Back to news

December 11, 2019 | International, Land

Analysis: NATO's defence budget formula is flawed — and Canada isn't going to meet its target

Trump is angry that a number of NATO nations haven't met an agreement, reached five years ago, to spend two per cent of their annual Gross Domestic Product on defence

DAVID PUGLIESE, OTTAWA CITIZEN

Another NATO summit brings another chance for U.S. President Donald Trump to browbeat America's allies for not spending enough on defence.

Trump is angry that a number of NATO nations haven't met an agreement, reached five years ago, to spend two per cent of their annual Gross Domestic Product on defence.

But that GDP yardstick has been rendered almost meaningless this year as the tiny nation of Bulgaria has joined the U.S. super power as being one of NATO's top military spenders.

Bulgaria's GDP is so small that by purchasing eight F-16 fighter jets in a one-time outlay of $1.5 billion, the country will now be spending 3.25 per cent of its economic output on its military.

Only the U.S., which spends 3.4 per cent of GDP on defence, is higher.

Using the GDP measurement means that Estonia, which has one of the smallest navies in the world with four ships, has reached the NATO gold standard of two per cent. Canada, which spends more than 20 times the amount in actual dollars on its military, is viewed as a NATO deadbeat.

For that reason, both Conservative and Liberal governments have pushed back on the GDP measurement, which was agreed to by NATO nations at a summit in Wales in 2014.

Prime Minister Stephen Harper, arguably the most supportive leader of the Canadian military that the country had seen in decades, dismissed the notion of reaching that two per cent target, even though Canada signed on to the goal.

At the Wales summit, Harper's staff pointed out that reaching the two per cent mark would have required the military's budget to almost double, something that was not fiscally or politically possible.

Harper himself had come under fire from defence analysts who pointed out that under his government, the percentage of GDP spent on defence reached almost an all-time low of around 1 per cent.

But Harper countered that it's the amount of actual spending and capability of a country's military that matters, not the GDP measurement.

Prime Minister Justin Trudeau was essentially using the same argument Tuesday when he met with Trump at the NATO summit.

“I think it's important to look at what is actually being done,” with defence dollars, Trudeau said.

Canada only spends about 1.3 per cent of GDP on defence.

But tabulate the defence dollars actually being spent on the military and Canada ranks an impressive sixth among the 29 NATO nations.

The Liberal government's defence policy has promised even more money in the future. Military spending is set to increase from the current $21.8 billion to $32.7 billion in 2026-2027.

Trudeau also noted in his meeting with Trump on Tuesday the key role Canada is playing in NATO operations in both Latvia and Iraq.

Germany has taken a similar approach to the one used by Canada's Conservative and Liberal governments. It believes the amount of money actually being spent on military forces is more important than measuring it as a percentage of the GDP. Germany has also pointed out it is the second largest provider of troops for NATO operations.

Trump is expected to once again criticize Germany for its level of defence spending.

But the country does not seem to be in a hurry to make the two per cent goal. Germany currently spends about 1.4 per cent or around $64 billion annually. Earlier this year it told NATO it would reach 1.5 per cent of GDP by 2024.

The other issue facing the Department of National Defence and the Canadian Forces related to the two per cent goal is one of capacity. Even if the defence budget was boosted to meet two per cent, the department simply doesn't have the ability to spend that amount of money.

Around half the defence budget is for salaries and while the senior military leadership would welcome an increase in the ranks the problem they face is that young Canadians aren't exactly rushing out to join the forces.

The military could spend more money on acquiring additional equipment. But a lack of trained procurement staff has been an obstacle standing in the way of even getting approved programs underway.

Trudeau's explanation Tuesday about Canada's military spending being on a steady increase seemed to placate Trump, at least for now. The U.S. president responded that he views Canada as “slightly delinquent” when it comes to defence spending. “But they'll be okay,” he told journalists. “I have confidence. They'll get there quickly, I think.”

https://ottawacitizen.com/news/national/defence-watch/analysis-natos-defence-budget-formula-is-flawed-and-canada-isnt-going-to-meet-its-target

