NATO budget target can be very expensive for Norway

President Donald Trump, left, with Defense Secretary James MattisPresident Donald Trump, left, with Defense Secretary James Mattis, right,Photo: (AP Photo/Susan Walsh)

Norway risk having to spend nearly 50 percent more on defense than per today if spending is to reach 2 percent of GDP by 2024.

Norway must steel itself for tough money demands when NATO defense ministers gather in Brussels this week.

US President Donald Trump has been crystal clear that Europe must take a greater share of the bill for defense cooperation. That means increased pressure to get European countries to achieve the goal of using 2 percent of gross domestic product (GDP) on defense by 2024.

Today the budget framework is 49 billion for Norway. This corresponds to 1.56 percent of GDP. The price tag for achieving 2 percent is over 13 billion.

Becomes more and more expensive

Because gross domestic product grows, the price tag only gets bigger every year that passes.

The budgets were given a significant boost in the Armed Forces Long-Term Plan, which was presented last year. Here it is calculated that spending will increase to 53 billion in 2020, measured in 2016 kroner.

This is barely enough to keep pace with economic growth. The GDP ratio in 2020 is projected at 1.57 percent, marginally higher than today.

State Secretary Øystein Bø (H) in the Ministry of Defence believes Norway is on the right path.

-It will also be difficult to lift the budget of up to 2 percent this quickly. The opportunities will also depend on developments in the Norwegian economy in that period, he said.

Secret number

The monetary target was adopted at the NATO summit in Wales in 2014. Formally, it was formulated as a pledge to “move toward 2 percent” within a decade.

Norway has not announced any plan that anticipates spendings throughout the decade. The Ministry of Defence has made calculations, but is keeping these hidden in a document classified as “strictly confidential”.

The ministry emphasizes that there is considerable uncertainty associated with both budgets and GDP growth.

The news channel NTB is however familiar with the projections for GDP growth as the Ministry has assumed in its own calculations.

If these estimates turn into reality, the spending has to be about 48 percent higher in 2024 than in 2016 if Norway is to reach 2 percent of GDP that year.

Requires political will

According to the newspaper Financial Times, more people now expect that the US will push for accelerating the monetary target.

Today there are only five countries in NATO that spend more than 2 per cent of GDP on defense. In Norway, the proportion has remained below 2 percent since 2003.

For countries like Portugal, Spain, Italy and Belgium it will be difficult to reach the target percentage, says senior analyst Zsolt Darvas in the think tank Bruegel.

The reason is large deficits and bulging national debt, which has forced painful cuts in their state budgets.

– But in other European countries it will be relatively easy to achieve this goal. It is simply a question of political will, said Darvas.

– I mean this also applies to Norway. If Norway wants to increase spending to 2 percent, it will be possible to do so fairly quickly, he says.

 

Source: NTB scanpix / Norway Today

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