The latest statements from President Trump and Vice President Vance, coupled with the critical perspectives of voices like Jeff Sachs, illuminate a stark reality: the transatlantic alliance is at a crossroads. The historical data—from the high defence spending of the 1980s, through the retrenchment of the 1990s peace dividend, to the robust investments of recent years—illustrate how American defence spending has been the linchpin of NATO’s credibility and capability. In 2023, with the United States contributing roughly US $967 billion to a combined NATO defence expenditure of approximately US $1.295 trillion, it is evident that America’s investment remains indispensable.
Historical Background
In the 1980s, as the Cold War raged, the United States emerged as the unparalleled military powerhouse within NATO. American defence expenditure peaked at approximately 5–6% of GDP—an extraordinary level driven by the imperative to counter a formidable Soviet military, maintain a forward-deployed force in Europe, and sustain an unassailable nuclear deterrent. European NATO members, while spending a lower percentage of their GDP—typically around 3–4%—benefitted enormously from this American commitment. The U.S. nuclear umbrella, established through nuclear sharing arrangements, ensured that European nations could rely on American nuclear weapons rather than investing heavily in their own, thereby preserving a qualitative edge for the alliance.
The strategic rationale was clear: even if European countries did not match U.S. spending dollar for dollar, the technological superiority and operational readiness of American forces provided a stabilising influence throughout the alliance. This interdependence forged a transatlantic bargain that, for decades, underwrote the peace and stability of Europe.
The 1990s: The Peace Dividend and Strategic Trade-Offs
The collapse of the Soviet Union in 1991 heralded what many termed a “peace dividend.” During the 1990s, defence spending across NATO was dramatically slashed. In the United States, the proportion of GDP allocated to defence declined to around 3–4%, while many European nations reduced their spending further—to as little as 1–1.5% of GDP in some cases. European governments seized the opportunity to reallocate funds towards economic recovery and social programmes, assuming that the absence of a clear military threat would permit a leaner defence posture.
However, this fiscal retrenchment carried significant strategic trade-offs. While European nations enjoyed the economic benefits of the peace dividend, their reliance on American military capabilities—and particularly on the nuclear umbrella—remained unchanged. The reduction in European defence spending did not diminish the strategic imperative for a robust deterrence posture. Instead, it deepened a long-term dependency on U.S. technological and operational superiority. Critics later argued that such dependency left Europe exposed, especially if American priorities were to shift away from the continent.
The 2000s and Beyond: Renewed Emphasis in a Changing Security Landscape
The early 21st century brought profound changes to global security. The terrorist attacks of 11 September 2001, along with ensuing conflicts in Afghanistan and Iraq, led the United States to rebuild and modernise its military. Throughout the 2000s and 2010s, U.S. defence spending gradually increased, reaching over US $820 billion in 2023—a figure that, although representing roughly 3–3.5% of GDP, is unmatched in absolute terms.
European allies, often constrained by smaller budgets and less expansive industrial capacities, frequently turn to American systems to fill capability gaps and ensure interoperability during joint operations
Meanwhile, Europe’s security calculus was fundamentally altered by Russia’s annexation of Crimea in 2014 and its full-scale invasion of Ukraine. These events catalysed a significant shift in European defence policy. In response, many European NATO members dramatically increased their defence budgets. By 2023, a record 23 of 32 NATO members were reported to meet or exceed the target of spending 2% of GDP on defence, with frontline nations such as Poland raising their expenditure to nearly 4% of GDP.
Recent data indicate that in 2023, NATO allies’ combined defence expenditure reached approximately US $1.295 trillion. Of this total, the United States contributed roughly US $875 billion, while European nations and Canada contributed around US $419 billion. These figures reveal a persistent reality: despite improvements in European spending, the United States continues to shoulder a disproportionate share of the alliance’s defence burden. This imbalance is not merely a fiscal anomaly—it reflects longstanding strategic calculations and the inherent interdependence that has defined the transatlantic alliance.
