S00: The 2026 national defense strategy calls for US allies and partners to take greater responsibility for their own security and contribute more to collective defense. But what does that burden sharing actually look like today? Since Russia’s invasion of Ukraine in 2022 and amid growing strategic competition in the Asia Pacific region, allies across Europe and Asia have significantly increased defense spending, expanded military capabilities, and invested in their domestic defense industries. European NATO countries and Canada have increased their defense spending by more than 50 percent since 2022, while the countries closest to Russia have moved particularly quickly to modernize and expand their forces. In Asia-specific countries such as Australia, Japan, South Korea, Singapore, and Taiwan are also increasing investment, while initiatives like AUKUS are creating new frameworks for industrial and technological cooperation. (.) But spending more is only part of the story. As allies seek greater sovereign capabilities, they are also building production capacity, diversifying procurement, and expanding industrial cooperation with one another. Recent European procurement agreements and initiatives like AUKUS and the Partnership for Indo-Pacific Industrial Resilience, or PIPER, suggest that allies are beginning to think about burden sharing not just in terms of dollars spent, but in terms of what they can produce and contribute to collective defense. (.) This creates an important opportunity for the United States. A more capable allied industrial base does not necessarily mean less U.S. involvement. Instead, it could open new avenues for co-production, licensed manufacturing, technology sharing, and deeper partnerships between the U.S. and allied defense companies. So, how is burden sharing changing, and what does the rise of more capable allied defense industries mean for the United States? Let’s look at the data and find out. As usual, I’m your host, Gerry McGinn, and welcome back to another episode of All About the Base.
(….) Now, let’s start by looking at our European allies in Canada. The data here shows the tremendous dramatic increase in defense spending since 2022, and Russia’s invasion of Ukraine. You can see the hockey sticks all over this chart. The dramatic increases in countries such as Poland, Latvia, Estonia, even Canada, and other countries. You know, you see these dramatic increases, almost all of them since 2022.
(…..) Now, this spending increase is also continuing. So, that’s through, last chart talked about through 2025. Here’s the current defense budgets for 2026. And you see, again, these dramatic increases. That percentage change, for instance, in Denmark is almost 180%. If you look at Norway, 135%. You look at Canada, 94%.
(.) Germany, 84% increase. You see these tremendous increases in projected spending among our European allies. So, these numbers are compelling, but if you look at the map, you see that geography really matters.
(.) The dramatic increases in spending are almost exclusively around where the conflict zone is in Russia and Ukraine. So, the Baltics, the Scandinavian countries, Poland, and even Germany, that’s where you see really dramatic increases in NATO Europe.
(…) And so, where are the NATO allies getting their equipment? You see these trends that looks at arms transfers over the past, since 2019. And you see an increase pretty much across the board from NATO countries buying from other NATO countries, (.) NATO countries buying from the U.S., and then NATO countries buying from non-NATO partners. (.) So, you see they’re all kind of increasing, and last year there was a big dip in the amount of U.S. equipment bought from the U.S., and a sharp increase from other regions. It’s too early to say whether or not that’s a trend, but you see they are diversifying their procurement sources. They’re buying more internal to NATO countries, as well as, you know, as well as outside, such as buying equipment from South Korea, for instance.
(..) And this has been translated most recently in the discussion at the NATO summit earlier this summer. And they announced $50 billion in defense deals. Now, most of these, all of these deals, none of them are fully complete and signed, but some of them are very, very close. And as you see, it’s an interesting breakdown. (.) Number one, there’s an increase across the board in terms of investment in European capacity. And it’s broken out by two ways. One is they’re still buying stuff from the United States. There’s a partnership between Lockheed and Reimittal, Reimittal is a German company, to build ATACMS in Germany. So a new production line or co-production. Northrop Grumman has a deal with a number of NATO countries for the MQ4C Triton unmanned aerial vehicle. And then Lockheed Martin is also going to be producing PAC-3s in Europe. But then the other big deals announced were Saab, a Swedish company, is going to be building the Global Eye, their aircraft for NATO, to replace Boeing’s, their NATO AWACS fleet, which has been around for many decades. And then also there was announced this deal to buy Airbus A400Ms, which is an airlift aircraft, a collective procurement effort by a number of the NATO allies. So that’s where you see the spending turning into deals and building overall capacity.
