NATO is one of the most powerful international organizations of the post-World War II era. It does not only have a remit to protect the alliance members from any military aggression, but has a significant underlying objective of promoting industrial policy.

The United States is a signatory of NATO and the most important member of the alliance. It commits significant resources to the alliance and legitimately expects the members to contribute to security obligations shared by the defense alliance. In the 2014 NATO Wales Summit, the alliance made a commitment to spend 2 percent of their gross domestic product on national defense. Very few NATO members are living up to that commitment and as a result, the US has threatened to adjust its commitment to the alliance, including its military presence around the world.

The main beneficiary of the industrial policy dimension of NATO appears to be the US. The vast majority of the expenditure of the alliance members supports the US defense industry.

Over a period of time, the US administration has maintained that the NATO alliance members under-spend on defense matters under the auspices of the NATO. The reasons for that under-spending is that the alliance members have been developing their own military capability and defense industries, which compete directly with US defense industry. There is considerable alignment between defense and security procurement frameworks under the premises of the EU Common Foreign and Security Policy. The establishment of a Common European Defense Policy has resulted in the integration of defense industries in the European Union and this development has inevitably changed European governments’ policies and practices when it comes to NATO and the required expenditure. Defense procurement in the EU has played a significant role in linking strategic industries with national and European-wide industrial policies.

The US also does not view positively the excessive budget surpluses generated by countries such as Germany and the respective disproportionate amount spent on defense as unsustainable grounds of sharing the financial burdens for providing defense and security in Europe. In addition, energy treaties between NATO alliance members, in particular Germany, and Russia, have caused significant discomfort to the US administration, as Russia and its containment is the main reason for the existence of NATO.

The future of the NATO alliance is safe and the long-awaited demand of the US to the members to contribute equitably has paid off. The Brussels 2018 NATO Summit reached agreement on a plan to improve military readiness and signed to a joint statement that emphasized burden-sharing. The alliance severely criticized Russia and strongly condemned Russia’s illegal and illegitimate annexation of Crimea, which they do not recognize under international law.

The danger of attacking the values of NATO is evident. The US global leadership of NATO as a mutually beneficial alliance that has kept peace and expanded the frontiers of democracy is

undermined by simplistic assumption that the NATO alliance is effective only on the amount of the contributions of its members.

The US has signaled a change in its diplomacy strategy since the Trump administration. It has started trade wars with many parts of the world including NATO members like Canada and Germany and the EU, as well as competitors like China.

This change typifies a shift towards a type of transactional diplomacy, where the moto “America First” underpins both policy and law making.

Transactional diplomacy does not represent the best way to solve disputes in a security and defense organization such as NATO. It alienates members and devalues their roles and contributions. The US should reflect on the global leadership examples of the past in resolving differences of opinion within international organizations. An example of global leadership could be the responsive and responsible leadership model adapted by the EU and China.

The visit of the US president to Europe and the United Kingdom reveal an approach to international relations which is based on antagonistic and confrontational tactics. Such approach goes beyond traditional diplomatic etiquette and results in polarizing both audiences and causes. The US president is also scheduled to meet Russian President Vladimir Putin in Helsinki. It becomes clear that the transactional diplomacy and the friction-based approach will carry the US messages to that meeting.

The US administration is expectedly unpredictable in the way it approached diplomacy, both in trade and in security and defense matters. The unpredictability creates uncertainty, but also unifies US international competitors in reacting to such international diplomatic environment.

The era of transactional diplomacy instigated by the US will bring on many trade wars and commercial conflicts in an attempt to rebalance a perceived trade deficit towards US interest. Trading blocs across the world will respond accordingly in retaliation; however the ultimate looser out of these actions will be the global consumers.

Christopher Bovis is professor of international business law at the University of Hull. The author contributed this article to China Watch exclusively. The views expressed do not necessarily reflect those of China Watch.

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