LITHUANIA-UKRAINE-RUSSIA-POLITICS-CRISIS-NATO-DEFENCE-SABER STRI...A Lithuanian soldier takes part in a field training exercise during the first phase Saber Strike 2014, at the Rukla military base, Lithuania, on June 14, 2014. Saber Strike, a NATO exercise that will span multiple locations in Latvia, Lithuania and Estonia, involves approximately 4,700 personnel from 10 countries. The Western military alliance launched on June 9, 2014 one of its largest military manoeuvres in the ex-Soviet Baltic states since tensions with Moscow spiked over its annexation of Ukraine's Crimea peninsula. AFP PHOTO / PETRAS MALUKAS (Photo credit should read PETRAS MALUKAS/AFP/Getty Images)
A Lithuanian soldier takes part in a Nato training exercise

Only two of Nato’s six biggest defence spenders — the US and France — will fulfil a pledge to protect military budgets made at the alliance’s summit five months ago.

Britain, Canada, Germany and Italy are all forecast to cut military spending this year, flouting an explicit promise not to do this, made at September’s Nato gathering in Wales. Nato nations are expected to spend a minimum of 2 per cent of gross domestic product on defence, but very few do so.

The figures, outlined in a report published on Thursday by the European Leadership Network, an association of former and current diplomats, military officials and politicians, comes as Nato faces up to what officials believe is the gravest challenge to its existence since the end of the cold war. They also show the extent to which Nato nations have spoken loudly about standing up to Russian aggression in Ukraine but have failed to commit resources.

“The last year has been much more a triumph of rhetoric over delivery,” said Ian Kearns, ELN director and a former UK defence policy adviser. “In spite of the talk of Ukraine being a game-changer for the alliance, it is much more business as usual.”

The need to increase collective defence spending has been a frequent refrain of successive Nato leaders and was addressed as a priority policy problem at the Wales summit — which was touted by many as the most significant Nato meeting for 20 years.

All 28 alliance members signed a commitment at the gathering reaffirming the 2 per cent target. They also agreed a pledge to “halt” further erosions in defence budgets and an aim to increase them in real terms in line with GDP growth.

2%

Amount Nato members say they aim to spend on defence as a percentage of GDP — although very few do so

“It is not that they aren’t hitting their GDP target that is the striking thing, it is that they are missing their commitment to reverse the trend in declining budgets,” said Mr Kearns.

Responding to the ELN report, Oana Lungescu, a Nato spokeswoman, said there was “a serious mismatch between the security challenges we face and the resources we are dedicating to our defence”.

Ms Lungescu also acknowledged that the decision to increase defence spending was complicated by budgetary constraints and would “take time to implement”.

Chart: Military expenditure

US military expenditure is forecast at 3.4 per cent of GDP this year, well above the 2 per cent threshold. France’s defence budget, equivalent to 1.5 per cent of GDP, is set to remain stable in 2015.

But the UK, Nato’s biggest defence spender after Washington, will reduce its military budget from $55bn to $54bn in 2015, dropping from 2.07 per cent of GDP to 1.88 as the economy grows this year.

Speaking to the Financial Times on Wednesday, William Hague, the former British foreign secretary, gave warning of “a systemically less stable world” and said the UK needed to maintain a powerful military, intelligence service and diplomatic presence. “I am totally in favour of maintaining Nato obligations and I have been totally in favour of spending 2 per cent — at least 2 per cent — of our national income on defence in this parliament,” said Mr Hague.

Meanwhile, Germany, Italy and Canada are set to spend a combined $5.7bn less on defence this year than last. All three countries already fall significantly short of their Nato commitments — each allocating 1-1.2 per cent of GDP to defence.

Germany’s low defence expenditure has been a particular bone of contention within the alliance and is becoming a sensitive issue, as US and UK troop numbers stationed there are reduced and debate over Berlin’s role in the world grows among German politicians.

In all, 14 Nato states have now finalised their national budgets for spending in 2015.

Seven others besides France and the US will meet their Nato pledge: the Netherlands, Norway, Poland, Romania and the three Baltic states of Latvia, Lithuania and Estonia. These seven are relatively small spenders in absolute terms, however. Collectively, they spend less than half the current annual defence budget of the UK.

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