Experts call for a Nato bank to 'Trump-proof' military spending

Europe and Ukraine should "Trump-proof" their military spending by setting up a "Nato bank", according to a report by a German and UK think tank.

As the White House election looms, there is concern over how a Donald Trump presidency could affect defence spending in Europe. The report asks leaders to "actively consider" urgent measures, including a Nato bank, said The Guardian.

Trump trepidations

The authors of the joint report said that if Trump wins next month, he could quickly slash US defence spending in Europe, push for a peace deal in Ukraine that surrenders parts of its territory to Russia, and might even withdraw from Nato altogether.

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They warn of the possible collapse of diplomatic communication between Washington and Europe, US withdrawal of troops and military assets from Europe, and new tariffs leading to the downfall of the World Trade Organization.

Trump's first term was "littered with withdrawn treaties, tariffs on allies and praise for authoritarian governments", said Sam Goodman, one of the report's authors. With that in mind, Europe must "practically and pre-emptively bolster European defence, security and resilience" against a second-term Trump presidency.

To do that, Nato countries should support the creation of an allied multilateral lending institution, or a Nato bank, said the think tanks. The bank would be funded with "initial subscriptions from Nato members in return for authorised capital stock".

A Nato bank could "save nations millions on essential equipment purchases, offer low interest rates on loans to alliance members and introduce a new line of financing with longer repayment timeframes", it said.

Saving millions

This isn't the first time a Nato bank has been proposed. Writing for the Financial Times last April, Robert Murray, a former head of innovation at Nato, argued that the alliance's "current strategy of pleading and arm-twisting allies to spend more is painfully inadequate". An "Allied Multilateral Lending Institution – in other words, a Nato Bank" – could be a "game-changer".

When Murray floated the idea of a "feasible model" in 2019, he suggested that the bank could "generate additional resources through interest earned on paid-in subscription capital", and he "conservatively modelled" the bank's balance sheet at about $300 billion.

But Nato Secretary-General Mark Rutte has told the international community to "stop worrying about a Trump presidency" and its implications for the war in Ukraine. Speaking during a visit to London, he insisted he is "absolutely convinced" that the US is involved in the conflict "because they understand" that "the whole of the US would be less secure if Putin would be successful in Ukraine".

Rutte's comments "could raise eyebrows in some European capitals", said Politico. Trump has recently criticised Washington's involvement in the war in Ukraine, saying the country is "stuck" and will be able to "get out" if he wins the election, said Kyiv Independent.