Why spend 2% of GDP on defence?

NATO’s guidelines ask its members to devote 2% of  GDP to defence spending, and currently there is a debate in the UK about whether spending plans are consistent with that.   Most NATO members don’t meet the 2% target;  it comes from a time when defence was about the prospect of a major land war in Europe, and as the prospect of such a war receded, most countries took advantage of the ‘peace dividend’ to wind down.  As it stands, the figure is difficult to defend – not because there may not be a case, but because it isn’t visibly related to  defence needs.  It seems fairly basic to public spending decisions that we ought to know what money is being spent on and what the spending is supposed to achieve.

It’s fairly unusual, in public policy, to start with a fixed amount of money and then to thrash around looking for ways to spend it.  Most spending starts with a set of commitments or  a recognisable set of demands or needs, and the purpose of budgeting is to try to do what’s necessary with the resources available. There is however a parallel in another field.  We are also committed to providing 0.7% in Official Development Assistance (ODA), and in recent years we’ve managed to do that.  ODA has been taking a battering from the political right, often for the same reasons that might lead to reservations about defence spending – the distribution of benefits  doesn’t seem to be related to the needs (why does so much go to Afghanistan and India?),  it’s not self-evident that the money is being spent on the right things, and it’s difficult to tell whether the money is being used to best effect.

The parallel is instructive.  Spending on ODA is  elective in its character – despite the international obligation, we can spend most of it as we think fit.   Whatever we spend, the problems of development are bigger than our capacity to deal with them, and we can only make a limited contribution.  In some ways, that’s liberating.  We don’t have to do the things we do in other forms of public spending – identify needs, assess the demand, or determine priorities.  It’s possible simply to do anything that seems effective and worthwhile.  If it turns out that ODA is not being used well in some cases, we can divert the money to other activities which work better, and there are plenty of those.   We’ve been refining these approaches  for some time, which is why ODA appears to be rather better used than many of its critics suppose.

Back to defence.  What is implied by setting defence spending at a set proportion of national income?  On one hand, the proponents of higher spending are arguing that expenditure on defence represents an irreducible minimum for any government – it’s something that governments absolutely have to do.   On the other, the case is being made for a figure that’s almost completely unrelated to that irreducible minimum – that treats defence as if it was elective, like ODA.  The two positions seem woefully inconsistent.  If defence is a necessity, then we should be paying what is necessary.  If defence spending is really an area where we can do as  we think fit,  we can use the money in any way we think effective, and it needs to be justified in those terms.

I’m not convinced that defence money is used effectively at present.  I don’t really understand – maybe someone out there can tell me – why we have maintained separate defence services fifty years after supposedly unifying the Ministry of Defence; why we try to do bits of everything in international cooperation rather than specialising in what we’re good at; or why we’re so focused on international actions that we don’t have the capacity to defend our territory or maritime  interests.  If we are going to spend 2% of our income on defence, let’s have a defence policy that works.

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