NATO in the aftermath of the financial crisis

Since the onset of the financial crisis, in 2008, members of the North Atlantic Treaty Organisation (NATO) have reduced their defence budgets by billions of euros.

Moreover, reduced investment on specific critical capabilities is affecting the ability of NATO to act.
Investment in equipment, and research and development has also been reduced. Whilst saving money immediately, this also potentially endangers international security. This trend is particularly visible in western and central Europe, but the US has also recently adopted measures to reduce its budget deficit.

The international context remains unstable and NATO is still confronted with a broad range of security threats. Allies have therefore been challenged to find the necessary resources both to maintain assets and to overcome disparities in capabilities.

In response to such funding difficulties, the European Union has implemented the Pooling and Sharing Initiative, while NATO has embraced the parallel concept of Smart Defence. Both envisage multinational cooperation and coordination, in order to secure critical capabilities for the future and spend money more efficiently, while improving interoperability amongst partner countries.

NATO allies face the choice of pooling and sharing certain capabilities at an international level or losing the capacity to act globally.