NATO Is Worthwhile Insurance
We live in a world full of risks. Sometimes we insure against risks, while other times we feel the cost of insurance to be too great relative to the perceived risks. Occasionally, a risk is greater than we perceive and we are sorry that we did not adequately insure against that risk.
Many years ago I was a junior accountant on a large audit. At lunchtime, two of the senior accountants who were novice real estate investors argued about whether title insurance was worth the cost.
When you purchase real property, there is a small risk that the seller does not legally own the property or that there are encumbrances against the property for which you unwittingly assumed liability.
Title insurance protects you against those risks. But the incidence of claims against title insurance companies is extremely rare, causing many people to believe that title insurance is either too expensive or overrated. In my career, I saw two incidences when clients faced catastrophic economic consequences when their ownership to real property was challenged. Having title insurance saved both clients.
Recent events have shown that it is wise to insure against geopolitical events that can lead to war. Over the past several years, many have expressed concerns that our investment in the North Atlantic Treaty Organization was no longer worth the cost.
They argue that we disproportionately fund NATO while other NATO members, who don’t pay for their share of NATO’s costs, take advantage of us. Just like real estate owners who don’t believe title insurance is worth the cost, NATO’s detractors believed that NATO is just too expensive.
Those voices have been quieted recently as the world watches Russia invade Ukraine. However, a peaceful European continent is essential to maintain world peace. Major European conflicts have been a common theme over the past several centuries.
Twice in the 20th century, America was involved in world wars that proved to be very expensive for the world — and for America.
After World War I, Europe was left to its own devices only to find that a quarter-century later we got involved in World War II — an even greater and costlier European conflict. Leaving Europe to its own devices a second time would undoubtedly lead to yet another war that would be so costly that even American survival could be threatened.
One of the problems with Europe is that it is a continent of numerous nationalities, many of whom are bitter rivals. Historically, those countries built large armies. Sometimes those military forces were for defensive purposes while other times they were used for expansion.
After World War II, the threat was from the east. The Soviet Union coveted the western European countries who needed to deter the Soviets. Thus, NATO was created to form a defensive umbrella against Soviet expansion. The umbrella was spearheaded by American might so that individual European nations would not have to arm themselves — thus preventing conflict among rivals that plagued Europe for centuries.
After the Soviet Union collapsed, there were skirmishes in the Balkans that NATO played a leading role in defeating. However, the need for a common umbrella defense has appeared increasingly unnecessary in recent years. Such appearance is an illusion.
America rightfully told other NATO members that they need to contribute more to NATO’s costs. However, this comes at a time when underlying nationalistic currents are sweeping Europe. Those currents may reinstate the centuries-old paradigm wherein European countries arm themselves not only for defense, but also to flex their muscles.
When I was growing up, my father warned that, because of its location in central Europe, a reunified Germany could pose a special threat to Europe because it is surrounded by rivals on the east and west. He feared that a re-militarized Germany would instigate a repeat the two great European struggles that occurred during his lifetime.
One lesson from the war in Ukraine is that nuclear weapons could have been a deterrent. If Ukraine had not relinquished control of its nuclear weapons upon the dissolution of the Soviet Union, it would have been harder for Russia to invade. Other countries around the world will undoubtedly take heed of this and will seek to develop nuclear capabilities. If so, the paradigm of the NATO umbrella may lose its appeal unless America steps up to reinvigorate it.
The last century has demonstrated that, when Europe goes to war, America gets drawn into it at great cost. By being proactive, America has played a leading role over the past 80 years of preventing the outbreak of another major war in Europe. Europe has rarely seen peace for such a duration.
That extended period of peace has resulted in complacency that undervalues our commitment to NATO.
We don’t want to end up like the real estate investor who lacked title insurance.