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President Trump, NATO And The Trade War With China – Analysis

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By Giancarlo Elia Valori*

The last Summit of the Atlantic Alliance saw, at least initially, a clear divergence between the United States and NATO’s European allies.

For President Trump, who is above all a businessman, budgets and investments count, rather than strategic doctrines, about which there was very little talk.

The US President, who arrived at the Summit with premeditated and carefully-considered delay, polemicized especially with Germany, saying that its low spending for defence makes it “prisoner” of Russia.

President Trump cannot get over and deal with the NORDSTREAM pipeline, headed by Mathias Warnig, former director of STASI in Dresden where,at the time, Vladimir Putin worked for the KGB, the intelligence service that was the “master” of STASI.

He wants Europeans to buy the North American shale gas and oil – but it is a very difficult goal to reach.

Europe is disputed by two energy oligopolists.

Furthermore, President Trump ignored the long and irrelevant discussions about Afghanistan and Georgia, where the EU counts less than nothing, and warned NATO’s European members that if they did not increase their defence budget up to 2% of the GDP as from January 1, 2019, the USA would do on its own, by actually walking out of the Atlantic Alliance.

After some initial disconcertment, the NATO Secretary General organized a confidential meeting between the European members of the Atlantic Alliance, which made no concessions to the US requests.

Let us analyse, however, the data on defence spending within NATO.

As to the USA, by far the largest contributor to the Atlantic Alliance, the 2017 defence budget was equal to 686 billion US dollars, equivalent to 3.6% of GDP.

Again in 2017 the total defence spending of all the other NATO members amounted to 271 billion US dollars.

Only nine members of the Atlantic Alliance, except for the United States, spend over 10 billion US dollars per year, namely Great Britain, France, Germany, Italy, Canada, Turkey, Spain, Poland and the Netherlands.

Moreover, the United States must control other regions, such as the Pacific and South America, which are of no interest to NATO’s European members.

Currently three European countries already exceed the 2% target, namely Great Britain, Greece and Estonia.

Romania, Lithuania and Latvia are very close to this 2% target and miss it by just 0.3%.

Hence if all the Atlantic Alliance’s members spent 2% of their GDP in defence, we would have additional 114 billion US dollars available.

However, how much would be needed to make the European Armed Forces really efficient?

As to Germany, the very recent Bartels report informs us that – after years of budget cuts and total neglect on the part of politicians -the German soldiers have no sufficient protective devices, winter clothes, tents, etc.

In late 2017 for the German Armed Forces there were no submarines available for operations and none of the 14 large transport aircraft was ready for flight, considering that the entire sea and air fleet was under repair.

Lack of spare parts and technological backwardness are widespread in the German Army, both for jets and ships, as well as for tanks.

21,000 posts of German officers are vacant – with obvious effects and repercussions on soldiers.

In fact, in 2017 Germany spent just 1.2% of GDP in defence and the results and consequences are before us to be seen.

There is still the complex of the defeated country. If all goes well, it will take decades to go back to the situation when the German General and military theorist, Erwin Rommel, wanted to engrave on a basalt plate in the Tunisian desert the following sentence: “The German soldier amazed the world, the Italian soldier amazed the German soldier”.

The German Armed Forces (but this holds true also for the Italian ones) were designed for the first clash with the Warsaw Pact, so as to later give way to the nuclear attack, and still bear the brunt of the old strategy not permitting any defence of the now global German international interest.

As to France, its military system is much more efficient than the German one.

But the recent vote in favour of Article 14, which enables the Minister for Economy and Finance to veto the spending proposed by the Minister for Defence, as well as to impose a ceiling on all State spending for the current year (106 billion euros),undermines the necessary renewal of the French military system.

The veto permitted under Article 14 comes just when France has become a member of the Permanent Structured Cooperation, i.e. the group of 25 European countries that is organizing an integrated and autonomous EU defence.

To replace NATO? To have an autonomous foreign policy from the USA? And what would be the current European foreign policy?

Italy, the third European Armed Force, has an almost perfect system of projection outside borders, not only in terms of empty peacekeeping, but a military system that is probably inadequate to defend the whole Italian territory from external attacks. And this applies to all European countries’ Armed Forces.

The Italian Armed Forces, however, are better trained and equipped than those of many other NATO’s European allies/competitors.

The Carabinieri Special Forces known as GIS trained the Navy Seals, the Sayeret 13 of the Israeli Army and the Japanese SAT.

Hence President Trump’s requests are made against the background of a largely obsolete European military system that is the primary victim of the various government’s “budget cuts”. Certainly the US President has got a point there.

Nevertheless without good defence, there is no political and strategic credibility and probably not even commercial credibility.

Moreover, in private meetings, President Trump asked the European allies to rise not only to 2%, but even to 4% as a new ceiling.

In this case, the US defence spending would amount to 762 billion dollars and all the other NATO European countries should spend 735 billion dollars.

For President Trump, however, it all hangs and fits together from the fiscal and economic viewpoints: while travelling back from Brussels, he said that the European allies spend too little – hence, in his mind, there is an obvious connection with the issue of EU’s trade surplus. Europeans spend too little because they behave like pirates in international trade.

The core of the issue is mainly the German surplus which, coincidentally, is combined with an almost ridiculous military spending.

Meanwhile, China has decided to increase its military spending by 8.1% in 2019, which is – in volume – slightly lower than the US one.

It amounted to 151 billion US dollars in 2017. Nevertheless the Chinese budget must be studied carefully.

Many resources of Ministries such as the Transport, Education and Communications Ministries are closely connected with the People’s Liberation Army.

