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Advances in Social Sciences Research Journal – Vol. 10, No. 4
Publication Date: April 25, 2023
DOI:10.14738/assrj.104.14320.
Matthijs, H. (2023). The Funding of The North Atlantic Treaty Organization. Advances in Social Sciences Research Journal, 10(4).
210-220.
Services for Science and Education – United Kingdom
The Funding of The North Atlantic Treaty Organization
Herman Matthijs
University Ghent & Free University Brussels
ABSTRACTS
This study examines the financing system of the budgets of the North Atlantic Treaty
Organization (N.A.T.O.). The NATO is not a supranational organization, with partly
exception of the military coordination by SHAPE, but an intergovernmental
organization. So far, it’s the only existing military institution at present worldwide.
This 2023 study concerns only the three internal NATO budgets. Therefore, this
article is based at the only reference material available, namely the primary
budgetary sources of the NATO. It must also be pointed out that NATO does prepare
an annual report concerning the political and military situation. But there is no
equivalent concerning an overview of its finances and administrative functioning.
The aspects to be investigated are as follows:
- who is funding the NATO budgets and how?
- what happens with the money given to NATO?
- how is NATO’s budget prepared and approved?
This article doesn’t treat the military budgets of the member states or the financing
of the Parliamentary Assembly of the NATO.
Keywords: public budget, NATO funding
INTRODUCTION
The NATO (North Atlantic Treaty Organization) was established in 1949 during the first years
of the Cold War and the tensions with the former Soviet Union in Eastern Europe. The treaty
was signed in Washington DC at 4 April 1949. What means that the NATO exists already nearly
75 years, what will the fact in 2024!
By the start twelve countries signed up for the new political and military alliance. These were
the five signatory countries of the Treaty of Brussels of 1948 and the creation of the WEU (West
European Union), namely: Belgium, the Netherlands, Luxembourg, France and the United
Kingdom. The other seven started members are the United States, Canada, Iceland, Portugal,
Norway, Denmark, and Italy. Remarkable was the presence of Portugal and Italy related with
their position in the second WW. But Portugal was geopolitically too important and as a non- democracy neutral during the war years. Italy turned in the final period of WW II to the allied
side. In 1952 Greece and Turkey entered the alliance and the Federal Republic of West
Germany in the year 1955. Membership then remained the same for almost quarter of a century
until Spain joined, as a democracy, the NATO in 1982. The next expansion of the membership
came with the end of the Soviet Union’s grip and the accession of Hungary, Poland, and Czech
Republic (1999) followed by the three Baltic States (Estonia, Latvia and Lithuania) together
with Slovakia, Slovenia and Romania in 2004. The next members were Albania and Croatia in
2009. The last two member states are also situated in the Balkan area, namely: Montenegro in
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Matthijs, H. (2023). The Funding of The North Atlantic Treaty Organization. Advances in Social Sciences Research Journal, 10(4). 210-220.
URL: http://dx.doi.org/10.14738/assrj.104.14320
2017 and North Macedonia in 2020. Therethrough the NATO has all the territories on both sides
of the Adriatic Sea. At the present NATO has 30 member states. It’s waiting for the official entry
of Finland and Sweden.
To be accepted the candidacy of a potential new member must be unanimously approved by all
the existing member states during a state-government leaders council. (f.e. summer 2022 in
Madrid for Finland and Sweden). Also, the ratification of the treaty concerning the new
members must be approved by the Parliaments of the member states.
This study concerns the budget system and the financial system of the three NATO budgets,
namely:
• The civil budget,
• The military budget,
• the NSIP budget.
The official unclassified documents of the NATO only exist in the two official languages of the
military alliance: English and French. (OTAN: Organisation du Traité Atlantique du Nord).
THE BUDGET CYCLE
NATO’s budgets are prepared by the administration at Brussels headquarters. NATO’s officials
are classed as international civilian staff and there were roughly 380 civil servants of them in
2022, They do have a specific tax system and have an international statute. But most of the staff
are employees seconded of the national administrations as well the armies of the member
states. (NATO, 2019a)
The budget is approved by a consensus of the 30 member states in the Council. This is yet
another indication that the North Atlantic Treaty Organization is an intergovernmental
institution.
All decisions of the NAC (North Atlantic Council), which have budgetary implications are
submitted to the RPPB (Resource Policy and Planning Board) for an opinion. In the NATO
hierarchy the Budget Committee (BC), and the Investment Committee (IC) are subordinate to
this Board. The Budget Committee advises on all budgetary matters relating to the civil and the
military budget of the NATO. The Investment Committee by contrast is responsible for
implementing the NATO Security Investment Programme, which is authorized for the financing
of the installation and facilities required by the strategic command centre of SACEUR (Supreme
Allied Commander EURope). All the member states are represented in the RPPB and this Board
is chaired by a rotating Presidency. Other members are: the military staff, the chairman of the
budget committee and the chairman of the investment committee. The RPPB was established
in 2010 and is the only financial committee that reports to the NAC. Examples of these reports
are listed in the references. (NATO: 2018, NATO: 2019a , NATO : 2021b )
The Board is also supported by NOR (NATO Office of Resources). The body is chiefly concerned
with NATO’s military budget. NOR also advises the BC and the IC in this respect.
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Advances in Social Sciences Research Journal (ASSRJ) Vol. 10, Issue 4, April-2023
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The RPPB works with the policy guidelines of the NAC. The main task of the Resource Policy
and Planning Board is to work out a policy regarding resources. To do this the RPPB examines
the affordability of choices, makes performance assessments, and determines the planning and
resource implications of new initiatives. (Matthijs, 2015)
Every year the Resource Policy and Planning Board prepares an all-inclusive Medium Term
Resource Plan for the forthcoming budget year including a projection of the planned figures for
the next four years. The result is an overview of the projected budget for the next five years.
This proposal by the RPPB is then submitted to the approval of the North Atlantic Council.
The budgetary rules governing NATO are always first approved by the NAC. These rules
however may be specific to a single or several institutions, namely,
• international staff funded from the civil budget,
• international military structure funded from the military budget,
• the NATO Security Investment Programme (NSIP),
• the NATO agencies.
The civil and military budgets run concurrently with the calendar year, that means from
January 1th until December 31.
It the Secretary General who presents the draft budget to the NAC and it is the Council that
approves the drafts. There is no role here for the NATO Parliamentary Assembly and NATO does
not have anything like the EU’s public financial regulations that set out the budget process in
detail. But the last published report from the RPPB dates from the year 2017! (NATO, 2018)
Here is more than a normal delay!
It should be remembered that a consensus is required for agreement and if the NATO budget is
not approved in due time by the NAC - NATO must rely on a system of provisional credits, which
is supervised the Budget Committee But there are not so much examples of the use of this
budget system.
The head of each NATO organization, e.g., the Secretary General where the civil budget is
concerned, has a degree of freedom when deciding how the budget is implemented as long as
he takes account of the relevant financial regulations. An example of this are the rules regarding
the transfers between budget items and the rules on the award of purchase tenders.
A number of specific rules apply regarding the NSIP. Here the point of departure is the available
assets. These are then supplemented to arrive at the requested goods.
They are then reviewed and drawn up by the RPPB and approved by the Council.
Once they have been approved, the implementation and management are the responsibility of
the Investment Committee.
AUDITING
The International Board of Auditors for NATO (IBAN) is responsible for auditing NATO
expenditure. The board monitors the efficient and effective use of the disbursements.