Misalignment of interests and threat perceptions: a dynamic study of NATO defense contributions

This study examines the defense contribution decisions of NATO member states, focusing on the dual influences of free-riding and threat perception. It develops a dual-modulation model of interest misalignment and threat levels to explain allies’ spending decisions. Using panel data from 27 countries (1950-2023), UN ideal point scores, and a threat density index, the study employs hierarchical modeling. Results show that in low-threat contexts, interest alignment with the U.S. reduces defense contributions, as free-riding dominates. When threat perception exceeds a threshold, interest alignment’s effect weakens; states prioritize self-help, leading to convergent defense spending. High-threat environments lead interest-misaligned states to pursue unilateral buildup, while aligned states favor contributing through collective arrangements within NATO. A case comparison of Poland and Hungary, post-Russia-Ukraine conflict, illustrates this: Poland increased its defense budget via NATO cooperation, whereas Hungary focused on independent procurement. The UK-Germany contrast further indicates that interest misalignment influences spending when threats are minimal. The findings challenge traditional public goods theory assumptions, revealing complex, multi-level alliance decision-making influenced by U.S. credibility and threat signaling, which could shape the future distribution of defense burdens within NATO.