Paying for NATO

The greater part of these contributions comes through participation in NATO-led operations and in efforts to ensure that national armed forces are interoperable with those of other member countries. Member countries incur the deployment costs involved whenever they volunteer forces to participate in NATO-led operations. With a few exceptions, they also cover the procurement of military forces and military assets such as ships, submarines, aircraft, tanks, artillery or weapons systems.

Direct contributions to budgets managed by NATO are made by members in accordance with an agreed cost-sharing formula based on relative Gross National Income. These contributions represent a very small percentage of each member’s overall defence budget and, generally, finance the expenditures of NATO’s integrated structures.

Direct contributions generally follow the principle of common funding, that is to say, member countries pool resources within a NATO framework. There are three budgets that come under the common funding arrangements:

• the civil budget;
• the military budget; and
• the NATO Security Investment Programme.

Common funding covers collective requirements such as the NATO command structure, NATO-wide air defence, command and control systems or Alliance-wide communications systems, which are not the responsibility of one single member.

Projects can also be jointly funded, which means that the participating countries can identify the requirements, the priorities and the funding arrangements, but NATO provides political and financial oversight.

Financial management of these different types of contributions is structured to ensure that the ultimate control of expenditure rests with the member countries supporting the cost of a defined activity, and is subject to consensus among them. The main body involved in these financial matters is the Resource Policy and Planning Board, to which the Budget Committee and the Investment Committee report.