Critically Examine The Proposition That Small Allies Have Ð''Exploited' Large Allies In The North Atlantic Treaty Organisation. Comment On The Proposition That Prospective Gains For Producer Groups Prove More Important Than Assessment Of Gains To

Critically examine the proposition that small allies have Ð''exploited' large allies in the North Atlantic Treaty Organisation. Comment on the proposition that prospective gains for producer groups prove more important than assessment of gains to nation states when explaining international collaboration?

The North Atlantic Treaty Organisation (NATO) expanded by three new members in 1999 and thus now has nineteen members. Although most people view this to be a benefit for the future of NATO as it should enhance their strength and credibility there are those who view that it will lead to further exploitation in defence budget sharing and an allocative efficiency. It is thought that due to issues such as Globalisation the world is becoming more interlinked with organisations such as NATO and the UN comprising of more and more members. It is feared that this expansion will lead to problems with free riders taking advantage of the ever-increasing availability of the public goods offered by organisations such as NATO. There is also a case that producer groups within member countries benefit more than the actual nation states as the benefits to them are much more assured and accessible. Politicians are an example of a group, which can benefit greatly from international collaboration, as it is a tool, which can help them, gain re-election.

The first real concerns over the economics of alliances were raised in Mancur Olson and Richard Zeckhauser their writings in 1966. This raises the point that in international institutions such as NATO the smaller allies are relying on the larger allies to pay the vast amount of the defence budget and thus free riding, this became known as the exploitation hypothesis. Sandler and Hartley point out a clear example of this exploitation, as in 1970 the USA contributed 75% on NATO's defence spending with the next closest allies which included the UK, France and Germany only contributing 6%. The exploitation becomes evident when you discover that the USA only received 35% of NATO's defence benefits. Olson and Zeckhauser felt that the NATO members would never be able to gain allocative efficiency under the system they were using for defence contributions.

Olson and Zeckhauser developed a test for the exploitation hypothesis this was done by dividing military expenditure by GDP and then adjusting by the ability to pay. Then those states paying a disproportionate amount of their GDP were viewed to have a heavy defence burden on them.

On the other hand though it is important to note though that the capabilities of countries such as the USA to spend on defence are much greater than many other countries and thus this may mean that they have a social responsibility to contribute more than others to the NATO defence budget. It could also be the case that if these countries are helped now then they will have the ability to pay more in the future and help to reduce the defence burden on the larger allies.

The table above shows clear exploitation of the USA by many of the smaller allies as their benefit shares are more than their burdens.

(Tables from Sandler and Hartley 1999)

The table above shows even more examples which back up Olson and Zeckhauser's allocation hypothesis, Canada being a clear and constant figure in this case where consistently every year their average benefit share is much greater than their defence burden e.g. in 1970 their burden was 1.98% whilst their benefit share was 25.32%.

There are also efficiency problems, which arise when taking into account factors such as the indirect benefits of NATO's actions (especially over the 1990's). This is to do with issues such as their efforts towards peacekeeping in areas such as Eastern Europe e.g. Bosnia. These actions have helped to increase the security in the area and help it develop as a whole both economically and politically. Thee efficiency problem comes into effect when you take into account the fact that the majority of the NATO members will benefit from these actions which were mostly funded by the USA.

International collaboration on the other hand can often benefit producer groups much more than it will benefit the member states. This would mean that groups such as politicians would be able to use their nations membership of international organisations to aid them in issues such as re-election. There is evidence further of this when in the 1980's Margaret Thatcher's Conservative government opted to support lowering the UK's fuel emissions, which had a severely negative effect on the UK coal industry. This benefited her though rather than damaging, as the coal miners were not her voters. This therefore was a great benefit to Thatcher as she gained votes from environmentalists who may previously not have voted for her but on the other hand this may not have been of a major advantage to the UK as a whole as it created mass unemployment. There was also an example in 1991 where John Major supported an international initiative to support lower airfares. This benefited the Conservative party with public support but had a negative effect for British Airways.

On the other hand though when looking at the international aviation market it has become clear that the national states were not the most important factor when the markets were set up post world war 2. The US were pushed into accepting an international cartel to run the aviation markets which was a very inefficient method as it did not allow much room for competition. The airline did not really benefit much