Cliff Notes – NATO likely to hike defense spending, amid economic concerns
- NATO defence ministers indicated broad support for a potential increase in spending to 5% of GDP, driven by escalating threats from Russia and geopolitical instability.
- US Defence Secretary emphasised that all member nations need to contribute, highlighting current burdens on the US military and ongoing reliance on American defence.
- The proposed hike raises questions about feasibility amid economic downturns in major European economies, potentially leading to public backlash against increased military expenditures.
NATO likely to hike defence spending, amid economic concerns
A NATO defence ministers’ meeting in Brussels on Thursday showed “broad support” for signing off a historic hike in defence spending at a crunch summit later this month. This was their response to the growing threat from Russia and a “more dangerous world” in general, the military alliance’s Secretary General Mark Rutte told reporters.
“I will propose an overall investment plan that would total 5% of gross domestic product in defence investment,” Rutte announced, following months of pressure from US President Donald Trump for allies to more than double the present target.
Current NATO guidelines encourage states to spend 2% of their economic output on their militaries. However, not all of the alliance’s members meet this target, raising questions of how they will reach an even higher spending goal.
Splitting the bill
Trump has long criticized NATO allies for relying on the US’ large military might as a strategy to defend the European continent. In 2023, more than two thirds of the 32 NATO countries’ collective $1.3 trillion (€1.14 trillion) military spending came from Washington, according to data compiled by the Stockholm International Peace Research Institute (SIPRI).
On Thursday, US Secretary of Defense Pete Hegseth drove home the message to the rest of the alliance once again. “Every shoulder has to be to the plough. Every country has to contribute at that level of 5% as a recognition of the nature of threat,” he said.
Leaders of the world’s most powerful defence alliance are set to gather in three weeks in the Dutch city of The Hague. Topping the agenda will be discussions on the ongoing war in Ukraine, and Russia’s resulting massive rearmament drive. It seems likely that NATO members will officially commit to the 5% goal at these upcoming talks.
Giving in to pressure
Under US pressure, and with Europeans alarmed by Russia’s full-scale invasion of Ukraine in 2022, NATO military spending has already burgeoned in recent years. Most countries now meet the 2% threshold, which was agreed upon 11 years ago. But around one third of the alliance still doesn’t, including Portugal, Italy, Canada, Belgium, and Spain.
Most NATO states had indicated willingness to spend more, but the 5% goal was considered far-fetched when Trump floated the idea earlier this year. Almost half a year on, the message seems to be resonating with many in the alliance.
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Last month, German Foreign Minister Johann Wadepuhl also indicated Germany could get on board with the goal.
Several NATO countries, including Poland, Estonia and Lithuania, have already committed to spending 5% or more in the future. All are former Soviet states, and two of them share a border with Russia.
Since taking office in January, the “America-first” president has strained the NATO alliance with threats not to help defend alliance members that didn’t meet spending targets should they be attacked. His designs on the semi-autonomous Danish territory Greenland have also alienated allies, as have his attempts at bilateral talks to find an end to Russia’s war in Ukraine, which sidelined European partners and left Ukrainian President Volodymyr Zelenskyy largely marginalized.
Questions remain
There are still many open questions to be answered, one of them being the timeline.
On Thursday, Estonian Defense Minister Hanno Pevkur spoke of committing to reaching 5% within five years. “We don’t have time for ten years, we don’t even have time for seven years, to be honest,” he said.
But the official focus at this week’s meeting was on working out what exact capabilities NATO would need and may currently be missing to defend itself if a member of the alliance were attacked. After the talks, Rutte spoke of the need to upgrade air defence systems and long-range missiles, among other things.
German Defense Minister Boris Pistorius said Germany might need as many as 50,000 – 60,000 more troops in its standing forces to meet defence needs in the coming years.
Increased spending amid economic downturn
While consensus appears to be forming, it is also clear that increasing military spending to 5% of GDP would be an enormous strain on public finances, particularly as Europe’s two major economies, Germany and France, face tough times.
Paris and Berlin are touting increased defence spending as a chance to fuel economic growth in Europe, but there is a risk of public backlash. In April in Rome, the opposition Five Star Movement led a protest against an EU drive to rearm the bloc — a move supported by the government of far-right Prime Minister Giorgia Meloni — reportedly drawing tens of thousands of people.
According to Cullen Hendrix, an expert from the Peterson Institute for International Economics, a US think tank, a 5% spending target would essentially put NATO countries on “war footing.”
“In 2023, just nine countries spent 5% of GDP or more on defence: Algeria, Armenia, Israel, Lebanon, Oman, Russia, Saudi Arabia, and South Sudan,” Hendrix wrote in February. “Most are, or were, at war. Five of these are authoritarian petro-states, unencumbered by competitive elections or the need to tax their populaces to fund this military largesse.”
There is also a risk that increased spending will make Europe less safe, Hendrix warned. “Increasing military spending to this extent would likely catalyze an arms race with those near-peer competitors.”
On Thursday in Brussels, Rutte argued there was little choice but to spend significantly more on defence, pointing to recent comments by the German Chief of Defense Carsten Breuer, who posited that Russia would be ready to mount an attack on NATO states by 2029.
“We live in a more dangerous world,” Rutte said. “We are safe today, but if we don’t do this, we are not safe in the foreseeable future.”