NATO spend % of GDP

During the NATO Wales summit of 2014, NATO members agreed an aim to move towards a 2% of GDP guideline for defence spending within a decade, with a view to meeting their NATO Capability Targets and filling NATO’s capability shortfalls. With economy cuts some countries actually reduced their spend since 2014. However, only 5 members currently (2016) spend 2% or more, and 5 members spend 1% or less. Opinion: there is no reason to think Scotland would be expected to spend any more than the NATO European average, currently 1.46% of GDP.

http://www.nato.int/cps/en/natohq/official_texts_112964.htm

Defence spending by percentage of GDP for 2016

 Albania         1.21% 
 Belgium         0.85%
 Bulgaria        1.35%
 Croatia         1.23%
 Czech Republic  1.04%
 Denmark         1.17%
 Estonia         2.16%
 France          1.78%
 Germany         1.19% 
 Greece          2.38%
 Hungary         1.01%
 Italy           1.11%
 Latvia          1.45%
 Lithuania       1.49%
 Luxembourg      0.44%
 Netherlands     1.17%
 Norway          1.54%
 Poland          2.00%
 Portugal        1.38%
 Romania         1.48%
 Slovak Republic 1.16%
 Slovenia        0.94%
 Spain           0.91%
 Turkey          1.56%
 United Kingdom  2.21%
 NATO - Europe   1.46%


 Canada          0.99%
 United States   3.61%
 North America   3.36%


 NATO - Total    2.43%

http://www.nato.int/cps/en/natohq/news_132934.htm

Download the excel tables on the right hand side of that NATO page, look at Table 3, and the column for 2016.


Funding of NATO

Member countries make direct and indirect contributions to the costs of running NATO and implementing its policies and activities.

  • Indirect – or national – contributions are the largest and come, for instance, when a member volunteers equipment or troops to a military operation and bears the costs of the decision to do so.
  • Direct contributions are made to finance requirements of the Alliance that serve the interests of all 28 members – and are not the responsibility of any single member – such as NATO-wide air defence or command and control systems. Costs are borne collectively, often using the principle of common funding.
  • Within the principle of common funding, all 28 members contribute according to an agreed cost-share formula, based on Gross National Income, which represents a small percentage of each member’s defence budget.
  • Common funding arrangements are used to finance NATO’s principal budgets: the civil budget (NATO HQ running costs), the military budget (costs of the integrated Command Structure) and the NATO Security Investment Programme (military capabilities).

Direct funding of NATO (Common funding)

Cost share valid from 1/1/2016 to 31/12/2017: UK = 9.8485%.
The civil budget for 2016 is € 222 million.
The military budget for 2016 is € 1.16  billion.
2016 ceiling for NSIP (NATO Security Investment Programme) € 690 million.
Total € 2,072 million, UK share € 204 million = £182 million (£1 = €1.12).

Opinion: Scotland's 1/12th population share for 2016 = £15.2 million.

http://www.nato.int/cps/en/natohq/topics_67655.htm

and click on “Direct Funding of NATO” to open it up. Note this is by GNI not GDP.


Membership criteria.

The “Open Door”.

Any European state which can contribute to the security and principles of the Alliance can be invited to join. On 19 May 2016, Allied Foreign Ministers signed the Accession Protocol for Montenegro. Following the signature of the Protocol, Montenegro has ‘Invitee’ status, allowing its representatives to participate as observers in Allied meetings. Once all 28 Allies have ratified the Accession Protocol Montenegro can then accede to the Washington Treaty and become a full member of the Alliance. Currently, three further countries aspire to NATO membership: Bosnia-Herzegovina, Georgia, and the former Yugoslav Republic of Macedonia. Allies assess each applicant country according to its own merits. A wide range of political, economic and security reforms need to be implemented before any country can join.

http://www.nato.int/cps/en/natohq/126169.htm

Opinion: Scotland as a part of the UK would be an unusual case for NATO members to consider, as though we are part of the UK membership, we would need to accede in our own right. It seems likely that Scotland would pass political and economic criteria, but that security would need to be assessed before intelligence sharing and full accession.

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Devolved “deficits”?

Devolved accounts – net fiscal balances

Scotland                (2014-15): population 5.4 M, deficit £14.9 Bn =  9.7% of GDP.
Wales                     (2014-15): population 3.1 M, deficit £14.7 Bn = 23.9% of GDP.
Northern Ireland   (2014-15): population 1.8 M, deficit  £9.0 Bn = 27.0% of GVA.

Total Devolved deficit:  £38.6 Billion for 10.3 million people.

