Website Link: https://alliance-substitution-lab.vercel.app/

BEYOND FIVE PERCENT

A Strategic Substitution Test for NATO Burden Sharing

In October 2025, the US Army ended the rotation of a combat brigade through Romania and did not replace it. The Army called the move “a positive sign of increased European capability and responsibility.” But the next day, the chairmen of both congressional armed services committees announced their strong opposition to the decision.

Neither the Army nor congress disputed that European defense spending is rising, instead, the fight was over a question NATO’s public reporting cannot answer: has their increased spending produced forces able to do what the departing Americans did? NATO publishes detailed data on what its members spend, but it publishes almost nothing on whether that spending is actually moving military burdens off American shoulders.

At the 2025 Hague summit, allies committed to invest 5% of GDP annually by 2035 on “core defence requirements as well as defence-and security-related spending.” At least 3.5% is tied to NATO’s capability targets, and up to 1.5% covers broader security investments. That pledge is politically valuable and should stand. But all it does is measure effort, and it fails to measure effect. NATO should supplement it with an unclassified Strategic Substitution Test, published each year alongside its defense expenditure report, that tracks whether allied investments are reducing Europe’s dependence on American forces and enablers.

Spending Is Up. Dependence Is Not.

By NATO’s accounting, European allies and Canada raised defense spending nearly 20% in real terms in 2025 compared to 2024. This brings spending to 2.3% of their combined GDP, up from 1.4% in 2014.

So, the money is real, but so is their dependence. A 2024 CSIS count found roughly 150 European aerial refueling aircraft against nearly 450 American ones, with similar gaps in airborne command and control and airborne intelligence, surveillance, and reconnaissance (ISR). The IISS estimated in 2025 that directly replacing key parts of the American contribution to European defense would cost on the order of one trillion US dollars over 25 years. With American forces stretched across Europe, the Indo-Pacific, and the Middle East, the question that matters most in Washington shouldn’t be purely how much its allies spend. It should be which missions’ American forces can stop performing.

What Strategic Substitution Means

Strategic substitution is the extent to which an ally can take over a military function the United States currently supplies or disproportionately supports, without weakening deterrence, readiness, operational endurance, or alliance cohesion.

A dollar of allied defense spending has different strategic value depending on where it lands. An investment substitutes for American power when three things are true.

1. It performs a mission for which the alliance currently depends on the United States to perform;

2. It can be deployed, sustained, and integrated with allied forces;

3. It reduces demand on the American enablers (e.g. refueling, ISR, and command and control).

If allied spending accomplishes these three things then it frees American capacity for use elsewhere. Spending that does not may still be worthwhile, but it is not burden sharing in the strategic sense.

A Tanker Pool Can Beat a Fighter Fleet

The Multinational MRTT Fleet is a great example of why substitution value is a better measure of reduced American dependency than absolute spending. Launched by the Netherlands and Luxembourg, the program pools NATO-owned Airbus A330 tankers that nine European nations now share. Nine aircraft are flying today and another three will join the fleet in 2029. In percentage-of-GDP terms, the program is a rounding error. But in substitution terms it scores extremely high because it performs a mission in which the United States currently holds most alliance capacity, and its pooled structure makes it easily deployable.

Now flip the example. An ally that buys a new squadron of advanced fighter jets records a far larger expenditure, and while that purchase may be sound, those fighter jets consume enablers. Unless tankers, ISR, and munitions stocks grow with them, each new squadron may in fact increase Europe’s reliance on American systems. A spending metric ranks the fighter purchase far above the tanker pool. A substitution test would often rank them the other way.

The test also disciplines claims about timing. European governments have announced major ISR and space programs, but publicly available evidence suggests the continent still depends on American satellite and airborne collection, and independent analysts expect the space-based ISR gap to take years to close even with funding secured.5 When using a spending measure, a program counts the year the money is appropriated. When using a substitution test, it counts when the cost of that capability actually moves from American shoulders to allied shoulders. The distance between those two dates is what a spending target fails to show us.

How the Substitution Test Would Work

NATO should publish an annual, unclassified Strategic Substitution Annex alongside its defense expenditure report. For a defined set of functions, including refueling, strategic lift, ISR, ground-based air and missile defense, munitions production, and deployable formations, the annex should assess:

• Whether new allied capabilities materially reduce dependence on the United States.

• Whether previously announced acquisitions have become operational.

• Readiness, deployability, and sustainability, where public evidence permits a judgment.

• Munitions production and replenishment rates.

• The confidence behind each finding, and the gaps in the available evidence.

For each defense function, the annex should rate whether the substitution standard is met, partially met, or not met, and state the evidence behind the rating. “Met” means an ally has taken over the function to a degree that meaningfully reduces the demand on American forces. Partially met means the capability exists but still depends on American support to operate at scale. Not met means the function remains American in practice.

A Strategic Substitution Test like this would complement NATO’s existing machinery. The NATO Defence Planning Process already assigns each ally classified capability targets, most recently agreed by defense ministers in June 2025, that specify contributions to the alliance’s regional defense plans. But those targets are secret, and they measure contributions to NATO plans, not the transfer of functions away from the United States. Classified planning cannot support public accountability, and public accountability is what sustains American congressional patience and appetite for bigger defense budgets within the European parliament.

Answering the Objections

Spending targets are simple and politically useful. Agreed. We should not do away with them. This is why the test supplements the 5% pledge and does not replace it.

There are some American contributions that cannot be substituted at any allied price, including extended nuclear deterrence, global intelligence reach, and the mass of American command structures. The test should exclude these functions explicitly instead of trying to push them into a common scale because they would distort the numbers too greatly.

Public data is incomplete, and a scorecard invites gaming, since governments will seek to optimize whatever is measured. These are reasons for careful design, not abandonment. Ordinal ratings with confidence statements avoid false precision. And where the available data does not establish a judgment, the annex should say so plainly. That admission itself is useful information about the alliance’s transparency.

The Bottom Line

The United States is not short of evidence that its allies are spending more. It is short of evidence about what that spending allows America to stop doing. The Romania decision shows that Washington is already making force posture choices on substitution grounds, and that allies and Congress don’t have a shared basis for judging those choices. A test would also change what allied money buys. Since governments will always spend against the measures they are judged by, a measure that rewards reduced dependence would pull investment toward the capabilities that actually lift weight off American forces. A Strategic Substitution Test would not end the arguments over burden sharing, but it would ensure they are argued with evidence.