Should NATO be pay-to-protect?

0:01Penny Goldberg:NPR.

0:11Sierra Juarez:This is The Indicator from Planet Money. I'm Adrian Ma.

0:14Aditi Bhandari:And I'm Waylon Wong. The Pentagon's decision to pull some American troops out of Germany represents a fresh chill in the relationship between the U.S. and its European allies in NATO. The North Atlantic Treaty Organization is one of the pillars of the post-World War II global order. And historian Heather Cox Richardson says it has yielded huge benefits for the U.S. and the rest of the world.

0:37Penny Goldberg:This is a defensive alliance that has this extraordinary payoff. Look even at hand now at how much the United States of America is spending in Iran alone. That's a billion dollars a day. So if you think about this not as a tit for tat and you think of it more as a concept of how the world should operate, NATO is really cheap.

0:59Sierra Juarez:President Trump, however, does talk about NATO like it's a tit for tat. He was once quoted as saying at a campaign rally, if they're not going to pay, we're not going to protect. And that makes NATO sound more like a protection racket than a strategic alliance. So is that what NATO is?

1:18Aditi Bhandari:Today on the show, we examine Trump's view of NATO, how this long-standing alliance is becoming strained, and how the U.S. could pay the costs, both politically and economically, for those frayed relationships.

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2:37Aditi Bhandari:See Mint Mobile for details. Historian Heather Cox Richardson writes a newsletter called Letters from an American. It has around 3 million subscribers. Her focus is explaining how we got to our current moment. And to understand NATO, she says, you have to put yourself in the mindset of people who endured the horrors of two world wars.

2:57Penny Goldberg:They wanted to make sure it never happened again. And they were willing to put everything on the line to make sure it never happened again, to create a safe world for their children and grandchildren and other people's children and grandchildren. So what they do is they think, how are we going to do this?

3:12Sierra Juarez:How leaders of the U.S. and its allies did this was through three basic pillars. Number one, free trade enabled by freedom of the seas. That means people and goods can flow safely between countries.

3:24Aditi Bhandari:Yeah, we don't have to worry about our imported athleisure or smartphones getting plundered at sea.

3:30Sierra Juarez:Our stretchy pants are safe.

3:32Aditi Bhandari:Important. The second pillar is international cooperation through exchanging culture and values.

3:39Sierra Juarez:And the third is collective security.

3:41Aditi Bhandari:These World War II-era agreements produced organizations like the World Health Organization and the International Monetary Fund. NATO was also born during this time. And the core of NATO is its famous Article 5, that an attack on one member is an attack on all of them. It's only been invoked once, when NATO allies rallied to support the U.S. after 9-11.

4:03Penny Goldberg:This was a treaty to try and stop there being a need to fight, which is actually really cool if you think about it. It's important to emphasize it doesn't mean there's never war. And it doesn't mean people all get along either. It means they don't go to war in such a way that they create a world war. That was central to American prosperity and American power after World War II and crucial to it.

4:28Sierra Juarez:President Trump, however, has characterized NATO as a system where European countries are shirking their responsibilities. And this is a worrying signal for Nikki Akani. She's a fellow at the NATO Defense College, which is NATO's research arm. Although Nikki says she doesn't speak on behalf of the alliance.

4:46Penny Goldberg:I'm a specialist on warnings when they fail, when they work. And that's obviously relevant for institutions like NATO.

4:52Aditi Bhandari:Wow, a specialist on warnings. Are you in a constant state of alert then?

4:59Penny Goldberg:It's true that if you write about warnings that go unheeded, you tend to see them everywhere.

5:04Sierra Juarez:She sounds so calm and collected. I don't know how she does it.

5:08Aditi Bhandari:She's a pro. This is why people with my disposition are not experts in warnings.

5:13Sierra Juarez:No, it'd just be walking around going, warning, warning. like that old TV show that I've only seen clips of. The warning signs for the U.S.-NATO relationship have been pretty clear. Trump has complained about NATO since his first term.

