The EU Defense Fund Can Bail Out NATO

The American security commitment to Europe has been significant since the end of the World War II, but ever since Europe recovered from the war, the presence of American forces has been a constant source of tension for the transatlantic alliance.

Last week, the Center for the Study of Democracy in Sofia, Bulgaria, organized a public discussion on future challenges to national and international security in the 21st century, with the Obama administration's former National Security Advisor General James L. Jones and Bulgarian Minister of Defense Anyu Angelov as the two keynote presenters. The two counterparts discussed the vanishing distinctions between national and international security and the deepening cooperation on intelligence and partnership programs. More importantly, both agreed on the future importance of intensifying the multi-dimensional nature of the EU-NATO partnership. Resolving the military budget shortfalls in NATO's European members requires involving the economic might of the EU. 

A consistent issue for the European side of NATO is that members are failing to meet the 2% of GDP target military budgets specified in the normative acts of NATO. The remedy to the issue lies not in NATO, but rather, with the EU. More specifically, the EU’s Common Foreign and Security Policy (CFSP) gives the institutional ground for creating an EU defense fund, similar to the Union’s structural fund programs. It will combine EU and NATO security needs with the needed monetary backing for meeting or exceeding the 2% national budget target.

The EU’s structural funds cover important areas such as regional development, infrastructure, state reform, and capacity-building. It is only the EU that funds the CFSP, and not these structural funds. If that can be arranged, it will be much easier for member states to meet the 2% target.

The economic downturn has also meant that states cut expenditures across the board, with military spending among the first to be reduced. A supranational solution in tandem with national commitments is likely going to produce the best solution to meeting the needs of cash-strapped states, deepen integration between EU and NATO, and give much-needed substance to the CFSP. Continuing supranational consolidation of European defense industries gives this idea further steam: EADS began the trend in 2000, and now there is talk between France and Germany to consolidate the military side of their shipbuilding industries.

Structural funds work by allocating a certain sum to each country in a specific area — in this case, military. The country then has approximately six years to absorb the total available resource; it is up to the state to manage the funds, for regions to submit projects for approval to the EU Commission, and do it in a way that is transparent and accountable.

There are a number of options available for the financing mechanism itself in the framework of a structural defense fund. One variant is that states unable to meet the target receive an annual contribution by the EU, up to a certain limit. Another is to define state needs within the finalized 2014-2020 budget framework and provide financing on a principle that meets or exceeds the 2% mark, but in accordance with EU and NATO security needs. The budget is made up of the annual member contributions, so a minimal increase on each and effective redistribution would be practical.

In an unpredictable world as ours, NATO is better off intensifying the cooperation it already has with other partners. The EU is a natural ally, both in terms of overlapping membership and ideological direction. It makes sense that both alliances integrate further for mutual benefit.

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