Gunboats and Butter: The Two Percent Guideline and NATO Burden Shifting in the Maritime Domain

This study integrates two strands of the alliance burden-sharing literature: the research exploring the impact of the patron’s ability to credibly threaten abandonment and allies’ incentives to burden shift, and the call to disaggregate defense spending when evaluating burden sharing. We contend that allies burden shift by reallocating funds away from capabilities designed to counter threats the patron is unlikely to abandon. Using a novel dataset on naval power, we examine the impact of the North Atlantic Treaty Organization’s (NATO) 2014 Wales Pledge and find a notable reduction in non-US NATO naval capabilities post-pledge. We argue that this trend reflects members’ confidence that the US is unlikely to renege on its commitment to protect vital Sea Lines of Communications (SLOCs). Since the US cannot credibly threaten to abandon its commitment to protect the alliance’s SLOCs, NATO members’ increase in overall defense spending was shifted away from investments in naval capabilities