Home / Articles / Three Percent, Two or Four Percent, It Doesn’t Matter Anymore
President Donald Trump’s recent journey to a NATO summit in Brussels and to a summit with Vladimir Putin in Helsinki turns the page on an epoch of American foreign policy that traces back to Harry Truman, George Marshall, Dean Acheson, George Kennan, and the other founders of the post-World War II U.S.-created international security order. The grand strategy that dates from roughly 1947-48 is no more; all that’s left is eroding institutional habit and some optical detritus that takes the form of what will prove to be akin to the ephemeral lingering images one sees on occasions of flash photography.
One aspect of that detritus has to do with numbers, specifically the kind of numbers that supposedly demonstrate the will of NATO member states to defend themselves: defense budget numbers reckoned by percentages of pledged increased spending from the present. Numbers are mesmerizing to many people. As Nietzsche wisely wrote, presumably before he went mad, “Were it not for the constant counterfeiting of the world by means of numbers, men could not live.” In this case, the form of mesmerization induces a “same ‘ol-same ‘ol” sensation, giving the false sense that beyond all the media hype and rapid shallow breathing in Europe, everything is pretty much the same as it was before the recent summits, and before Donald Trump became President of the United States.
Some Americans, at least, have been complaining almost from the postwar get-go that the Europeans were not pulling their weight. Those old enough will remember the Mansfield Amendment, from 1972, which threatened to withdraw U.S. forces from Europe unless the Europeans came up with more cash, and more besides. And it was true; the pre-expansion Allies, save for special-relationship Britain and sometimes France, have never spent robustly on defense in the postwar era, either during the Cold War or especially since.
A History of Subpar Defense Spending
This led pretty much every President since 1972 to complain in one way or another that the Allies needed to do more, though it was invariably done more in sorrow than in anger and usually in private. This was certainly true during the Cold War, but after a great swoon in post-Cold War defense spending throughout the Alliance, including in the United States, it became true again in the post-Cold War era for essentially three reasons: the swoon went too deep and lasted too long; NATO had refashioned itself as a more broadly functional alliance, and so had plenty of agreed obligations in which to invest; and the security threat to member states from the east began slowly, and then not so slowly, to increase—in different ways going under the headings “cyber” and “hybrid” but eventually also in potentially the “same ‘ol” way. Go back and read the Alliance-related speeches of post-Cold War Defense Secretaries Les Aspin, William Perry, William Cohen, Donald Rumsfeld, Robert Gates, and Ash Carter: in significant ways, they all sound the same on this point, and for the same reason. Their Presidents did, too. Barack Obama also referred to the European Allies as “free riders”; Donald Trump is not original in that.
Even during the Cold War, U.S. policymakers toyed with the idea of forging allied agreement on defense spending levels as a means to get traction on increased investment levels. Staffers tossed about such ideas at summit preparation meetings, and some informal “understood” targets did form from time to time among senior policymakers. European defense professionals found the method useful in their own intra-governmental plaints to their political masters, for whom an added defense burden was almost invariably unpopular. From time to time, the informal targets did some good in that regard.
But this method defined as a binding pledge, including binding on the United States, did not prevail as high-level public policy until 1979. That is when the U.S. policy habit of plainting by the numbers to NATO’s European members really got started. As to how that happened, as Damon Runyon used to say, “A story goes with it.” It is a story I happen to know a little bit about.
The Birth of the “3 Percent Solution”
In the late winter of 1977, I was a graduate student at the University of Pennsylvania, interested in U.S. foreign policy generally, but especially at the intersection of strategic arms analysis and the geopolitics of the Middle East. I was working part-time at the Foreign Policy Research Institute, for that was the source of some of the fellowship support that paid Penn for my presence. To keep this story as short as it can reasonably be, at one point I was shipped off to Washington to work as a temporary adjunct to the staff of Senator Henry “Scoop” Jackson. The occasion was President Carter’s nomination of Paul Warnke to be Director of the Arms Control and Disarmament Agency and chief negotiator in the then on-going SALT II negotiations between the United States and the Soviet Union.
