It is good to see a widening of the debate on this issue, and Andrew Carr and Peter Dean have done a commendable job of covering the political history of the 2 % of GDP commitment as it has played out in the public debate. It is certainly true that the Coalition exploited Labor's inability to meet the funding pledges outlined in the 2009 Defence White Paper and the subsequent budget cuts made in Defence in pursuit of an elusive budget surplus.

The core policy recommendation made by Carr and Dean, however, is that since the bipartisan target of 2% of GDP is not based on defence planning, it should be abandoned. Even if we fully acknowledge the domestic political optics of the 2% target, this in no way detracts from the target's alliance management utility. The question then becomes: does having a 2% of GDP target undermine defence planning in Australia to such an extent that abandoning it is still justified, despite the cost to alliance integrity? 

Dean's answer appears to be that the US itself does not really care about proportion of GDP as an indicator of alliance contribution. This is hard to sustain given the many public criticisms made by high-ranking US military officers and politicians (cited by Carr and Dean themselves), which have been aimed squarely at Australia's level of defence spending, not Australia's defence planning. As Carr and Dean observe, few NATO allies are currently at the 2% target, and they too have been subject to stern rebukes by US officials, including former defense secretary Robert Gates, who labelled NATOs level of defence expenditure an exercise in 'collective military irrelevance'. 

Nonetheless, in the wake of Russia's annexation of Crimea, a number of NATO allies have pledged to arrest their defence budget decline, with countries such as Lithuania committing to raising defence spending up to 2% of GDP within five years. Lithuania is not doing this because its defence planning indicates that an $800 million defence budget equips them to resist a possible Russian invasion, but rather to demonstrate to the Americans that Lithuania is doing its bit for the alliance and should be protected. It would hardly make sense for the Lithuanians to double their defence spending if they believed that defence expenditure as a proportion of GDP had no impact on American decision-making.

Carr and Dean also point out that Japan, a close US ally, only spends 1% of GDP on defence for constitutional reasons. Japan has adopted a different alliance management approach: host an American superbase and 50,000 US troops, and be a strategic client of the US. This serves as one extreme example of what 'pay for the alliance in other ways' actually means, and I'm not at all certain that this model is what most Australians would like to pursue. 

It is accurate to say, as Carr and Dean do, that Australia's strategic circumstances are influenced far more by the absolute defence expenditure and overall economic trajectory of countries in our region than by defence spending as a proportion of GDP. For alliance management, however, the reverse is true. Australia having a 2% target helps the US to manage the very excuse implied by Carr and Dean when discussing NATO countries: 'other US allies aren't pulling their weight, so why should we?' The 2% target may not add much strategic weight for a small country like Lithuania, but it helps the US to pressure major players like Germany. 

While I do not believe that Carr and Dean have adequately made the case for abandoning the 2% target in light of the adverse costs to ANZUS, I must stress a unity ticket on the need for Australia's defence planning and capability development to be rooted firmly in a rigorous analysis of Australia's strategic circumstances. Indeed, I expect that a faithful application of Australia's defence planning principles would dictate a strategy requiring defence spending exceeding 2% of GDP, but that debate will no doubt be had as we move closer to yet another defence white paper.

Image courtesy of the Department of Foreign Affairs and Trade