• [WEBCAST] Raoul Pal & Neil Howe: A Sobering U.S. Economic Reality Check

    Prepare your portfolio for “big picture” paradigm shifts with Real Vision co-founder Raoul Pal and Demography analyst Neil Howe. Watch the replay from this webcast.

With President Trump en route to Brussels this morning, our 28 NATO allies are worried - a lot - about the forthcoming head-of-state NATO Summit. Why? Concern that it will be a repeat of the G-7 Summit in Quebec, where even agreement on the most basic communique language dissolved into ad hominem attacks by the president; and unease that Trump will be focused on placating Vladimir Putin, with whom Trump has a separate summit immediately following the NATO meeting.

  • On the attacks, the president has already signaled his agenda: focus on those NATO nations (at least 20) that have failed to outline credible plans for achieving defense spending at the "2% of GDP" level that's been a NATO target for years.
    • Trump has a point, especially with Germany; they spend 1.2% of their GDP on defense (compared to our roughly 3.5%). After years of prodding, Germany's defense minister just announced a plan to raise defense spending to 1.5% -- by 2025! It's no wonder the president and his immediate predecessors are frustrated.
    • But NATO progress has been substantial in raising collective defense spending over the last three years - a point the respected NATO Secretary General Jens Stoltenberg tried to make, with only limited success, in his Oval Office meeting with Trump last month.  
  • On Putin, allied eyes have focused on the president's Singapore Summit performance with Kim Jong Un to gauge Trump behavior with the Russian leader. And the conclusion of those NATO members concerned about Russia? Trump is too eager to preemptively concede on key issues with an adversary, simply to make the meeting itself appear successful!

Further, NATO summits are held in a format that Trump HATES. I participated in a NATO summit in 1994, when I represented the U.S. on NATO's Military Committee. Then there were only 16 NATO members, and the formal remarks and interventions by heads of state were endless; but President Clinton loved it - working the room and schmoozing with his counterparts, from the smallest member to the most significant! Trump detests large-scale "summit" arrangements, preferring to work his deals bilaterally or in very small groups. Like the G-7, therefore, he'll arrive in Brussels in a foul mood.

Given this, of the Brussels attendees, who should be worried about the next few days?

  • The NATO leaders France and Germany, plus Norway (who just asked for more U.S. Marines to train on their Russian border) and, of course, the Baltic states. 
    • The Balts, in particular, have memories of Russian intervention in Ukraine in the days immediately following the winter Olympics in 2014; they don't want a repeat of Moscow adventurism following the World Cup. (However, NATO forward deployments since 2014 in each of the Baltic states should provide the deterrence they need.)  
    • One additional worry: the apparent waning influence of Secretary of Defense Jim Mattis. As a former NATO Supreme Commander, he has acted as a foreign policy "guardrail" across the globe, but especially regarding Europe. If the Brussels summit turns out be a diplomatic disaster, it will only reinforce the worrisome Mattis perception.    

And who might be smiling?

  • The new, populist-led Italian leaders who, like the Greeks, have made no secret of their frustration with sanctions on Russia; add to these two a small but growing coterie of Putin-admirers in central Europe, especially Hungary and the Czech Republic, and Trump will have no trouble finding those in Brussels who will applaud any overtures to Vladimir.

Of course, divisions like these in NATO play directly into Putin's (and before him, Soviet leaders') "divide and conquer" anti-NATO playbook. And it's why my lot is cast with those who are deeply worried about presidential "unforced errors" in the days ahead with our most vital security alliance. There's a lot riding on this meeting and the subsequent one-on-one with Vlad.