There, in the bowels of the Russell Senate Office Building—in a suite “lent” to Scoop by Senator Sam Nunn—I encountered the formidable Dorothy Fosdick, Scoop’s chief of staff, and Richard Perle, his legislative assistant, with whom I was to work. I slept in the evening on a couch in the Georgetown townhouse of an FPRI alumnus, John Lehman. My ancillary expenses were paid by a setup known as the Abington Corporation.
Scoop was not fond of the Warnke nomination, and he was suspicious of the new Carter administration’s approach to the Soviet Union and U.S. foreign policy generally. It will be recalled that Scoop had run for the Democratic nomination in 1976, and had experienced some frustration, not least at the hands of upstart outsider Jimmy Carter, who had captivated the press. Example: Scoop won the Pennsylvania primary, but the banner headline the next day in the Philadelphia Inquirer read: “Carter Takes Second in Pennsylvania.” When Carter got to Washington with his Georgia mafia, he and they made a point of ignoring Scoop and most of the rest of the senior Democratic Party leadership in the Senate and House. But withal, the rankled relationship wasn’t mainly about political or personal issues, at least from Scoop’s perspective. It was about policy.
My job was to research everything Warnke, a former senior DOD staffer and Vietnam War dissenter, had ever written or said about arms control and the strategic nuclear competition—and to feed crispy kernels of Warnke language to the rest of the staff for Scoop’s hearings preparation. I found plenty of kernels. The point of the effort was not to defeat the Warnke nomination, because that was not a practical objective at the time. The point was to lay down a marker for the future, and the marker had a very specific aim: that Warnke’s role as chief negotiator be approved by a less than two-thirds vote. The message: If Warnke and his senior associates brought to the Senate a SALT II Treaty that reflected Warnke’s views on the issues, it would not win Senate confirmation. The vote approving Warnke as chief negotiator was 58-40.
We thought we had achieved our stated objective. Only later did we entertain the possibility that the message was not understood at the White House. In 1979, it turned out that Warnke and company did submit to the Senate a SALT II Treaty that broadly reflected Warnke’s views. Scoop was determined either to defeat Senate confirmation of the treaty, or to force a renegotiation of it, or, if necessary, to attach conditions to confirmation that would ameliorate some of the deficiencies he saw in it.
By this point, at the advanced age of 28 and on the cusp of receiving my Ph.D., I was once again dispatched to Senator Jackson’s staff to work as an adjunct in preparation for Senate Hearings on the SALT II Treaty. I was there in Washington during the summer of 1979 and into early fall, for the most part liberated from John Lehman’s couch: I was instructed instead to stay at the Jackson residence on Rockwood Parkway, near American University, while Scoop was back in Everett, Washington and in China for much of that recess period. I was to look after the place, not to throw parties or make a mess, close the curtains at sunset since Scoop had been informed that he was a PLO target, and to start Scoop’s 1961 Chevy and drive it around the block once a week so the battery wouldn’t die from disuse in his absence. Scoop and I shared the house for about a week before he left for Everett to collect his family and head off to China; that’s how I first met Daniel Patrick Moynihan and James Schlesinger—at the front door.
Meanwhile, Alexander M. Haig, Jr., had returned from being Supreme Allied Commander in Europe (SACEUR). He had ideas about running for President in 1980. (I could tell several stories about that, but please, not here, not now.) But he was also enlisted to testify on the SALT II Treaty before the Senate Armed Services Committee by the bipartisan informal grouping in the Senate devoted to putting the SALT II Treaty draft to the test—led by Senator Jackson and Senator John Tower, aided respectively by Richard Perle and Bud McFarlane, and advised overall by Paul Nitze. Upon return from Europe and retirement from the U.S. Army, Haig became director of the Western Security Studies program at FPRI and, not incidentally, president of United Technologies.
