
new strategies, new threats, debates over
burden-sharing and, over the years, has
attracted new members (Greece and Turkey
in 1952; West Germany in 1955; Spain in
1982; East Germany as part of a unified
Germany in 1990; Czech Republic,
Hungary and Poland in 1999). The fact that
states have remained members and that the
club has continued to expand indicates that
membership remains worthwhile.
Economic models of military alliances
provide a basis for understanding burden-
sharing. In these models, collective defence
in the form of deterrence is viewed as a pure
public good. Such goods have two character-
istics. First, a nation’s consumption of
defence does not affect the amount still
available for consumption by other nations.
For example, the US nuclear deterrent can
protect additional allies without diminishing
the protection available to existing allies
(non-rivalry). Second, once these goods are
provided, they are available to everyone:
exclusion is so costly that it is not worth-
while (non-excludability). This character-
istic provides the incentive for a nation to
‘free-ride’ when it knows that other nations
will provide sufficient alliance defence for its
needs (Sandler & Hartley, 1995, 1999).
The original versions of alliance models
offered three related and policy-relevant pre-
dictions resulting in unequal burden-
sharing. First, because larger members of an
alliance place a higher valuation on security
and protection, they will usually devote
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