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How Did NATO Get Here?

Austin Smith

Published: August 20, 2024 8:14 am

Key Points:

• NATO members committed to 2% GDP defense spending in 2014; now 23 of 32 meet the goal.
• U.S., U.K., and Greece were initially the only countries meeting this target.
• The Russia-Ukraine conflict has increased focus and spending on NATO defense.
• With conflicts on the rise the defense sector may seem like a good place to invest, but the smart money is already looking at The Next Nvidia as the top stocks to soar in 2025. Unlock details here.

Austin Smith, joined by defense analyst Michael Muir from 247wallstreet.com, discusses the increasing interest in NATO, especially in light of the Russia-Ukraine conflict and recent political discourse in the U.S. They provide background on NATO’s defense spending commitment, where members agreed to allocate 2% of their GDP for military readiness, a goal set in 2014 after Russia’s annexation of Crimea. Michael notes that while only three members met this target in 2014, today, 23 out of 32 members have reached the 2% threshold, reflecting significant progress in NATO’s defense efforts.

Transcript:

Hello, my name is Austin Smith.

I’m joined by Michael Muir, our defense analyst expert at 247wallstreet.com.

And Michael, we’ve seen a lot of interest among our readers about NATO, and it makes sense.

It’s one of the most exciting topics geopolitically of the last few years, really sparked in the context of the Russia-Ukraine conflict.

But also just in the language that we have heard domestically from our own leaders in the United States has sort of really thrust NATO back into the center of dialogue.

So I want to spend some time talking about NATO today.

And just for context for everybody, so roughly a decade ago, NATO members agreed to pay 2% of their annual GDP for defense spending to ensure military readiness.

And at the time, European allies in Canada were below that threshold of about 1.3%, I’m sorry, 1.4% of their combined GDP.

This year, we’re looking at the hundreds of billions of dollars going to NATO.

So Michael, let’s just start with the current state of NATO with that as the backdrop.

What is the current state of NATO today?

Sure. Well, as you’ve mentioned, the two percent threshold comes from a 2014 summit that was held in Wales.

A longstanding criticism of NATO members has been that the United States has taken on a disproportionate share of the burden in defense spending.

So to alleviate that, and of course, we should also point out the 2014, the background that was right in the aftermath of Russia’s annexation of Crimea.

So there was a heightened sense of need to get NATO members more combat ready.

So that agreement was formed at a summit in Wales in 2014.

Another part that we should mention is 20% of the defence budget should be reserved for procuring new equipment as well.

So that’s another key part of the agreement.

So today, so at the time in 2014, only three members were actually meeting that threshold, the United States, of course, United Kingdom and Greece.

But today, that has changed significantly.

Now it’s a clear majority.

But that was only in the last couple of years.

It’s now 23 out of 32 members have reached that threshold now.