Upon return from Europe via Brussels, where he was nearly the victim of a terrorist bomb, Haig had not yet read the Treaty text. Having sat through all the Armed Services Committee and Foreign Relations Committee hearings, I was delegated to brief Haig on the Treaty, including the implications for Haig’s presumed special expertise: the impact of the Treaty on the security of the Western Allies. (More stories about those particulars, yes, there are; but again, not here, not now—except to note that part of my briefing took place at a barbershop on K Street, and so with a small accidental audience!)
A day or two later, at the Hearing, I was joined by my senior FPRI colleague and friend, Harvey Sicherman, the two of us sitting just behind General Haig in the Capitol’s Senate Caucus Room. (More stories about that, yes; but not here, not now.) The upshot, for the purpose at hand, is that Haig enthusiastically affirmed the idea, mooted a few days earlier by Senator Jackson as he questioned Secretary of State Cyrus Vance, that all the NATO Allies should commit to an increase of 3 percent in their current defense spending levels to compensate somewhat for the risks to Western security posed by imperfections in the Treaty.
Scoop’s grilling of Vance had been masterful. He got him to commit to a 3 percent U.S. defense spending increase, presumably in return for which Scoop would relent on his opposition to the Treaty’s Senate confirmation. We didn’t know if Vance had pulled that remark out of his trouser pocket under duress, or if it had been an option previously discussed with the President, Defense Secretary Harold Brown, and National Security Advisor Zbigniew Brzezinski. (Years later Zbig told me that the affirmation of the May 1977 guideline had indeed come in a moment of pressure from Vance’s trouser pocket, but that he had been delighted to hear it all the same, and had recommended to President Carter that he stand by it.)
And that is how the “3 percent solution” as a supposedly binding pledge was born. A few weeks later, back now in Philadelphia, Harvey Sicherman gathered the troops for the book project The Three Per Cent Solution and the Future of NATO. We had some useful input from Haig, FPRI president William Kintner, FPRI founder and former U.S. Ambassador to NATO Robert Strausz-Hupé, and a few others. But basically Harvey wrote the book with my assistance, and my main job was the detailed budget analysis of what a 3 percent increase in U.S. defense spending really meant, or might mean. It was then that I first began to understand what Lord Palmerston meant when he wrote that there were three kinds of liars: big liars, little liars, and statisticians. I added a fourth category: people who screw around with budgets.
In the course of my research, I learned a simple truth: Budget numbers are very elastically fungible. Depending on what baseline is chosen, and what assumptions are made about inflation and other variables, a 3 percent increase in a defense budget can mean buying a lot of new capacity, a little, or none at all. That’s why when Michael Boskin and Alan Greenspan screwed with the calculation of the consumer price index in 1999 in order to reduce payouts for yearly CPI adjustments, I understood what they were doing. That’s why when my German friends confide in me that, despite what’s on paper, the German military today cannot muster a single combat-capable division, I understand how that discrepancy can be. It’s all about reverse alchemy. In “real” alchemy the aim is to combine and manipulate common ingredients to get precious ones; in reverse alchemy, the aim is to take precious resources and make them more or less disappear.
That is, again more or less, what the Carter administration tried to do, or was about to try to do . . . until the Red Army invaded Afghanistan about three months later. That is when Jimmy Carter suddenly began to understand the Soviets, remember? That is when Zbigniew Brzezinski began to smile more, and Andrew Young to smile less. President Carter claimed that he was withdrawing the SALT II Treaty from Senate consideration because of the Soviet invasion of Afghanistan, and that claim has stuck as truth in common knowledge. But as with a lot of common knowledge it is not so: Carter withdrew the Treaty because his head counter in the Senate, Senator Alan Cranston, told him that a vote would not achieve the necessary two-thirds for passage. The vote, Cranston told his Executive Branch colleagues, would be about nine votes short, about 58-40.