On the same subject

  • Contract Awards by US Department of Defense - August 12, 2019

    August 13, 2019 | International, Aerospace, Naval, Land, C4ISR, Security

    Contract Awards by US Department of Defense - August 12, 2019

    ARMY Birdon America Inc.,* Denver, Colorado, was awarded a $196,941,052 firm-fixed-price contract for acquisition of M30 bridge erection boats, crew protection kits, stock lists, tools, test equipment, service representative and support, training and storage. Bids were solicited via the internet with one received. Work locations and funding will be determined with each order, with an estimated completion date of Aug. 12, 2024. U.S. Army Contracting Command, Warren, Michigan, is the contracting activity (W56HZV-19-D-0093). NAVY Sikorsky Aircraft Corp., a Lockheed Martin Co., Stratford, Connecticut, is awarded $107,353,729 for firm-fixed-price advance acquisition contract modification P00029 to a previously awarded fixed-price-incentive-firm, cost-plus-fixed-fee contract (N00019-16-C-0048). This modification procures long lead items for six CH-53K low-rate initial production lot 4 aircraft. Work will be performed in Stratford, Connecticut, and is expected to be completed in August 2020. Fiscal 2019 aircraft procurement (Navy) funds in the amount of $107,353,729 will be obligated at time of award, none of which will expire at the end of the current fiscal year. The Naval Air Systems Command, Patuxent River, Maryland, is the contracting activity. Austal USA LLC, Mobile, Alabama, is awarded $23,099,311 for cost-plus fixed-fee task order N6931619F4002 against previously awarded basic ordering agreement N00024-15-G-2304 to accomplish advance planning, material procurement and accomplishment of work in support of the post shakedown availability (PSA) of littoral combat ship USS Tulsa (LCS 16). This effort encompasses all of the manpower, support services, material, non-standard equipment and associated technical data and documentation required to prepare for and accomplish the PSA. The work to be performed will include correction of government responsible trial card deficiencies, new work identified between custody transfer and the time of PSA and incorporation of approved engineering changes that were not incorporated during the construction period which are not otherwise the building yard's responsibility under the ship construction contract. This contract was not competitively procured in accordance with 10 U.S. Code 2304(c)(1) - only one responsible source and no other supplies or services will satisfy agency requirements. Work will be performed in Seattle, Washington, and is expected to be complete by April 2020. Fiscal 2019 and 2013 shipbuilding and conversion (Navy); and 2019 other procurement (Navy) funding in the amount of $12,199,311 will be obligated at time of award, and will not expire at the end of the current fiscal year. The Supervisor of Shipbuilding, Conversion, and Repair Gulf Coast, Pascagoula, Mississippi, is the contracting activity. SOLPAC Construction Inc., doing business as Soltek Pacific Construction Co., San Diego, California, is being awarded a $12,111,121 firm-fixed-price task order (N6247319F5055) under a multiple award construction contract for the construction of a Littoral Combat Ship Mission Module Readiness Center at Naval Base San Diego. The work provides for the construction of a facility in a portion of the existing northwest wing of Building 3304. The renovated building will support a variety of functions including administration, conference, fabrication, maintenance, storage, locker rooms, secret and non-classified internet protocol router network telecommunications and a wash rack for the facility. The project includes all pertinent site improvements and site preparations, mechanical and electrical utilities, excavation and grading, foundations, roofing, telecommunications, plumbing, fire protection systems, heating, ventilation and air conditioning. The task order also contains two unexercised options and two planned modifications, which if exercised would increase the cumulative task order value to $13,102,121. Work will be performed in San Diego, California, and is expected to be completed by March 2021. Fiscal 2019 military construction (Navy) contract funds in the amount of $12,111,121 are obligated on this award and will not expire at the end of the current fiscal year. Four proposals were received for this task order. Naval Facilities Engineering Command Southwest, San Diego, California, is the contracting activity (N62473-18-D-5855). DEFENSE LOGISTICS AGENCY BMK Ventures, Inc.,** Virginia Beach, Virginia, has been awarded a maximum $10,500,000 fixed-price with economic-price-adjustment, indefinite-delivery/indefinite-quantity contract for hospital equipment and accessories for the Defense Logistics Agency electronic catalog. This is a five-year contract with no option periods. This was a competitive acquisition with 88 responses received; 20 contracts have been awarded to date. Using military services are Army, Navy, Air Force and Marine Corps. Location of performance is Virginia, with an Aug. 11, 2024, performance completion date. Type of appropriation is fiscal 2019 through 2024 defense working capital funds. The contracting activity is the Defense Logistics Agency Troop Support, Philadelphia, Pennsylvania (SPE2DH-19-D-0013). Epic Aviation LLC, doing business as Epic Card,** Salem, Oregon, has been awarded a maximum $7,955,949 fixed-price with economic-price-adjustment contract for fuel. This was a competitive acquisition with 148 responses received. This is a 43-month contract with a six-month option period. Location of performance is Alabama, with a March 31, 2023 performance completion date. Using customers are Army, Navy, Air Force, Marine Corps and federal civilian agencies. Type of appropriation is fiscal 2019 through 2023 defense working capital funds. The contracting activity is the Defense Logistics Agency Energy, Fort Belvoir, Virginia (SPE607-19-D-0118). *Small business **Service-disabled, veteran-owned small business https://www.defense.gov/Newsroom/Contracts/Contract/Article/1932379/source/GovDelivery/

  • BEL and IAI sign MoU, to tap opportunities in Short Range Air Defence Systems’ domain

    September 6, 2023 | International, Land, C4ISR

    BEL and IAI sign MoU, to tap opportunities in Short Range Air Defence Systems’ domain

    The MoU aims at leveraging IAI and BEL’s capabilities, and is in sync with the ‘Atmanirbhar Bharat’ and ‘Make in India’ policies of the Government of India.

  • Indian navy to float $6 billion tender for six submarines

    June 8, 2021 | International, Naval

    Indian navy to float $6 billion tender for six submarines

    The approval was granted by the defense ministry’s procurement body, the Defence Acquisition Council, on June 4.

All news