The Future of NATO

Alliances can be a useful arrangement for countries to collectively defend themselves against threats. At the same time, they can pose an economic challenge for their members. Defense within an alliance functions as a collective good: every member benefits from membership in an alliance regardless of how much they contribute. This dynamic creates an incentive for smaller countries to spend less on security, relying on disproportionate investment from larger, wealthier countries.

The North Atlantic Treaty Organization (NATO) exemplifies that economic challenge. Formed in 1949, NATO binds the United States, Canada, and a group of European countries to the principle of collective defense: the idea that an attack on one member is an attack on all.

The alliance served several strategic purposes: to deter Soviet expansionism; to prevent the kind of violent nationalism deployed by the Nazis during World War II from reemerging; and to encourage integration, peace, and stability in Europe. NATO also represented a formal commitment by the United States to play an active role in European security. As NATO’s first secretary-general, Lord Hastings Lionel Ismay, summarized, NATO’s purpose was to “keep the Soviet Union out, the Americans in, and the Germans down.”

Many of those objectives remain relevant today. Russia's unprovoked invasion of Ukraine in 2022—the largest war in Europe since World War II—underscores that the threat of Russian aggression did not vanish after the Cold War. American leadership in the alliance remains a defining component of U.S. engagement in Europe. And NATO’s European allies have enjoyed decades of relative peace and prosperity, in part because the U.S. security umbrella allowed them to invest more heavily in their economic development. NATO has furthermore served as a vehicle for promoting democratic norms and cooperation among its members.

From its inception, the United States has played the largest role in NATO, vastly outpacing other allies in military deployments and defense spending. For much of the Cold War, the United States accounted for more than 70 percent [PDF] of NATO members’ total defense spending. That figure declined moderately in the years following the Cold War, but the U.S. share of the burden remains high: the United States accounted for approximately 64 percent of NATO defense spending in 2024.

Many U.S. leaders have argued that shouldering a larger burden is an acceptable price to pay in exchange for the alliance’s strategic benefits. However, a growing number of policymakers question whether the outsized role the United States plays in European security remains worthwhile.

Critics highlight that despite Canada and European allies being prosperous nations, they have consistently fallen short of agreed commitments to defense spending. In 2014, after Russia annexed Crimea from Ukraine, NATO members pledged to move toward spending at least 2 percent of their gross domestic product (GDP) on defense. For nearly a decade afterward, most members failed to meet that target.

Russia's invasion of Ukraine prompted a wave of increases; all members have now met that target. And for the first time in NATO’s history, a European member, Norway, now spends more per capita on defense than the United States.

But as the war in Ukraine drags on, the cost of European security is rising. And despite allies’ increased spending, the Trump administration has continued to voice frustration about NATO burden-sharing, even questioning whether the United States should honor its treaty obligations toward member states that do not meet spending targets.

NATO members agreed in 2025 to further increase their core defense spending to 3.5 percent of GDP by 2035, with an additional 1.5 percent devoted to defense-related expenditures such as infrastructure and cybersecurity. The commitment is designed to bolster European security and demonstrate that European allies are serious about burden sharing. But questions remain about whether rhetoric will translate into lasting capability. Meeting that target would require significant increases in funding from nearly all NATO members. Some analysts question whether such a commitment is feasible or sustainable for all NATO members.

Spending targets alone do not necessarily capture the full picture. Spending more on defense does not automatically translate to a more equitable share of the burden. As of 2025, the United States was responsible for about 44 percent of NATO’s overall military capabilities. And European allies currently lack critical capabilities, such as intelligence and surveillance platforms, and air and missile defense systems, that the United States provides. But with growing challenges in the Indo-Pacific and ongoing threats in the Middle East, every dollar spent sustaining European defense is a dollar not allocated to those other priorities. Alongside pushing for larger overall investments in defense, therefore, some policymakers are also calling for a transition toward greater European leadership and self-reliance within NATO.