Two Percent Becomes Four
Since its 1979 birth, the idea of formal and binding numerical targets for NATO defense spending has been kept alive in one way or another. It works as a kind of political symbol, useful, as already noted, for discussions within European governments, and useful too to satiate narrowly minded Americans, our green eyeshade types, into believing that some effort is in train to get the Europeans to pull more of their weight. But the targets have rarely if ever been met on the European side, and that includes the agreed 2014 target of reaching 2 percent of GDP by 2024. As of this past year, seven NATO states were at 1 percent or less, and only about five were even remotely on target to meet the 2024 goal.
Numerical targets that state projected increases as a percentage of GDP, or GNP for that matter, are different from those that state projected increases as a percentage of an existing defense budget. They are worse—even more fungible—because they allow for manipulation of GDP projections as well as the defense-related numbers. Moreover, GDP is not a very useful number in the first place. Invented during the Great Depression as a rough metric for calculating the velocity of money, it is completely agnostic about actual economic productivity. GNP rises when there is a car crash, or when elderly women, for some reason I have never been able to understand, dye their gray hair a bluish hue that reminds one of dried fish skins.
More important, different Alliance members have different defense-related obligations. Britain and France have nuclear weapons arsenals, and they, as well as some other NATO members, have accepted NATO’s out-of-area redefinition post-Cold War with more alacrity than others—Germany, say. So when France sends troops to Mali, it costs money that adds toward the 2 percent target. The United States has assumed global common security goods obligations, so that its array of military assets and their physical reach is not comparable to that of any other Alliance member.
For all these reasons, defense spending targets predicated on a percentage of GNP leave a good deal to be desired. But it’s just simpler for politicians to understand a one-digit number than it is to explain to them the complexities of interoperability protocols, doctrinal and training coordination, and export-dependent business models for new major weapons platforms. When DOD officials try to do the latter up on the Hill, they have been known to return to the Pentagon in a stupor, mumbling about cretinism and other rare psychological conditions.
But nothing about the 2014 targets was as bizarre as Donald Trump’s post-summit press conference this past week. As is by now well known, he suddenly demanded that the 2 percent target not wait until 2024 but be accomplished this year, or maybe next—it was not entirely clear. And why stop at 2 percent? He demanded 4 percent. This performance may be likened to a jack-in-the-box popping out at the end of a funeral service. Somber and sad as was nearly all that preceded it, the President closed the summit on a surreal note, leaving observers wondering what it all meant.
Trump doubtless does not know that U.S. defense spending only tips out at 4 percent of GNP when one includes the rather large budget of the Veterans Administration—which is of course separate from the DOD budget and the defense-related parts of the DOE budget. But this is a man who never lets a fact get in the way of an insult or a provocation. And so while the topic was an old one—European defense spending dereliction—the tone and actual substance of the remarks could not have been more different, which brings us back to where we started: This was not your father’s, or even your elder sister’s, NATO Summit.
NATO: Changing or Dying?
Already during Donald Trump’s first attendance at a NATO summit in 2017 it was clear to those without scales on their eyelids that he detested the European Union and considered NATO obsolete and its European members feckless. He failed to affirm Article 5 despite numerous opportunities to do so, and the Europeans who matter—and the Russians—understood the body language very well indeed. A few months later Trump gave a 180-degree reversal speech in Warsaw, a speech he read without emotion and that any postwar President might have delivered, leading some observers to hope that Trump was being “handled” properly and that, indeed, policy in all regards was regressing to the mean.
Meanwhile, with such hopes in hand, the platoons of NATO pros focused on their endless quotidian struggles to make the Alliance work better, and with more money for the purpose dating back to the Obama administration’s last few years, they were happy. There were trips and BOGSATs. There were exercises and new equipment. There were studies and seminars. The Marshall Center in Garmisch was saved from the budgeteer’s chopping block, albeit at the cost of adopting a new focus. The Americans were urging their European counterparts to take the 2 percent target from 2014 seriously, and they were assured that, yes, they did take it seriously. Happy, happy.
