By Aurélie Pugnet

(EurActiv) — NATO allies are close to setting a new defence spending target, and they’re getting creative with what counts as “defence”.

The number floating around is 5% of GDP. That’s what US Secretary of State Marco Rubio called for during a visit to Brussels earlier this year. NATO Secretary-General Mark Rutte is on board with that target, Reuters reported on Friday.

It’s a big jump from NATO’s current 2% mandatory target, which one third of the allies is still missing.

Although the Alliance doesn’t impose sanctions on countries that spend too little, the spectre that the US could walk away has got the Europeans fretting.

With no appetite to slash pensions or hike taxes, European capitals are stretching the definition of defence spending before Trump shows up to June’s NATO summit in The Hague with his long-standing fixation: the €307 billion defence spending gap between Washington and its European and Canadian allies.

NATO’s current formula

As the first round of talks kicks off in Brussels this month, the idea of broadening what qualifies as “defence” is spreading across the corridors of NATO HQ and national capitals.

Currently, when ranking its members’ spending, NATO officials consider purchases of military equipment, infrastructure building, operations abroad, soldiers’ salaries, and pensions.

However, military aid to Ukraine, repurposing bridges and roads for military needs, civilian development of dual-use technologies, and critical infrastructure protection are all left out.

This calculation naturally favours any country going on massive shopping sprees, like Poland, or the US, where troops’ pay and pensions bump up the numbers. 

But the current formula is under review – something that more and more allies have asked for.

Rutte has a plan, Reuters reported: boost traditional defence spending to 3.5%, and introduce a further 1.5% target for broader security-related spending, for a total of 5%. Swedish Prime Minister Ulf Kristersson had said last month that a similar plan had been suggested.

Such a redefinition could acknowledge how different sectors in society and industry contribute to making citizens safer, including through technological development, several diplomats said.

That Rutte has come with such a proposal suggests the US is receptive to the plan – it is customary for the Alliance’s chief to respect the position of its largest military power.

Smart spending

Europe’s richest countries, Germany and France, have long argued for ‘quality’ spending rather than ‘quantity’. Under Rutte’s plan, they’d have to do both.

Berlin has splurged on military gear in a push towards 2% and beyond. But they’re still looking at ‘quality’ spending, partially labelling some infrastructure projects as defence spending under a promise to help tanks and troops move around.

The goalposts for all NATO countries could be moved closer through a new definiton of “responsibility sharing”, which could see efforts to support Ukraine and abandon Russian oil and gas count towards the new target. This could push 13 allies above the 4% mark, the Centre for Strategic and International Studies said – but not Germany or France.

Achieving that target – double the current figure – would bring NATO spending nearer to that of Moscow and Beijing. Russia is now spending 6.7% of its GDP on what they consider defence, while Beijing aims for 7.2% this year.

But doing so will take time, three European diplomats said, to avoid overwhelming national public finances. “The negotiations are not only about the figure, but also about the timeline,” one NATO diplomat said, echoed by their colleagues.Around NATO HQ, no one wants June’s meeting to descend into the quarrelling of the 2018 summit in Brussels, where Trump publicly bashed Germany’s Angela Merkel for her country’s under-investment – should Trump turn up at all.