We’re hearing a lot about moral hazard these days.  Usually it’s in connection with the financial markets, where bankers are prone to take undue risk because any losses will be backed by Uncle Sam.  But moral hazard extends to other issues of public policy, including foreign policy, and perhaps most acutely to our relations with our NATO allies.  From their grudging commitment of troops to Afghanistan, through their appeasement of Russia, to stingy defense spending, many of our allies feel free to engage in irresponsible behavior, because they know Uncle Sam will step into the breach if disaster threatens.

NATO may be the world’s first “virtual” military alliance: Among its members, only the U.S. and perhaps Britain are willing and able to offer much more than a pantomime of military action.  There is a growing temptation to shut the whole fraudulent alliance down and start from scratch with allies that are serious about the threats we face and are willing to provide the necessary resources and resolve.

In Afghanistan, the United States is taking the lead in fighting a tenacious enemy and is expected to increase its troop commitments, while certain NATO allies are becoming defeatist or talking about compromise with the Taliban.  Others either refuse to fight; have rules of engagement that make them ineffectual, such as a prohibition on fighting at night; or, have committed at best a few dozen soldiers to the struggle.

In confronting Russia, almost all we hear are words to soothe the ogre.  Both France and Germany, for example, oppose extending NATO membership to Georgia, and a number of European countries have made themselves overly dependent on Russian energy supplies and prone to blackmail – precisely as many analysts warned 20 years ago.

The numbers on defense spending offer the most explicit evidence of moral hazard.  Here is a sample of NATO’s own figures on expenditures as a percentage of 2005 GDP:

United States:    4.0

            Great Britain:     2.5

            France:              2.5

            Germany:          1.4

            Italy:                 1.9

            Belgium:            1.1

            Spain:                1.2

            Greece:              3.0

            Turkey:              2.9

Given this lack of seriousness, it may be time for a reappraisal as to whether the alliance as currently constituted is largely useless if not an actual impediment to our safety.  Indeed, one can only wonder if the West could have held off the Soviet Union if the Cold War turned hot and whether the United States would have had to carry an unfair portion of the burden.

When there was war in NATO’s own back yard, in the former Yugoslavia in the 1990s, the Europeans were paralyzed by what seemed to be a lack of will and the ability to fight.  It may have been that they did not have the necessary resources – especially in the air – but the lack of resources is, in itself, a reflection of a nation’s lack of seriousness.  Serbia, of course, was only broken after the U.S. entered the war.

NATO was formed after World War II, as it was said, to keep the Germans down, the Americans in, and the Soviets out.  It served that purpose.  The challenge now is to put nostalgia and inertia aside and tailor its role to a profoundly changed world, with a democratic Germany, a U.S. heavily committed to world security, and a resurgent Russia.

From an American point of view, NATO is less important than in the past.  Russia still needs to be checked, but a greater threat that should have first call on our attention and resources is Islamofascism.

With “fronts” everywhere and nowhere, geopolitical logic demands an alliance of virile, clear-eyed countries around the globe which are alive to this new peril.  NATO’s European focus is not only a drag on American resources; our allies fail to take seriously the threats that we regard as important, most especially Islamofascism; and like the UN, the alliance offers an appealing refuge for the faint of heart that actually narrows our options by smothering action in yet more talk or the requirement of a rarely achievable consensus.

The Europeans strongly support today’s NATO.  And why not?  They have a racket going.  The fact that it’s such a good deal for the Europeans and that Russia is increasingly assertive, may make this the moment of maximum leverage.  We should make it clear to our NATO allies that if they want to maintain an alliance that is increasingly irrelevant there are going to have to be some changes.  We should stress two changes especially:

The Europeans are going to have to increase defense spending, and they are going to have to be diplomatically and militarily more supportive of U.S. initiatives to defeat Islamofascism.  No more sheltering behind the economic bounty and political freedom the U.S. has guaranteed while offering nothing in return.  No more subtle sabotage of our efforts that makes us look like the bad guys and Europe the good guys while breezily cozying up to the West’s enemies.  That is, no more free ride.

It’s not a matter of seeing who will blink first but of speaking plainly to allies who ultimately need us more than we need them.  Surely our sophisticated European friends would appreciate our sense of Realpolitik in ensuring that they don’t make a moral hazard of our guarantee of their security.

Now is the time to make real changes by demanding that our NATO allies be as aggressive in confronting Islamofascism as they have been in their anti-Americanism.

Otherwise, we need to disband it and start fresh with countries that are serious about our collective security.