But in the White House sat a man who did not know or care about such details and, more important, did not share the overarching purpose of the Alliance. Don’t look now, but the original strategy assumed that the European Allies, with the partial exceptions of Britain and France, would not remilitarize their national security policies to prewar levels. It assumed that to some extent they would be perpetual free riders, and that on balance this was in the U.S. national interest.
The aim of postwar U.S. grand strategy was to suppress security competitions in Europe, as it was to suppress security competitions in East Asia and later the Middle East. U.S. power would substitute, and in so doing render impossible the internecine disasters of the 20th century’s world wars that had been so dangerous and costly to the United States. U.S. support across every postwar administration for integrative economic institutions in Europe, first the Coal and Steel Community and later the European Economic Community, were designed and supported as denationalizing accompaniments to the demilitarizing core of the strategy. And so was the broader pursuit of a liberalized trading regime designed to support the core strategy, in two ways: to help the Allies recover from the war and grow strong as liberal democracies; and insofar as trade arrangements tipped to their benefit, to compensate them for their willingness to nest more or less compliantly beneath the American wing.
These aspects of U.S. strategy were as important in the original design as deterring would-be hegemons in Europe and Asia—the Soviet Union and the People’s Republic of China—and indeed were understood as ingredients of statecraft supporting that deterrence. As time passed, and allied economies grew strongly, U.S. policy desired levels of defense spending sufficient to allow the U.S. military to plug-in to Europe in the event of a military crisis or a war. But it never sought levels of defense spending in Europe that amounted to the remilitarization of those countries’ foreign policies—not that that was ever in prospect such that U.S. officials had to worry about it.
This strategy worked, even despite occasional Transatlantic crisis—like Suez in 1956, for example. The Soviets on several occasions tried to drive wedges into the Atlantic, for example with the development and deployment of the SS-20 intermediate-range nuclear-capable missiles in the late 1970s and early 1980s. The fear was something then called Finlandization—albeit unfairly so to the Finns—and a manifestation of it was a trend in Germany, associated with a man named Egon Bahr, to seek German reunification as a neutral country apart from NATO. None of this worked. The U.S. effort to militarily counter the SS-20s was fraught but ultimately succeeded, testifying to the strength of underlying Alliance bonds, and it was parleyed into real arms control: the INF Treaty, which eliminated an entire class of nuclear-armed missiles. It was an effort that vindicated the old wisdom: Si vis pacem, para bellum, a statement you can see on buildings in contemporary Poland, but not in Germany.
The point of this historical recital is to drive home the truth that alliances are not effective by dint of capabilities alone. They are ultimately dependent on shared perceptions of threat and, in enduring alliances of democracies, ultimately on shared principles about civic life. It matters not what capabilities exist, or what mid- and lower-ranking NATO defense officials do together on a daily basis, if there is no will, no trust, and no convergence of principles on the political level. Events this past weekend in Brussels and Helsinki make it clear, to anyone who has heretofore refused to see, that such will, trust, and convergence no longer exist. What else can we make of a man who, speaking on behalf of the U.S. government, insults his alliance hosts in their own country and continent, and stands with a mendacious authoritarian Russian leader against his own Allies and indeed his own intelligence services? As Acheson once said, “Things are not always as they seem, but sometimes they are.” Well, this is one of those times when they are. You watch this spectacle in Helsinki and can’t help thinking: Putin is Edgar Bergen, and Trump is Charlie McCarthy.
Trump’s Real View of NATO
Truth to tell, the shift in U.S. thinking about Europe began before Donald Trump became President. The post-Cold War disappearance of the Soviet Union, the diffusion of threats, the rise of dangerous non-state actors and a concomitant rise in ambient uncertainty, the seeming stability of the NATO-Europe states after the perturbations of the wars of Yugoslav Succession, and straitened economic conditions all in turn undermined the argument for NATO. Mixed experience in out-of-area operations, notably in Afghanistan, did not help either. But Barack Obama, he of the anti-blob persuasion, was content to affirm the basic strategy even if he felt no particular affinity for it, or for Europe. He wanted to do it on the cheap if he could, but he could not—or at any rate did not—think of a better way.
