Gunboats and Butter: The Two Percent Guideline and NATO Burden Shifting in the Maritime Domain

Ensuring fair burden sharing among members has been a persistent challenge for NATO. This issue has recently been thrust back into the spotlight by Russia’s full-scale invasion of Ukraine in February 2022 and Donald Trump’s comments that he would encourage an attack against NATO allies that failed to meet their financial obligations. Furthermore, Russia’s attempts to disrupt Ukrainian grain exports and recent Houthi attacks in the Red Sea highlight another critical issue for NATO: securing freedom of navigation and protecting global maritime trade. Bridging these two strands of research, in this new article, Nizan Feldman and Mark Shipton argue that the United States’ steadfast commitment to safeguarding international maritime commerce and freedom of navigation has inadvertently allowed other NATO members to underinvest in their own naval capabilities.


The tendency to underinvest in naval capabilities was amplified as NATO members moved closer to fulfilling the Defence Investment Pledge established at the 2014 Wales Summit. This pledge commits them to spending at least 2% of GDP on defense and allocating 20% of that to equipment modernization. However, analyzing the impact of the Wales Pledge, the authors find a significant decline in non-US NATO naval capabilities since its adoption.

The findings mirror a broader trend of allies reallocating defense resources away from capabilities that are more likely to be provided by the alliance’s leading power, known as the ‘patron’. Previous studies have shown that a patron’s ability to credibly signal its intention to abandon alliance members significantly influences burden sharing within alliances. However, the risk of abandonment is not always a binary choice. A patron may indicate its willingness to protect allies against specific threats while signaling its reluctance to counter others.

The U.S. commitment to and interests in global freedom of navigation reduce its ability to credibly signal an intention to abandon NATO members that face substantial disruption to their wartime maritime trade or other major maritime-related threats. Therefore, when NATO members increased their defense spending to comply with the Wales Pledge, they deferred the highly costly investments needed to commission expensive naval platforms.

To test this hypothesis, the authors created several proxies to measure the naval capabilities of each ally, using data from the annual editions of Jane’s Fighting Ships, published by Janes Information Group. They then conducted various estimations, including a set of control variables that typically influence a country’s propensity to develop naval power or engage in burden shifting. The primary explanatory variable is a dummy that assigns a value of 0 for years before and 1 for years after the implementation of the Wales Pledge. In accordance with the main hypothesis, the coefficient of this variable is negative and highly significant in all of the models we ran.

One might argue that the reduction in naval power resulted from a more coordinated division of labor within NATO. Prompted by Russia’s 2014 invasion of Crimea and the subsequent Defence Investment Pledge, allies may have been motivated to revisit the Cold War dynamics where the United States and traditional European naval powers primarily secured Sea Lines of Communication (SLOCs), while other European allies focused on coastal defense and developed specialized skills in areas such as anti-submarine warfare (ASW) and minesweeping. If true, the findings would represent not burden shifting but a more cooperative, efficient, and equitable sharing of responsibilities. However, there is scant evidence of a comprehensive, mutually agreed transformation in the division of labor that would allow each ally to capitalize on its military comparative advantage. Despite some advancements in process design aimed at harmonizing capabilities, the post-Wales Summit period has not been marked by the political conditions necessary to foster a deliberate and coordinated shift in the division of labor.

This is not to suggest that the burden shifting through a reduction in naval power observed in the post-Wales period is a definitive trend that will necessarily characterize NATO dynamics in the coming years. Nor is it a given that a future coordinated division of labor in the maritime domain is unattainable. Growing concerns among NATO members over China’s geopolitical rise, along with the significant impact of the September 2022 Nord Stream explosions—which highlighted the vulnerability of critical maritime infrastructure—and other geostrategic shifts, have emphasized the importance of maintaining robust maritime capabilities. Thus, despite NATO navies’ reliance on the U.S. commitment to ensure freedom of navigation and secure maritime trade, other factors may drive future development. It would be in the alliance’s interest if such a resurgence in maritime investments were to be coordinated.

That said, it is important to note that even if NATO allies increase future naval investments, scholars and policymakers would benefit from keeping in mind the core trend demonstrated in the article. While the analysis focuses on the maritime domain, the argument and empirical findings may capture a broader pattern of allies’ tendency to shift defense resources away from capabilities that are more likely to be provided by the patron. When allies must increase “guns” at the expense of “butter,” either due to alliance commitments or because of a more threatening security environment, they will reallocate their budgetary resources to make investments that best generate private economic, domestic, or strategic benefits. One way to do so is to reduce funds to platforms the patron is more likely to provide, redirecting those resources toward goals that potentially yield private domestic or strategic benefits.

Therefore, adopting the proposed disaggregation approach allows scholars to better assess the effectiveness of specific policies designed to foster fairer burden sharing among alliance members, such as the Wales Pledge. Recent efforts to move beyond using a simple military spending indicator for evaluating burden sharing should not only adopt a more detailed examination of capabilities but also distinguish between the threats the patron is more or less likely to address.

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