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Transformation of NATO’s Financial Instruments During the Period of Strategic Expansion and New Threats (1991–2025)
Dzhyhora O. M.

Dzhyhora, Olha M. (2025) “Transformation of NATO’s Financial Instruments During the Period of Strategic Expansion and New Threats (1991–2025).” Business Inform 7:36–44.
https://doi.org/10.32983/2222-4459-2025-7-36-44

Section: International Economic Relations

Article is written in Ukrainian
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UDC 657.1

Abstract:
The aim of the article is to scientifically substantiate the patterns and specifics of the transformation of NATO’s financial instruments during the period of strategic expansion and the escalation of new types of threats (1991–2025), taking into account the institutional evolution of the Alliance, the dynamics of the security environment, and changes in the structure of collective financing of defense needs. The article analyzes the use of trust funds as a financial instrument to support member countries of the Alliance, which contributed to the establishment of mechanisms for democratic civilian oversight of the armed forces, the disposal of excess weapons, the reduction of ecological risks in the defense infrastructure sector, and the development of scientific and technical cooperation in the field of security. An assessment of NATO countries’ GDP, adjusted for PPP as of 1996, is presented, which has been used during the review of financial commitments of the EU Member States following Spain’s integration into the Alliance, as well as within the broader adaptation of NATO’s financial architecture to the conditions of the post-cold war. Qualitative transformations of the Alliance related to the first wave of expansion after the cold war were identified, including changes in the formulas for distributing costs that were traditionally based on the GDP of each country. Changes in the Alliance’s financial policy caused by the global financial and economic crisis of 2008–2009 were analyzed. The main vectors of transformation of NATO’s financial architecture in the context of expansion were identified, which not only involved internal redistribution of budgetary responsibilities but also reflected the overall increase in the operational burden on the Alliance. The nature of the systemic renewal of defense spending planning parameters for the member countries of the Alliance has been emphasized, accompanied by the adoption of the «2/20» Directive, which focused on the need to restore NATO’s defense capabilities. The status of compliance with the «2/20» criteria among NATO member countries has been analyzed. The nature of the transformation of NATO’s financial architecture, driven by changes in the security environment, waves of Alliance expansion, increasing hybrid threats, and the need for prompt responses to regional conflicts, has been identified. The transformation of NATO’s financial mechanism has been characterized in the context of key events and strategic changes from 1999 to 2025.

Keywords: NATO, financial instruments, trust funds, defense spending, financial architecture, «2/20» Directive.

Fig.: 1. Tabl.: 2. Bibl.: 29.

Dzhyhora Olha M. – Candidate of Sciences (Economics), Associate Professor, Candidate on Doctor Degree, Department of National Security, Public Management and Administration, Zhytomyr Polytechnic State University (103 Chudnivska Str., Zhytomyr, 10005, Ukraine)
Email: [email protected]

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