Moreover President Xi Jinping has recently established a new “Central Commission for Integrated Military and Civilian Development” – a clear sign of the strong permeation and interpenetration between these two sectors.

This will probably be the policy line that will enable NATO’s European countries to spend what is needed for defence, even with a significant impact on “civilian” spending.

The Russian Federation is spending 1.35 billion US dollars for the current year, with an 8% increase compared to the previous forecasts for the same year.

The 2% target of desirable military spending by NATO’s European countries dates back to long time ago. It was first discussed at the NATO Summit held in Prague in 2002, but it was only a gentleman’s agreement.

At the meeting of NATO’s Defence Ministers held in 2006, mention was still made of the “willingness” to spend “at least” 2% of the State’s yearly budget. But it was only lip service. Just hollow words, as usual.

At the NATO Summit held in Wales in 2014 the Heads of State and Government raised again the issue of spending at least 2% of public budgets for defence.

As already noted, only four Western countries spend 2%, namely USA, Greece, Great Britain and Estonia. Greece, however, spends most of its military budget on salaries and pensions.

Ukraine is the only country exceeding 2% and reaching a “US-style” rate of 3.57%, while Georgia and Poland are just below the 2% level.

With specific reference to equipment, NATO’s “policy line” requires at least 20% of defence budget spending. Currently we are at a much lower level.

Within the Atlantic Alliance, only 3.11 of the 28 NATO members do spend 20% on equipment. Germany, the country that in 2019 should lead the Very High Readiness Joint Task Force, invests only 14% of its defence budget in materials and equipment.

Conversely, three nations of the former Warsaw Pact spend according to the target set by NATO’s policy line, namely Romania, Lithuania and Bulgaria.

Slovenia and Belgium are at the bottom of the list, with only 4-5% of spending on equipment.

Russia, however, has already increased its defence budget for 2018 by 95 trillion roubles, equivalent to 51.53 billion US dollars, while its military spending, as share of Russian GDP,is slowly decreasing, according to the plans adopted by President Putin in 2015. If the GDP increases, everything will work well.

Obviously the problem raised by President Trump is only quantitative and not qualitative.

In fact, so far NATO has carried out many peacekeeping operations – a sort of strategic refrigerator that preserves regional tensions for long time – or has supported the weak and fragile democracies resulting from Eastern Europe and the former Warsaw Pact.

Moreover Europeans cannot afford to arm and train the Rapid Reaction Force led by the EU – initially by France and Great Britain with 60,000 soldiers – which will be hard to put together, but always for peacekeeping and peace enforcement purposes and for humanitarian missions.

Currently Eurofor is composed of forces from France, Italy, Spain and Portugal. According to plans, there are 60,000 soldiers available, but readiness is to be verified.

So far it has carried out operations in Albania, Macedonia, Chad and the Central African Republic.

Eurofor has also an intelligence service provided only by the United States.

The EU battlegroups, military units that each EU country provides, are financed only with ATHENA funds – a pool of funds already allocated by European countries. Will they be enough?

What happens, however, if – with specific reference to the use and deployment of Eurofor and EU battlegroups – there are differences between EU countries on foreign policy?

Furthermore, President Trump’s request to European countries for more defence investment actually means only one thing.

According to the United States, currently European countries are too heavy a burden to bear. The EU -initially supported by the United States during the Cold War – has become a troublesome economic competitor and, with its Euro, a dangerous rival for the dollar.

If the United States reaches a sort of “cold peace” with Putin’s Russia – which wants to rebalance power in peripheral regions, but also in Europe – the EU will have no longer meaning for the USA.

Indeed, the European Union could become a competitor or even an enemy.

It would be possibly better to share it out with Russia and put an end to NATO as a collective security organization.

President Trump thinks that, if they wish so, Europeans can continue their wars of the buttons in the Balkans or in countries that apparently need the cosmetic exercise called peacekeeping.

In the future, however, without the NATO umbrella mostly paid by the United States.

If the agreement with the Russian Federation goes on, President Trump will claim for the United States not just a part of the EU, but a political stake in all EU countries, i.e. by buying a traditionally Atlantic political region which is currently vaguely and vocally pro-European.

President Putin will take possession and control of the so-called “anti-establishment” or “nationalist” parties, which will undermine the EU mechanisms. The United States will enjoy the spoils, without having to bear any longer the huge cost for NATO defence to the benefit of economic competitors, as well as for very harsh European tariffs and duties, and finally for the Euro.

About the authors:
*Advisory Board Co-chair Honoris Causa Professor Giancarlo Elia Valori is an eminent Italian economist and businessman. He holds prestigious academic distinctions and national orders. Mr Valori has lectured on international affairs and economics at the world’s leading universities such as Peking University, the Hebrew University of Jerusalem and the Yeshiva University in New York. He currently chairs “La Centrale Finanziaria Generale Spa”, he is also the honorary president of Huawei Italy, economic adviser to the Chinese giant HNA Group and member of the Ayan-Holding Board. In 1992 he was appointed Officier de la Légion d’Honneur de la République Francaise, with this motivation: “A man who can see across borders to understand the world” and in 2002 he received the title of “Honorable” of the Académie des Sciences de l’Institut de France.

Source:
This article was published by Modern Diplomacy.


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Modern Diplomacy

Modern Diplomacy

The Modern Diplomacy is a leading European opinion maker - not a pure news-switchboard. Today’s world does not need yet another avalanche of (disheartened and decontextualized) information, it needs shared experience and honestly told opinion. Determined to voice and empower, to argue but not to impose, the MD does not rigidly guard its narrative. Contrary to the majority of media-houses and news platforms, the MD is open to everyone coming with the firm and fair, constructive and foresighted argumentation.

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