UPDATE 3-Trump criticizes European allies before NATO anniversary meet
* Gathering of 29 allies to celebrate 70th anniversary
* Trump urges Europe to "shape up," critical of Macron
* Erdogan steps up demand on terrorist group recognition (Adds more Trump quotes, Stoltenberg tweet, reinstates details of summit agenda)
LONDON, Dec 3 (Reuters) - U.S. President Donald Trump lashed out at European allies before a NATO anniversary summit in London on Tuesday, singling out France's Emmanuel Macron for "very nasty" comments on the alliance and Germany for spending too little on defense.
Underlining the breadth of strife in a transatlantic bloc hailed by its backers as the most successful military alliance in history, Trump demanded that Europe pay more for defense and also make concessions to U.S. interests on trade.
The attack echoed a similar tirade by Trump ahead of NATO's last summit in July 2018. It will add to the growing doubts over the future of the 29-member alliance, described last month by Macron as "brain dead" in the run-up to a London meeting intended to be a 70th anniversary celebration.
"It's a tough statement, though, when you make a statement like that, that is a very, very nasty statement to essentially 28, including them, 28 countries," Trump told reporters as he met the head of NATO in London.
"Nobody needs NATO more than France," he said, adding that France, where Macron is seeking to push through delicate reforms of its large state sector, was "not doing well economically."
Explicitly linking his complaint that Europe does not pay enough for NATO's security missions to his staunch "America First" defense of U.S. commercial interests, Trump said it was time for Europe to "shape up" on both fronts.
"It's not right to be taken advantage of on NATO and also then to be taken advantage of on trade, and that's what happens. We can't let that happen," he said of transatlantic disputes over everything from the aerospace sector to a European "digital tax" on U.S. technology giants.
Dismissing recent signals from Germany that it was ready to do more to match a NATO target of spending two percent of national output on defense, Trump accused it and other nations which spend less than that of being "delinquent."
ERDOGAN THREAT ON BALTICS PLAN
NATO Secretary-General Jens Stoltenberg, who shared omelet and sausages with Trump at their breakfast meeting, tweeted that the pre-summit talks had got off to an "excellent start."
But the U.S. leader's broadside came only hours after splits opened up elsewhere in the alliance, with Turkey threatening to block a plan to defend Baltic states unless the alliance backs it in recognizing the Kurdish YPG militia as a terrorist group.
The YPG's fighters have long been U.S. allies on the ground against Islamic State in Syria. Turkey considers them an enemy because of links to Kurdish insurgents in southeastern Turkey.
"If our friends at NATO do not recognize as terrorist organizations those we consider terrorist organizations... we will stand against any step that will be taken there," Turkish President Tayyip Erdogan said before traveling to London.
Erdogan, who has already strained alliance ties with a move to buy Russian air defense systems, said he would meet Polish President Andrzej Duda and leaders of Baltic countries.
While Trump hailed Turkey as a good NATO ally, U.S. Defense Secretary Mark Esper earlier warned Ankara in a Reuters interview that "not everybody sees the threats that they see" and urged it to stop blocking the Baltics plan.
Queen Elizabeth will host the leaders at Buckingham Palace. But even the British hosts, for generations among the most enthusiastic champions of the trans-Atlantic partnership that NATO represents, are disunited over their project of quitting the EU and distracted by a rancorous election due next week.
“The question is, as we celebrate 70 years, are we waving in celebration or do people think we are drowning?” said a senior European NATO diplomat.
In a bid to placate Trump, Europe, Turkey and Canada will pledge $400 billion in defense spending by 2024, and also agree to reduce the U.S. contribution to fund the alliance itself.
The allies will approve a new strategy to monitor China's growing military activity, and name space as a domain of warfare, alongside air, land, sea and computer networks.
Leaders will issue a statement condemning Moscow's Crimea annexation and its military build-up, recommitting to the alliance's collective defense pledge.
While giving few specifics, Trump said he believed Russia wanted deals on arms control and nuclear issues, and that he would be willing to bring China into such accords. (Reporting by Robin Emmott in London, Ali Kucukgocmen in Istanbul, Joanna Plucinska in Warsaw; Writing by Mark John Editing by Gareth Jones and Peter Graff)
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