Canada has often been criticizing as a relative lightweight among its NATO partners when it comes to defence spending as a percentage of GDP. But now, a new report from a U.S.-based defence analyst firm, says that other NATO countries are also trimming defence spending.

Currently only four dual EU-NATO members have military budgets that allocate the NATO minimum requisite of 2 percent of annual GDP for defense: France, the United Kingdom, Bulgaria and Romania. The latter two are the newest (and poorest) members of the EU and, while tasked with replacing their aging Soviet-era equipment for NATO-compatible ware, their budgets themselves are insufficient. Greece – typically one of the bigger defense spenders in Europe – is reining in its budget, bringing it down to 1 percent of GDP or less through 2015. Forecast International projects that, by 2011, total defense spending across the European continent will amount to just under $300 billion . .

The post-Cold War European inclination has been to cut force totals in an effort to create more nimble, readily deployable militaries, while also curbing defense expenditure. Meanwhile, Europe’s governments have summoned these smaller forces to take on more missions with fewer resources. “Ultimately this trend cannot continue on either the financial or manpower scale, particularly as a new defense arm with separate demands takes root,” Darling notes.

According to Forecast International, defense spending across the entire European continent will reach only $266 billion in 2007, or about 58 percent of the U.S. baseline defense budget of $462 billion for the current fiscal year. And it isn’t only the militaries that suffer from a shortage of funds – many of these nations’ domestic defense industrial bases feel the crunch from lack of state orders needed to sustain themselves.

[Read more from the press release]