In a sense, the diffidence of the Obama White House with regard to Europe provided an on-ramp for the Trump volte face. But only those who had tracked Donald Trump’s views for years before November 2016 had a clue as to what his presidency would really mean for NATO—and why would anyone bother to do that? Well, thanks to Brendan Simms and Charlie Laderman’s 2017 compendium on Trump’s views on a range of subjects, anyone can go back retrospectively and track. And what we find is consistent with Trump’s voyeur form of Randian nihilism—voyeur because he certainly never read her long and odious books, just watched a movie or two.
On NATO, we find—a coincidence?—a concern mainly with numbers. Trump is the perfect example of Oscar Wilde’s definition of a cynic: someone who knows the price of everything and the value of nothing. He thinks in flat zero-sum commercial terms, which is why he can label Germany, Russia, and China equally as “competitors.” That is also how the new U.S. Ambassador in Berlin talks. In his office on June 28, he explained his pitch to the Germans: “You have a budget surplus, so why wait until 2024 to hit the 2 percent target?” Germany has a generous welfare state, with good schools, decent day care and healthcare facilities, he said, and we in the United States can’t afford these things because we spend so much money to keep troops in Germany. And I thought only Democrats were bad at policy math.
There is a shard of justification for lumping Germany in with Russia and China as competitors, both because of its Nordstream II shortsighted selfishness and its willingness to let German banks help Iranians evade sanctions. But just as there is more to humanity than its commerce, there is more to relations among nations than trade. Trump seems unable to comprehend that, but is he perhaps in some transcendent way correct? How could that be?
Perhaps the President’s great-power geoeconomics worldview is the right form of realism for the 21st century. Perhaps the older geopolitical realism we all learned about in school and with which we have grown up is obsolete for imagining actual conflict and even war still a possibility. Put more specifically, if, as Trump seems to prefer, European politics are both renationalized and remilitarized in the absence of U.S. troops and commitments, would there eventually be war in Europe? Or is the European post-bellicist ethos so deeply entrenched that war will remain unthinkable, impossible at least among current NATO states, for as long as anyone can imagine?
It might be. But even if no war is in prospect from within Europe, could the same be said about the future behavior of a revanchist regime without that has attacked two neighbors within the past decade and seized territory from them, and which is even now engaged in the systematic bombing of hospitals, schools, and other civilian targets in Syria? That’s not a trick question.
The 3 percent solution. The 2 percent or the 4 percent of GDP solution. We can plaint by the numbers until we fall down from exhaustion or boredom. There is no such solution for an alliance whose key state is led by a man, followed docilely by a brain-dead party he has hijacked with but pathetic lingering resistance, who is a self-proclaimed geoeconomic realist and a clueless geostrategic naïf. Trump’s boast that his bullying in Brussels has made NATO stronger resembles the dissimulations of a costumed wolf trying to reassure a nervous little girl dressed in a red pullover of his best intentions. Said Lord Vansittart, “There are moments which unmistakably portend slaughter.” I fear this may be one of them.
 The “three percent solution” was mooted first in NATO ministerial meetings in 1976, and featured as a general guideline—but not as a binding pledge—in the May 1977 London NATO summit.
 Note that Niall Ferguson’s biography of Henry Kissinger credits Kintner, who was present at the creation of the CIA, as being the man who brought Kissinger into the political arena. See Kissinger: 1923-1968, The Idealist (Penguin Press, 2015), p. 355.
 See my `Finlandization’: A Map to a Metaphor (Foreign Policy Research Institute, 1978).
 In Tucker Carlson’s interview with Trump on July 17, 2018, Carlson said:
“Membership in NATO obligates the members to defend any other member that’s attacked. So let’s say Montenegro, which joined last year, is attacked. Why should my son go to Montenegro to defend it from attack?”
Trump’s response underscores that the problem is not ultimately about money: “I understand what you’re saying, I’ve asked the same question.”
The Mist Procession (London: Hutchinson, 1958), p. 119.