Total UK deficit is:  £67.6 Billion for 64.1 million people = 4.9% GDP.

So figures from HM Treasury used to produce the GERS, GERW and (GERNI) show that the devolved 16% population ran up 57% of UK deficit in 2014-15.

Scotland: http://www.gov.scot/Publications/2016/03/3692

Wales: http://sites.cardiff.ac.uk/wgc/files/2016/04/Government-Expenditure-and-Revenue-Wales-2016.pdf

Northern Ireland from here (under maintenance): https://www.finance-ni.gov.uk/publications/estimates-publications

(previous years): https://www.finance-ni.gov.uk/publications/northern-ireland-net-fiscal-balance-report-2012-13-and-2013-14

England: no accounts available

Current year 2015-16 for Scotland: deficit £14.8 billion (9.5 per cent of GDP).

http://www.gov.scot/Publications/2016/08/2132

Opinion: So 16% population ran up 57% of UK deficit in 2014-15? Really?

  1. Is this actually true?
  2. If it is true, why does England not have a devolved Parliament to fight its corner?
  3. Why can we not get a GERE – the illustrative accounts of England – to check it out?

So – how accurate is GERS itself?

GERS follows the “ESA” standard of accounting, but by “ESA” in GERS is currently meant ESA95 also known as 1995 ESA as followed by the UK Treasury and the ONS (Office for National Statistics). The current EU approved implementation of ESA since 2014 is ESA2010. The UK along with some other EU countries currently has at least a partial derogation (in this case delay in full implementation).

. . . but the further detail will only be available in 2017.

http://www.ons.gov.uk/guide-method/method-quality/specific/economy/national-accounts/articles/2011-present/update-to-asset-classifications-under-esa2010.pdf

Also: “The revised standards will change the way in which National Accounts and Balance of Payments across the EU Member States are produced and bring them into line with the updated worldwide System of National Accounts 2008 (SNA 2008) already adopted by other parts of the world including Canada, the United States and Australia.”

Current version of the EU ESA standards: http://ec.europa.eu/eurostat/web/esa-2010

Since September 2014, ESA95 has been replaced by ESA 2010.

Opinion: It will be interesting to see what changes this may bring. Remember, it is the UK implementing this, which should mean more detailed statistics being available to the Scottish Government statisticians who produce GERS to the best of their ability from estimated information made available to them – that information as supplied by the UK Treasury. As Andrew Hughes Hallet, recently appointed to the Scottish Government’s Fiscal Commission correctly pointed out, GERS does not conform to these international or EU standards.


An interesting webpage stored for future use:

https://www.gov.uk/government/collections/public-expenditure-statistical-analyses-pesa

Trade Balance between Scotland and the rUK

2015 total:  Exports to rUK £45.884 bn, Imports from rUK £51.255 bn. (-£5.371 bn).
2016 Q1:    Exports to rUK £11.355 bn, Imports from rUK £12.787 bn. (-£1.432 bn).

Figure in brackets represents balance of trade, a negative figure indicates that Scotland imports more from the rUK than it exports to it. By the same token, when Scotland becomes Independent the UK’s balance of trade worsens by £5.3 billion – a fact not missed by the financial and currency markets.

Source: http://www.gov.scot/Resource/0050/00504651.pdf  (Table G Contd – page 15)

Opinion: Scotland represents around 16% of rUK exports.

This is a difficult one to pin down exactly as statistics are given for exports outside the UK, and different statistics elsewhere from one part to another, but the 16% is a rough guide. Total rUK exports outside the UK were for the year ending June 2016 £256.5 bn (UK minus Scotland). iScotland would then be a full export for the rUK taking the total rUK export figure to £307.8 bn, and the iScotland percentage of that as 16.6%.

Note: United Kingdom total figures include trade that cannot be allocated to a region.

https://www.uktradeinfo.com/Statistics/RTS/Pages/default.aspx

Note that the graphic on the right hand side of the page is import / export to and from the UK, not within the UK. Those figures for Scotland though are substantially different from the ScotGov figures in the Table G above. This article does not attempt to examine why.


Opinion: The Balance of Trade figures also show just how one-sided the “Best of Both Worlds” poster from the UK Government was in 2014 about Scotland during our first Independence Referendum, in which they failed to mention how much the rest of the UK exports TO us.

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/80797/Scotland_analysis_Final_11.2.pdf

Note at the bottom right: “A separate Scotland would have to negotiate its way back into Europe”. Promises made, and promises broken, now we’re being dragged out of the EU.