(…) So let’s turn now to Asia-Pacific. Asia-Pacific, you see increases, but it’s a different trend. You don’t have the dramatic hockey stick increase like you do in Europe, but you do have some significant increases in Singapore, Taiwan, and Japan, and even Indonesia, where you’ve got bright, significant increases over time. Some of them started at a low level, but the overall trend is trending up across the Asia-Pacific.
(….) And you see this geographically. It’s not as stark as in the European case, but the threat is perceived in the Asia-Pacific as China. And you see Taiwan has increased their defense spending by 56% in the past decade. Japan has increased their defense spending by 60% in the past decade. Singapore is up 48% in the past decade. So you have significant increases among countries in the region as well.
(…) Now, the trade in Asia-Pacific, 70% of the defense trade in Asia-Pacific comes from outside of the region. So they buy from the U.S. or they buy from other allies outside of the region. And you see here’s the darker blue is U.S., transfers from the U.S. And you see that’s been significant. It’s, you know, from around 35% up to over almost 60% over the past five years. And that’s been pretty steady.
(….) And then the interesting thing in the Asia-Pacific is that South Korea has become a major defense exporter. This has always been a focus, but it’s really, really starting to have an impact, as you can see in the last several years. And a lot of this comes from challenges in the U.S. foreign military sales system in the terms of some of our, we have backlog of a number of our systems. And the Koreans build capable, very capable systems that allies are buying that have shorter backlogs and are quite a bit less expensive. So they’re becoming a significant player in arms exports. And they’re looking to become the fourth largest in the world in a short period of time.
(….) And they’re also, as you can see, taking strides to increase their production in the region. Now, Japan has had longstanding co-production deals on a number, on Patriots, on SM-3s, and on Sea Sparrow. But they’re also adding SM-6 capabilities and the glide phase interceptors, as well as AMRAM. In Australia, you have the establishment of the Guided Multiple Launch Rocket Systems, or GMLRS. And they’re getting ready to also start producing the precision strike missile there in Australia. And then finally, in Taiwan, you have the National Changsheng Institute of Science and Technology is partying with Andurl to produce the Barracuda missile there in Taiwan. So you’ve got significant amount of deals happening in the Asia-Pacific region involving U.S. companies, principally. As the data shows, U.S. allies and partners are making meaningful progress towards taking on a greater share of responsibility for collective defense. Defense spending is rising, across Europe in particular, but also in the Asia-Pacific. Countries are expanding their military capabilities, and new initiatives are creating opportunities for greater industrial cooperation. (.) Yet this progress should not be measured simply by how much allies are spending. The more important question is what that spending is producing. Across Europe, allies are increasingly investing in domestic production and pursuing defense cooperation with one another. In Asia-Pacific, initiatives such as AUKUS and PIPER are beginning to build deeper industrial and technological ties. But many of these efforts remain in their early stages. And significant gaps remain in production capacity, supply chain resilience, and the ability to scale rapidly defense manufacturing. Allied self-sufficiency and U.S. leadership should not be viewed as competing objectives. And instead, the growth of allied capabilities creates an opportunity for the U.S. to build a more resilient and integrated defense industrial base. Expanding co-production, license manufacturing, technology sharing, and industrial partnerships will allow allies to contribute more while continuing to strengthen U.S. capabilities and sustain interoperability. Ultimately, burden sharing is becoming less about who spends the most and more about what the allies and the alliance can collectively produce, sustain, and replace in a crisis. The strongest alliances will be those that combine resilient national defense industries with deep industrial cooperation and interoperable capabilities. For U.S. policymakers, the challenge now is to turn rising allied investment into industrial partnerships and a foundation for stronger collective deterrence.
(..) Thanks so much for watching today’s episode. And we look forward to seeing you again soon. (.) And remember, it’s all about the base. Here she looks like you beacon Lu and behold. By day. Here we go.
