16 December 2022
NATO member states have agreed the civil and military budgets for the alliance for 2023. At a meeting of the North Atlantic Council (NAC) on 14 December 2022, a civil budget of €370.8 million was agreed, while the military budget is set at €1.96 billion, representing a 27.8% and 25.8% increase, respectively, over 2022. All member states contribute to these budgets, according to an agreed cost-sharing formula based on Gross National Income.
Secretary General Jens Stoltenberg said: “I strongly welcome the agreement of NATO’s civil and military budgets for 2023. This is a concrete expression of the higher level of ambition set by allied Heads of State and Government at our transformative Madrid Summit in June. We must continue to invest more and better together in NATO. Only North America and Europe, working together in a strong NATO, can keep our one billion people safe in a more dangerous world".
The civil budget provides funds for personnel, operating costs and programme expenditures at NATO Headquarters and its International Staff. The military budget covers the operating costs of NATO Command Structure headquarters and programmes, missions and operations around the world. In addition to the civil and military budgets, NATO’s third principal common funded element is the NATO Security Investment Programme (NSIP), which covers major construction and command and control system investments. The 2023 ceiling for the NSIP is €1 billion, representing a 26.6% increase over 2022.
However, these amounts are still small when compared to individual member states’ military budgets. The United States, for example, allocated $1.64 trillion in budgetary resources for its armed forces in FY2022, while Germany’s military budget for 2023 is $55.4 billion.
The NATO common funding process is overseen by the NAC, managed by the Resource Policy and Planning Board, and implemented by the Budget Committee and the Investment Committee. In 2019 a new cost-share formula was agreed for the period 2021-2024 resulting in an increase in the shares attributed to most European allies and Canada and a decrease in the United States’ share. This commitment reflected US pressure for fairer ‘burden-sharing’ and under the new arrangements, the US contribution reduced from around 22% to around 16% of the total.
Financial transparency and accountability within NATO remains ‘work in progress’. At the NATO Wales Summit in 2014, following criticism in particular from the Netherlands Court of Audit (NCA)--the official auditing body of the Dutch government--NATO leaders charged the organisation with improving financial transparency and accountability and to report back progress at the next summit. Prior to 2015, the NATO website only provided some background on the budgetary process, but the actual budget amounts and respective member state contributions were not available. This changed in 2015, however, and both the NATO website and the NATO secretary general’s annual report provide headlines figures for the three NATO budgets.
Another small but tangible change is that NATO’s Resource Policy and Planning Board for the first time in 2015 publicly released a five-page executive summary of its 2015 Annual Report and did so again for the 2017 Annual Report (but has not done so since). This report assesses the performance of military common funding within NATO. However, there has been little, if any, reporting back on this issue at the subsequent NATO summits. The Warsaw summit declaration (in 2016) effectively restated the earlier commitment; while the five subsequent summits (Brussels 2017; Brussels 2018; London 2019; Brussels 2021; and Madrid 2022) failed to provide any progress report in this area. The bottom line is that NATO’s limited financial (and other) transparency continues to make it difficult to ensure that NATO-related spending (by both member states and collectively) is efficient and effective.