5:28Penny Goldberg:President Trump has sometimes spoken about certain allies as being delinquent, as if they owe money. And he suggested that if countries, NATO countries, don't spend enough on their defense, the U.S. might not defend them. And the logic is them becoming, if you pay, you get protection. And if you don't, you are not protected. So it almost becomes like NATO is a fee for a service, like a subscription, where if you pay, you get the service. And if you don't, you do not.

5:56Aditi Bhandari:NATO is, in fact, not a Netflix for transatlantic security. It is an organization based on mutual assistance. And there are two main components of NATO's funding. The first is the organization's common budget. It's$5 to$6 billion a year, and each member pays into that pot in proportion to their size.

6:14Penny Goldberg:That pays for things like NATO headquarters, the communication systems, the real practical things NATO needs to run as an organization. Bigger countries pay more and smaller ones pay less. And everyone has been paying that bill.

6:28Sierra Juarez:The second aspect of NATO funding is national defense spending. This is what Trump has zeroed in on. Members commit to spending a percentage of their gross domestic product on their own defense. So this is money that countries spend on themselves, with the understanding that these resources can be used for the good of the whole alliance.

6:47Aditi Bhandari:So let's say NATO is a group project in school. Each student spends money on supplies that they need for themselves, but that they can also share with the whole group. So one kid buys scissors, another kid buys markers, but one kid buys glue sticks and glitter and googly eyes.

7:05Sierra Juarez:Right. And Nikki says there's another thing. It matters what that percentage of GDP gets spent on. If that money goes towards, say, paying military pensions, then it doesn't really help NATO if there's an attack on one of its members.

7:20Penny Goldberg:It's not about the money you spend, but what you spend it on and what that allows you to do in a crisis. And this is where there's some truth to the recent statements from the White House Because even if European countries are increasing their defense spending, it's still the U.S. that provides a large share of those high-end capabilities.

7:40Aditi Bhandari:Nikki says the U.S. has invested in crucial infrastructure that benefits other NATO members. These are capabilities like high-end surveillance systems, aircraft that can refuel mid-air, and nuclear deterrence.

7:52Sierra Juarez:And so, to go back to our group project analogy, it would be like if one student shows up with a poster board, but the project doesn't need poster board. Meanwhile, another student buys a 3D printer. And that's what the group actually needs to complete the project.

8:08Aditi Bhandari:The NATO defense spending commitment used to be 2 % of GDP. It was upped to 5 % last year amid intense pressure from Trump. And Nikki says it's this pledge that gets entangled in controversy. One reason is that until recently, the U.S. was one of the only NATO members that actually hit that original 2 % benchmark. In fact, historically, if you added up what other allies spent on defense, it was less than half of what the U.S. spent.

8:35Sierra Juarez:Nikki says there was a time when the U.S. didn't mind this imbalance in spending. It believed it was in its own best interest to protect its European allies.

8:44Aditi Bhandari:That thinking has changed. Nikki says the Trump administration sees security as less of a group project and more of a transaction between countries. Pay up, support the U.S. and Iran, or we will withdraw from NATO or we'll pull troops from Germany. Trump has threatened to do the same in Spain and Italy.

9:02Sierra Juarez:We reached out to the White House and Press Secretary Anna Kelly said, quote, Europe benefits tremendously from the tens of thousands of United States troops stationed in Europe. Yet requests to use military bases in order to defend American interests were denied, unquote. She added that the president will never allow the U.S. to be taken advantage of by so-called allies.

9:22Aditi Bhandari:Historian Heather Cox Richardson says Trump's stance isn't good for the U.S., politically or economically.

9:29Penny Goldberg:What really makes my head explode is that we have literally on the table the proof that from World War II to the ascension of Donald Trump, the system for keeping the United States safe and for keeping the United States economy strong worked.