Germany Uses Accounting Trick to Meet NATO Defence Obligations, Report Claims

NATO requires its members spend two per cent of GDP annually on defence, a figure that only a handful manage. Germany has promised to meet its obligation, but to make sure it does so before the next election the government is apparently rolling in previously uncounted spending, like interest payments.

Germany will reclassify some other government expenses as “defence-related” to inflate the proportion of the economy devoted to military spending to hit the NATO treaty obligations by next year, a report in broadsheet Die Welt claims. Per those claims, one of the newly “defence-related” areas of spending will be a proportion of federal debt servicing — interest payments — that will swell the theoretical defence spend by five billion euros ($5.5 billion) over the next year.

Welt reports political opponents to Geramny’s Left-Green coalition government as criticising the move as dishonest, and a bid to hide the fact the German military is seriously short on equipment — an issue seriously exacerbated by the amount of materiel that has been donated to Ukraine in the past year.

Every one of NATO’s 31 members are bound by a treaty obligation to spend two per cent of their GDP on defence, an answer to mutual defence that allows those in the alliance with the broadest shoulders to bear the greatest strain, but also not allowing others a free ride. Actually, just seven of those 31 do spend two per cent a year: Greece, the United States, Poland, the United Kingdom, Estonia, Latvia and Lithuania.

After Russia relaunched its invasion of Ukraine last year priorities in Europe changed to some extent, and Germany said it was going to make an effort to boost its defence spending to two per cent after years of being deficient, but the gap to close is a considerable one: Germany’s figure was just 1.5 per cent in 2021. The threat presented by Germany’s willingness to cosy up to Russia for cheap energy while simultaneously neglecting its own military was a key theme of the warnings made by President Donald Trump in 2018 when he said Germany should be a more reliable NATO ally.

He said then: “We’re paying a lot of money to protect, this has been going on for decades… it’s very unfair to our country, it’s very unfair to our taxpayers… these countries need to step it up, not over a ten year period, but immediately.”

Despite Germany moving to pay more for defence, there are still serious concerns about the quality of its own military. As reported this year, Germany’s own defence minister said his armed forces were incapable of defending the nation, never mind leap to the aid of other NATO allies if they were invaded.

While Germany’s accounting trick has been criticised as dishonest, it would not be alone in NATO in ‘cooking the books’ in this way. Even the United Kingdom, long seen as one of the most reliable NATO allies, avoided dropping below the two per cent threshold in 2016 as predicted by inflating its figures by rolling in the cost of military pensions and some intelligence work for the first time.

The move was criticised by some as “creative accounting” at the time, but the change in accounting methods was accepted as legitimate by NATO.