RELEASE: NATO Should Create Its Own Bank, CAP Report Urges

Washington, D.C. — A new report from the Center for American Progress is recommending that the North Atlantic Treaty Organization set up its own bank to invest in key military capabilities, upgrade infrastructure, and strengthen its financial standing.

The report urges the incoming Biden administration to push for NATO to create the bank at one of the initial leaders’ summits. Since its founding, NATO has lacked the resources to fill gaps and make investments. But the alliance has overlooked one of its potentially most powerful assets—the collective economic and financial clout of its members. NATO has not leveraged its collective financial stature and the position of its many wealthy members to shore up the alliance. In the wake of the COVID-19 crisis, the report says, this must change through the creation of the alliance’s own bank.

“It is essential to strengthen the NATO alliance, the foundation for European security and the trans-Atlantic partnership,” said Max Bergmann, a senior fellow at CAP and co-author of the report. “NATO needs to get more innovative in how it seeks to address its shortfalls. While a NATO bank will not magically solve all issues, it would be a flexible tool that could evolve with NATO priorities and leverage the alliance’s financial clout to strengthen the security of all members.”

While the alliance is stronger and better prepared to deter Russia than it was six years ago, significant gaps remain. Marginal spending increases by various NATO members were inherently fragmented and often yielded few new major capabilities or failed to address some of NATO’s serious shortfalls. Meanwhile, many member states have yet to adequately invest in their forces, leading to very low states of readiness and operational strain.

There has also been a lack of progress toward meeting the benchmark set in 2014 for member nations to spend at least 2 percent of their gross domestic product on defense by 2024. This has caused major diplomatic tension within the alliance between the countries meeting their commitments and those that are not.

A NATO bank would:

  • Resemble other multilateral financial institutions but focus on allied defense priorities.
  • Finance efforts to address critical gaps that might fall through the seams of the alliance, such as modernizing dual-use infrastructure.
  • Provide an alternative to nations and regions turning to banks and lending institutions tied to NATO’s competitors, such as China and Russia.
  • Help the alliance manage the financial challenges of conflict.

Read the full report: “NATO’s Financing Gap: Why NATO Should Create Its Own Bank” by Max Bergmann and Siena Cicarelli

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