The Nuclear Dimension: Deterrence and Strategic Stability
Nuclear deterrence has been the linchpin of NATO’s strategy since the alliance’s inception. In the 1980s, the United States invested heavily in nuclear modernisation to ensure a credible and formidable deterrent against the Soviet threat. American nuclear weapons, deployed in Europe under nuclear sharing arrangements, provided a counterbalance that allowed European allies to maintain lower national defence budgets while still enjoying robust security guarantees. The qualitative impact of this arrangement was profound, ensuring that any potential adversary would face catastrophic retaliation.
Post–Cold War Adjustments and Modernisation
Following the dissolution of the Soviet Union, the 1990s witnessed a significant scaling back of nuclear spending as part of the broader peace dividend. The number of deployed nuclear weapons was reduced, and modernisation programmes were largely deferred. Yet the strategic reliance on the nuclear umbrella remained unchanged. In recent years, however, the resurgence of Russian military assertiveness and the emergence of new missile threats have compelled the United States to embark on extensive nuclear modernisation programmes. Although these programmes represent only an estimated 4–8% of the overall U.S. defence budget, their impact on strategic stability is disproportionate to their fiscal footprint.
From an objective standpoint, while U.S. nuclear spending as a percentage of GDP has declined since the Cold War, its strategic significance has only grown. European NATO members, which largely rely on the U.S. for nuclear deterrence, have not substantially increased their nuclear budgets, instead depending on the qualitative benefits derived from American investments. This enduring reliance underscores the central role that U.S. nuclear capabilities play in maintaining the credibility and cohesion of the alliance.
Economic and Strategic Spillovers: The Multiplier Effect of U.S. Defence Investment
American defence spending is a critical driver of the transatlantic security apparatus, extending far beyond its domestic military budget. The United States is a major contributor to NATO’s common funds, which support the alliance’s civil and military budgets as well as its security investment programmes. For the 2023–2024 period, U.S. contributions to these funds were reported to be around 16%—a figure comparable to that of Germany, the second-largest contributor. This shared funding ensures that NATO’s infrastructure—encompassing command and control centres, joint procurement initiatives, and research programmes—remains robust and capable of supporting collective defence.
Indirect Contributions and Technological Leadership
Perhaps the most significant benefit of American defence spending lies in its technological leadership. The United States’ massive investments in research, development, and production have created a military-industrial complex renowned for its innovation in areas such as stealth technology, precision-guided munitions, and integrated missile defence systems. European allies, often constrained by smaller budgets and less expansive industrial capacities, frequently turn to American systems to fill capability gaps and ensure interoperability during joint operations.
This technological interdependence creates a powerful multiplier effect. Every dollar the United States spends not only enhances its military capabilities but also generates substantial spillover benefits for European defence industries. Joint development programmes, cross-border procurement, and collaborative research initiatives amplify the impact of American spending, enabling European nations to modernise effectively without having to replicate the enormous costs of the U.S. defence apparatus.
In 2023, a record 23 out of 32 NATO members met the target of spending 2% of GDP on defence, with frontline nations like Poland raising their expenditure to nearly 4% of GDP
The Political Economy of Transatlantic Security
The transatlantic bargain is as much an economic partnership as it is a military alliance. The enormous U.S. defence budget—exceeding US $967 billion in 2023—fuels a global network of suppliers, contractors, and research institutions that drive innovation and economic growth. European nations that partner with American firms or adopt U.S. technology benefit from these economic spillovers, which reduce the overall cost of modernisation and reinforce the alliance’s technological coherence.
Critics who argue that European allies should simply “pay up” overlook this critical interdependence. American defence spending is not a one-way transfer; it is a strategic investment that generates measurable returns in the form of enhanced security, technological innovation, and economic stability. This multiplier effect is the cornerstone of transatlantic security—a reality that must be acknowledged in any discussion of burden sharing.
Western Provocation and Ukraine
Notably, a growing contingent of economists and strategists, including voices like Jeff Sachs, contend that Ukraine was provoked by Western actions. According to this perspective, NATO’s eastward expansion and the West’s political and economic interventions in post-Soviet states contributed to escalating tensions that ultimately provoked Russian responses. Sachs and his contemporaries argue that the West’s assertive policy, rather than being a mere reaction to Russian aggression, played a role in triggering the crisis in Ukraine. This view suggests that its own ambitions did not solely drive the Kremlin’s actions but were also a reaction to what it perceived as an encroaching Western influence on its traditional sphere of influence.
