What are the largest indirect costs the U.S. bears for NATO (bases, exercises, and bilateral aid)?
Executive summary
The largest indirect costs the United States bears for NATO are not the alliance’s modest common budgets but the far larger share of U.S. national defense spending that supports forward basing, exercises, readiness and bilateral programs that reinforce allied deterrence; NATO’s common funds amount to only a few billion euros while U.S. defense spending runs in the hundreds of billions and represents multiple percent points of GDP [1] [2] [3]. Debates over “burden‑sharing” reflect that the U.S. picks up many operational and capability costs—troop posture, infrastructure, exercises, and security assistance—that are funded outside NATO’s pooled budgets [4] [5].
1. NATO’s common budgets are small—and clearly counted
NATO’s formal, pooled budgets and programmes—the Civil Budget, Military Budget and the NATO Security Investment Programme—total only around €3.8–€5.3 billion depending on the year, money that pays headquarters, shared command structures and some infrastructure projects [1] [2] [4]. The United States contributes roughly 15–16 percent of those common budgets under the current cost‑share formula, meaning its direct cash contributions to NATO’s pooled accounts are in the low hundreds of millions of euros/dollars annually, not the majority of NATO spending [6] [7].
2. The true “indirect” bill is U.S. defense spending that underwrites NATO posture
By contrast, U.S. national defense outlays dwarf NATO’s common funds: U.S. defense spending is measured at multiple percent of GDP—reported at about 3.1–3.6 percent in recent years—and totals many hundreds of billions of dollars, a pool from which costs tied to NATO posture, exercises and forward presence flow even when they are not book‑kept as “NATO” spending [3] [8] [7]. Analysts note that much U.S. defense spending primarily serves U.S. national requirements but also produces benefits for allies—so these expenditures are effectively indirect contributions to collective deterrence even if they are budgeted domestically [9].
3. Forward basing, troop rotations and infrastructure are major hidden items
Stationing forces in Europe, maintaining prepositioned equipment, operating air and naval facilities and sustaining the command, control and logistics needed for rapid reinforcement imposes continuous costs that come from U.S. force budgets rather than NATO’s common funds; NATO lists such military infrastructure (air/naval bases, communications, pipelines) as mission‑critical but many associated bills are borne bilaterally or by U.S. defence appropriations [2] [1]. Public reporting shows large U.S. troop presences in Europe (on the order of tens of thousands, historically cited as over 100,000 at some points) and continual exercises and rotations that drive operating and personnel costs—line items difficult to isolate in NATO accounting [10] [5].
4. Exercises, readiness and bilateral programs (the “extra” spending)
Programmes intended to enhance allied readiness or U.S. capability while benefiting partners—training, enhanced forward presence, prepositioning initiatives and bilateral funding streams—are commonly funded through U.S. defense accounts (and occasionally specific congressional appropriations) rather than NATO budgets, creating significant “indirect” U.S. costs that are politically salient during burden‑sharing debates [5] [4]. Taxpayer watchdogs and commentators emphasize that these U.S.‑funded initiatives, while not required by NATO’s treaty, are de facto costs of upholding the alliance’s deterrence posture [5] [3].
5. Politics, formula changes and competing narratives
The burden‑sharing dispute has practical consequences: a 2019 cost‑share formula reduced the U.S. fraction of NATO’s civil and military running costs, responding to U.S. pressure that Europe spend more, yet political leaders continue to frame much larger portions of collective defense as U.S.‑borne because national budgets underwrite posture and capabilities that benefit the alliance [4] [10]. Advocates point to tangible security returns on U.S. investment while critics argue those sizable indirect expenses should be constrained or shared more transparently [9] [11].
6. Limits of available accounting—and what’s missing from the ledger
Open sources give clear figures for NATO’s common funds and for aggregate U.S. defense spending, but they do not produce a definitive, agreed‑upon tally that allocates slices of the U.S. defense budget as “NATO costs”; estimating the indirect U.S. bill requires assumptions about what portion of forward posture, procurement and readiness exists primarily to deter threats to NATO versus U.S. global missions—an apportionment not provided in the available reporting [1] [4] [9].