The Price of Protection

If NATO is a shield, then budget is the cost of the steel

The Elephant in the Room

To understand the friction within NATO, we have to look who's contributing what to the alliance. In 2024, the United States spent nearly twice as much on defense as the rest of the 31 allies combined. However, this number might be misleading and is decreasing each year. A noticable increase in defense budgets across Europe, especially in the Eastern flank and Nordic countries, is closing the gap. We have highlighted these countries in the plot below: Norway, Sweden, Finland, and the Baltic states of Estonia, Latvia, and Lithuania, but also Poland and Romania feel the pressure and are increasing their defense budgets significantly.

For every $1 spent by a European ally, the US spends nearly $2. Trump argues that the US is paying for the protection of Europe, while European allies are not doing their fair share. Since 2014, NATO has been pushing for a more equitable distribution of the financial burden. Each country is expected to contribute according to its economic capacity, which is measured as a percentage of its Gross Domestic Product (GDP). The alliance set a clear benchmark: every member should spend at least 2% of its GDP on defense. ^[1] In 2024, 13 countries still didn't meet this target, although this number is projected to drop significantly in 2025 (see our explore section for more details).

For a long time, many European allies fell short, enjoying what economists call the peace dividend. However, the world changed in 2022 with Russia's invasion of Ukraine. Our data shows a radical pivot: defense budgets are no longer stagnating; they are surging.

When viewed per capita, the spending gap begins to shrink. While the US still leads, citizens in nations like Norway and the Baltic states often shoulder a personal financial burden that rivals or even exceeds that of the average American. This data suggests that the "cowardly" label ignores the significant personal investment made by people living on the alliance's frontlines. ^[2] However, the gap shrinks each year, and the estimates for 2025 show that US citizens will be paying less than other NATO citizens for their protection for the first time in history.

Another important aspect of NATO's defense is the human cost, in terms of soldiers. While the US has the largest military, by far, these absolute numbers can again be misleading. The plot below gives an indication of the number of soldiers for each country, with the annotation showing the number of soldiers per 10 000 inhabitants, to give a better indication of the relative contribution of each country in terms of manpower.