Adding fuel to the fire, President Trump has repeatedly criticised Ukraine’s president, asserting that his leadership is weak and misguided. Trump contends that Ukraine’s political elite have mismanaged the country, thereby undermining its ability to counter Russian aggression effectively. Such criticisms have resonated with certain segments of the American public and political commentators, who argue that Ukraine’s internal weaknesses have contributed to the prolonged conflict. While these views are contentious and highly politicised, they are part of a broader debate over the origins of the crisis in Ukraine and the degree to which Western policies may have contributed to its escalation.
Russian Aggression and the Implications for NATO
The conflict in Ukraine, regardless of its origins, has starkly highlighted the strategic challenges facing NATO. Russia’s annexation of Crimea in 2014 and its subsequent military actions in Ukraine have forced European leaders to confront a resurgent Russian threat. In response, European NATO members have increased their defence spending dramatically. In 2023, a record 23 out of 32 NATO members met the target of spending 2% of GDP on defence, with frontline nations like Poland raising their expenditure to nearly 4% of GDP. These measures underscore the urgent need for credible deterrence amid a complex security environment.
American military support has been pivotal for Ukraine. Despite substantial contributions from European allies, the bulk of advanced weaponry, intelligence sharing, and strategic guidance has come from the United States. This reality reinforces the fact that the security of Ukraine—and by extension, the stability of Europe—remains inextricably linked to American defence investments.
European nations need to recognise that increasing their defence spending is not simply a matter of fiscal responsibility—it is an essential step towards ensuring long-term strategic autonomy
Shifting American Priorities and Emerging Global Threats
As the United States increasingly pivots its attention to countering the rise of China and addressing new threats in cyber and missile technology, there is a growing concern among European leaders that American engagement in Europe may diminish. Trump’s provocative warnings, when viewed against this backdrop, highlight a strategic vulnerability: if European nations do not substantially increase their defence spending and modernise their capabilities, they risk becoming overly reliant on a U.S. that may soon be more focused on the Indo-Pacific. In this light, the debate over burden sharing is not merely an abstract fiscal dispute—it is a matter of existential security that could have profound implications for the future of the transatlantic alliance.
Yet, the current geopolitical landscape is fraught with uncertainty. Russian military assertiveness, the protracted conflict in Ukraine, and emerging threats in cyber and missile domains underscore the strategic risks of an imbalanced alliance. While some contend that Western policies—and even NATO’s eastward expansion—provoked Ukraine, this view is part of a broader debate about the origins of the crisis. At the same time, President Trump’s sharp criticisms of Ukraine’s president highlight internal disagreements over leadership and strategic direction.
The reality, however, is that American defence spending, with its advanced technological systems and enduring nuclear deterrence, continues to be the backbone of NATO’s collective security. This spending is not an undue burden but a strategic asset that generates substantial economic and operational spillovers for European allies. It ensures that, even as the United States adjusts its focus to new global challenges, the transatlantic alliance remains capable of deterring aggression and responding to crises.
As the world navigates an era of renewed Russian aggression, shifting American priorities, and complex security challenges, the transatlantic bargain must be re-evaluated on its merits. European nations need to recognise that increasing their defence spending is not simply a matter of fiscal responsibility—it is an essential step towards ensuring long-term strategic autonomy. The security of Europe, and indeed the stability of the international order, depends on a robust and united NATO that leverages American strength to bolster European capability.
In conclusion, the objective data and emerging realities make it clear: the transatlantic alliance faces profound strategic challenges that demand collective action. While debates over burden sharing continue to simmer, the undeniable truth remains that American defence investment—historic, enormous, and strategically indispensable—is the cornerstone of NATO’s effectiveness. Whether one subscribes to the view that Ukraine was provoked by Western policies or criticises the leadership in Kyiv, the fact remains that without sustained U.S. commitment, the alliance’s collective security would be severely compromised. In these perilous times, the transatlantic alliance must confront these strategic realities head-on and reaffirm a model of shared responsibility that ensures the enduring strength and stability of NATO.