The Economics of NATO Expansion

Issue Briefs | National Security

No. 200
Thursday, December 08, 2016
by David Grantham and Christian Yiu

In his January 1997 State of the Union speech, President Bill Clinton lauded the
expansion of the North Atlantic Treaty Organization (NATO) into Central and East
Europe, saying America’s “first task is to help to build...an undivided, democratic Europe.” However, the president also expressed a desire to expand NATO in the hope of fostering seamless military cooperation across Europe.

Twenty-five years later, there has been little discernable improvement in NATO’s military capabilities despite the addition of 12 new member nations, leaving the United States to provide most of the forces defending Europe, and to pay the tab.

The Formation of NATO. NATO began as a mutual defense pact between the United States, Canada and
10 European nations in 1949 as a guard against Soviet aggression. The collapse of the Soviet Union and its formal dissolution in 1991, however, ushered in a new era of independence for many in Eastern Europe. The organization has since grown to 28 nations, all pledged to mutual defense under Article V, which states that an attack on one NATO member is an attack on all. The North Atlantic Council, the governing body of NATO, invoked Article V for the first time in its history after the September 11 attacks on the United States.

The Russian invasion of the Republic of Georgia in 2008 and the successful annexation of Crimea in 2014
demonstrated Russia’s renewed interest in reclaiming certain territories. Putin continues to justify his annexation of Crimea and intervention in eastern European nations, claiming NATO was the first to breach the peace by moving eastward in violation of the 1990 negotiations over German unification. However, those agreements only promised that NATO would not deploy into East Germany until the Soviets had redeployed — a fact that even former Soviet President Mikhail Gorbachev confirmed.

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