The cost of sending troops and military hardware around the world to provide security when and where it is needed is causing major financial headaches across Europe.

Indeed, Europe's finance ministries face a dilemma over how much of their stretched national budgets to allocate to the military; and European defence officials must somehow ensure that precious funding is spent in the most efficient manner.

The problem is acute in Britain, not only because of our current troop deployments in Afghanistan and Iraq, but also because of the unfair systems by which Nato-led missions and military operations under the European Security and Defence Policy are financed. Under both systems, those who accept responsibility to take military action also take on the lion's share of the financial burden. It is time our collective security alliances overhauled these inequitable funding methods and made sure that all member states pay a proportionate price for global security.

It is no secret that Britain's Ministry for Defence is facing a funding crisis. Despite British forces having been engaged in two major military operations since 2003, defence spending represents only 2.3 per cent of GDP - the lowest since the 1930's. As a share of total government spending, defence expenditure has fallen from 7.8 per cent in 1998 to 6.1 per cent in 2006.

Owing to the ongoing operations in Iraq and Afghanistan, any future British government will inherit a military that is overstretched, undermanned, and working with worn-out equipment. The unfunded liability associated with this will total billions of pounds.

Better military and financial burden-sharing within both Nato and the ESDP would not only benefit the UK, but would also help to alleviate some of the pressure on other national defense budgets in Europe.

We must take full advantage of our organised security structures to ensure that the global security burden is shared in a fair and proportionate manner. To date, this has not happened.

For Nato to work properly, its members must be prepared not only to supply troops and equipment for Nato-led military operations, but also to fund and sustain these operations until missions are completed. Instead, certain members now do a disproportionate amount of the fighting, funding, and dying.

This is not sustainable. All Nato countries must understand that membership brings implicit and explicit responsibilities to ensure that their military forces have the capability to fight and win on the modern-day battlefield.

They must recognise the need to create a sounder financial system for alliance operations.

There is currently common funding for certain shared costs, such as headquarters, with contributions linked to the member states' GDPs. But the amounts covered by common funding are only a small part of an operation's total cost.

All other expenses "lie where they fall": The more troops and equipment a country contributes to a mission, the more it ends up paying. The cost to the UK for its contribution to the Nato operation in Afghanistan, for example, totals £3.1 billion - a heavy burden on British taxpayers.

Because of the expeditionary nature of today's military operations, that system is an anachronism. Yet, fixing the problem is easier said than done. Nato has been trying for years - without success - to get its member states to spend the required two per cent of GDP on defence. Compliance would mean an estimated $67 billion increase in Alliance-wide defence spending, or roughly the equivalent of adding another British or French defense budget - no panacea, but very helpful nonetheless.

Last April, the leader of the UK's opposition Conservative Party, David Cameron, explained why we should establish a real operational fund for Nato expeditionary missions, with every member state required to contribute. Doing so would provide some reimbursement to countries that currently carry an unduly large part of the burden. It would also offer potential funding to countries that might deploy forces but face short-term financial difficulties in meeting the cost.

The new Nato operational fund would clearly be more equitable than today's system, which penalises proactive member states and rewards members that prefer to do nothing. Why should the few carry the many? Common security implies common commitment.

Moreover, solving Nato's burden-sharing problem is not enough.

The EU crisis management missions face similar issues when military forces are involved. EU civilian crisis management is funded directly from the Common Foreign and Security Policy budget.

But, apart from the common costs of an operation (usually less than eight per cent of the total), the ESDP uses the same funding method as Nato, which means that the bulk of the money for both ESDP and Nato-led military operations comes out of the same defence pot in each member state.

So there is no point in fixing one funding mechanism without simultaneously fixing the other.

Interestingly, there was some discussion under the French presidency about reforming the so-called Athena Mechanism, which is the means used to determine the amount that each EU member state contributes to the common costs of a mission. Like the Nato common fund, EU contributions are largely based on GDP.

The French also called for the "costs lie where they fall" concept to be abandoned in the name of financial solidarity.

Any change made to the Athena Mechanism must include reforms to its rules and procedures. Currently, non-EU members of Nato that contribute troops to an operation cannot vote - or even be present at votes - when the Athena Special Committee sets the mission budget, even though their troops will fight and possibly die. This is discriminatory, undemocratic, and no way to treat important allies like Norway and Turkey.

Collective security alliances are just that - collective. It is time that everyone contributed their fair share to the common good.

The author is the UK's Shadow Secretary of State for Defence and member of Parliament.

© Project Syndicate, 2009. www.project-syndicate.org