The United States may not be at war with Russia in the classic military sense. But it has troops deployed in NATO countries. And that costs money. For an overview of contractual expenditure to support troops in NATO countries, the Federal Drive with Tom Temin turns to senior Bloomberg government data analyst Paul Murphy.
Tom Temin: Paul, good to see you again.
Paul Murphy: Nice to be with you, Tom.
Tom Temin: So I guess the 82nd Airborne and other US units are ready for any purpose in some NATO countries, Poland, what does it cost? What are some of their needs that are reflected in their spending?
Paul Murphy: Well, Tom, we noticed, looking at contract spend in Afghanistan, that the total amount of spend correlated quite closely with the number of troops deployed, and as the number of troops went down, the spend went down significantly. So we thought we would do another similar analysis with NATO spending. So we pulled data from the Defense Manpower Data Center, we found that active duty troops and reserves and DoD civilian personnel totaled about 82,700 in fiscal year 2021. And that increased by about 3 %, over the past seven years since Russia invaded Crimea. in 2014.
So there has been a general increase in the number of personnel deployed, including DoD and civilians. We have also noticed over the same period that expenditure has increased, it has increased by approximately 5.4 billion in the 28 European NATO countries, and it has increased by 18.5%, it amounts to approximately $5.1 billion a year. So that means the ratio of dollars to troops is about $63,000 per person, DoD and civilian per year. That’s the overall seven-year average, $63,000. So if we take the figure of 7,000 troops that President Biden has proposed to augment US NATO forces that was announced last week, that’s about an additional $440 million, we could expect support contract for troops deployed in NATO, European countries in the coming months and years.
Tom Temin: And how much does it cost to have people, because their salaries and such are already taken care of. And what are the expenses for?
Paul Murphy: Well, contract expenses are an obligation. They are therefore not expenses. It is not military aid, as we hear about being sent to Ukraine. These are not the expenditures of civil agencies, state and USAID, we are present here. These are contractual obligations. And it is spent mainly in four markets. We have 38% of the money spent on facilities and construction, which is not surprising. Around 23% for transport and logistics, 10% for IT and 9% for professional services. That’s four out of five dollars in just those four markets.
Tom Temin: And to whom fall these obligations? Are they local entrepreneurs based abroad?
Paul Murphy: Largely, I mean, there are a few US companies that stand out, for example, the largest US companies working in NATO countries right now include KBR, have a large presence in Poland and Khaki and Amentum in Germany. And Amentum, of course, is so locally based here in Germantown, Maryland. But a lot of the money goes to utilities, electric and local utilities that are paid for by foreign companies in foreign countries.
Tom Temin: We’re talking with Paul Murphy, senior data analyst at the Bloomberg government, and it’s appropriate money, I mean, there’s no more budget for overseas emergency operations. So which accounts are they from?
Paul Murphy: I think a lot of it comes down to operations and maintenance budgets. And I think, you know, we’re going to see a general upward trend if the number of soldiers increases.
Tom Temin: And now, of course, the president has promised, we’re not going to fight with Russia, we’re not going to have a war with Russia. I hope not. When we had wars with countries or actual kinetic activity of our military, the cost increased exponentially, right?
Paul Murphy: It’s possible, it really depends on the nature of the conflict. And if we’re in direct hostility with those foreign countries, I think something to watch is how much money we’re actually spending on IT, and especially cybersecurity in the coming months, because Russia is notorious for hacking and attacking countries with cyber threats throughout Eastern Europe. And the United States is dedicated to supporting countries in cyber threats as well as security threats.
Tom Temin: And have we ever seen this happen? The increase in cyber-spending? Or is it just potential at this point?
Paul Murphy: I think it’s potential right now. As I said, it’s going slowly, the total is about 5.1 billion a year. And as threats emerge, spending evolves. But we can see more IT spending especially now due to the nature of the shots.
Tom Temin: But back to that cost of keeping troops out of where they are normally housed. In this case, in the 28 NATO countries following the situation in Ukraine, $63,000 per capita over seven years. That doesn’t sound like much.
Paul Murphy: There have been efficiency changes in Europe. There has been a core consolidation initiative since 2015. So there have been attempts to try to moderate spending and make it as efficient as possible. But you know, again, depending on the nature of the sport offered by the United States, we could see an increase in contract expenses commensurate with an increase in personnel.
Tom Temin: And what about civilian personnel who might be moved or placed elsewhere for the duration of something? Is it coming? Can it be seen? This kind of expense?
Paul Murphy: We didn’t look at that explicitly, we were looking at DoD civilian personnel. These would therefore be people attached, in particular to the bases, providing administrative support, operational support to the bases and not involved in direct hostilities.
Tom Temin: And among the 28 countries, where does most spending happen?
Paul Murphy: The bulk, unsurprisingly, occurs in Germany, around 2.6 billion in fiscal year 2021, followed by the UK with 720 million and Italy, where we have a large naval presence of 450 million.
Tom Temin: And that could change as more and more people move, say east.
Paul Murphy: Absoutely. And also change in response to the nature of the threat being tackled. And there is talk of moving a Stryker brigade, for example, to Romania and making it a permanent presence. And so with the Stryker armored vehicles that are coming, you need support, maintenance training, other forms of logistics.
Tom Temin: Paul Murphy is a senior data analyst at Bloomberg Government, thank you very much.
Paul Murphy: Thanks Tom. Looking forward to being with you.