21 December 2020
NATO member states have agreed the civil and military budgets for 2021. At a meeting of the North Atlantic Council (NAC) on 16 December 2020, a civil budget of €258.9 million and a military budget of €1.61 billion were agreed for 2021. All member states contribute to these budgets, according to an agreed cost-sharing formula based on Gross National Income.
The civil budget provides funds for personnel, operating costs and programme expenditures at NATO Headquarters in Brussels, and has risen by 0.9% from the 2020 level. The military budget covers the operating costs of NATO Command Structure headquarters and programmes, missions and operations around the world, and has risen 5% from the 2020 level. In 2021, over 98% of the military budget will go toward funding NATO’s missions and operations, including the Resolute Support Mission in Afghanistan; NATO’s training mission in Iraq, and the KFOR peace support operation in Kosovo.
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 2021 ceiling for the NSIP is €710 million.
This 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. This report assesses the performance of military common funding within NATO. However, there appeared to be 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 three subsequent summits (Brussels 2017; Brussels 2018; and London 2019) 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.