Davos live legal updates: Budget insult at Davos exposes fault lines in NATO law

When United States Treasury Secretary Scott Bessent dismissed President Emmanuel Macron’s reported support for a NATO exercise in Greenland by declaring that the French budget was “in shambles”, the remark was treated by many observers as another instance of abrasive Davos rhetoric. In legal and diplomatic terms, however, it represents something far more consequential. It touches the law of collective defence, the constitutional foundations of fiscal sovereignty within the European Union, the legal status of Greenland, and the rapidly deteriorating norms governing relations between NATO allies.

The exchange arose after a question about statements attributed to the French presidency supporting a NATO exercise in Greenland. Bessent responded not by addressing the legal or strategic merits of such an exercise, but by attacking France’s domestic finances, stating: “If this is all President Macron has to do when the French budget is in shambles, I would suggest he focuses on other things for the French people.”

This was not a casual aside. It was a deliberate conflation of three distinct legal domains: alliance security policy, national budgetary autonomy, and territorial sovereignty in the Arctic. Each of these is governed by a dense body of international and constitutional law. Treating them as interchangeable talking points risks destabilising the legal order that NATO and the European Union depend upon.

To understand the scale of the problem, one must begin with Greenland.

Greenland is an autonomous territory within the Kingdom of Denmark, with its own parliament and extensive self government under the 2009 Self Government Act. Defence and foreign policy remain formally reserved to Copenhagen, but in practice Denmark is legally bound to consult the Greenlandic authorities on matters affecting the territory. Any NATO exercise in Greenland would therefore require not only Danish approval, but also political consent from Nuuk, and compliance with domestic Danish constitutional law as well as international obligations toward indigenous peoples under instruments such as the United Nations Declaration on the Rights of Indigenous Peoples.

There is no legal mechanism by which the United States can unilaterally authorise NATO activities in Greenland, let alone acquire the territory, as some figures within the Trump administration have suggested in parallel remarks. NATO is a treaty based organisation. Article 4 of the North Atlantic Treaty allows for consultations when territorial integrity or security is threatened. Article 5 governs collective defence. Military exercises are conducted only by consensus of the North Atlantic Council. No member state, including the United States, has a veto over the political speech of another member, nor the legal right to dismiss proposals on the basis of that state’s domestic fiscal position.

Bessent’s attack on Macron therefore rests on no legal foundation within NATO law. A state’s budgetary condition is not a criterion for participation in alliance deliberations. Indeed, NATO’s own burden sharing debates are structured around defence spending as a percentage of GDP, not the general balance of national public finances.

Turning to the French budget itself, the legal reality is again more complex than the soundbite suggests.

France, as a member of the European Union and the euro area, is subject to the Stability and Growth Pact, reformed in 2024, and to Articles 121 and 126 of the Treaty on the Functioning of the European Union. These provisions require member states to avoid excessive deficits and to coordinate economic policy. Enforcement takes the form of surveillance, recommendations and, in theory, sanctions.

To describe the French budget as “in shambles” is not a legal determination but a political characterisation. France does indeed face high public debt and persistent deficits, but it remains in formal compliance with the restructured EU fiscal governance framework, which explicitly allows for flexibility in periods of economic stress and strategic investment, including defence and energy transition.

Moreover, budgetary sovereignty is a core element of constitutional law. Under the French Constitution of 1958, Parliament authorises the finance laws, while the executive proposes them. External commentary, even from allied governments, has no legal standing whatsoever in this process. For the US Treasury Secretary to imply that French fiscal policy disqualifies the French president from proposing NATO activities is, in legal terms, meaningless.

Yet it is politically and diplomatically corrosive.

International law is built on the principle of sovereign equality of states, enshrined in Article 2 of the United Nations Charter. That principle does not evaporate within alliances. NATO members are legally equal parties to the treaty, regardless of their debt levels or credit ratings.

By suggesting that France should refrain from alliance diplomacy until its budget is repaired, Bessent implicitly advances a doctrine of conditional sovereignty, in which economic weakness diminishes a state’s right to participate fully in collective security decisions. Such a doctrine has no basis in treaty law, customary international law, or the internal legal order of NATO.

The implications extend beyond France.

Only days earlier, Bessent had publicly disparaged Denmark as “irrelevant” in the context of US Treasury markets, accused the United Kingdom of “letting us down” over Diego Garcia, criticised Switzerland for its regulatory culture, and supported the claim that Greenland “needs to be part of the United States”. Taken together, these statements amount to a sustained pattern: the substitution of legal relations between allies with a hierarchy of perceived economic usefulness.

This is a direct challenge to the legal architecture of the post war Atlantic system.

NATO is not a commercial consortium. It is a collective defence organisation governed by public international law. Its legitimacy rests on the consent of sovereign states, not on their balance sheets. The European Union, likewise, is not a debtor’s cartel but a treaty based legal order in which fiscal rules are enforced through institutions, not through foreign ridicule.

There is also a deeper strategic contradiction.

If, as the Trump administration repeatedly claims, the world is more secure when the United States is strong, that strength is in large part legal and institutional. It lies in the predictability of American commitments, the stability of its alliances, and the credibility of its treaty obligations.

Publicly undermining a major NATO ally over its domestic budget weakens, rather than strengthens, that credibility.

From a strictly legal perspective, France’s right to propose or support a NATO exercise in Greenland is unimpaired by its fiscal position. Denmark’s right to accept or refuse such an exercise is unimpaired by the size of its Treasury holdings. Greenland’s right to be consulted is unimpaired by US strategic ambitions.

What is impaired is the assumption that disputes within the alliance will be handled through established legal and diplomatic channels rather than through personal attacks.

There is also a risk of legal escalation.

Should the United States attempt to block NATO activities, impose economic measures, or otherwise retaliate against France or Denmark over Greenland related policy, such actions could raise questions under the North Atlantic Treaty itself, under the WTO agreements, and under general principles of non intervention in domestic affairs.

In the extreme, persistent economic coercion against allies could amount to a breach of the duty of good faith performance of treaties, a cornerstone of international law codified in the Vienna Convention on the Law of Treaties.

Bessent’s comment about Macron may therefore appear trivial, but it reveals a jurisprudential shift. Security policy is being reframed as a function of fiscal obedience. Sovereignty is being treated as conditional. Alliance law is being subordinated to transactional politics.

For Europe, the lesson is stark. Participation in NATO does not shield states from being publicly delegitimised by the very power that claims to lead the alliance.

For the United States, the danger is systemic. Once budgets become grounds for silencing allies, there is no legal boundary left to prevent the same logic being applied to trade balances, regulatory standards, or domestic social policy.

In the language of law, what is at stake is not merely courtesy, but the continued viability of a treaty based international order.

Greenland is not a bargaining chip. The French budget is not a jurisdictional defect. NATO is not a creditors’ club.

To pretend otherwise is to replace law with leverage.

And once leverage replaces law, alliances cease to be legal commitments and become temporary arrangements of convenience, dissolvable whenever a balance sheet is deemed insufficiently impressive.

That is not a doctrine of strength.

It is the beginning of legal entropy in the very system the United States once built to prevent it.