In 2014, the NATO Allies agreed that within a decade, they would spend at least 2% of their GDP on defence. Following Russia’s 2014 annexation of Crimea and war in the Donbas, and its full-scale invasion of Ukraine in 2022, the European Allies have focused more on strengthening their military posture. Donald Trump’s insistence that Europe should take larger responsibility for its own security and the doubts he has sown regarding America’s commitment to its NATO obligations have strengthened European resolve and emphasised the need for the continent to foster greater military independence, including from the US. Trump’s vigorous return to these ideas at the start of his second term will make defence spending, in particular the Secretary General’s proposal for a new NATO target, the key agenda item for The Hague Summit.
Download and read as a PDF: The Central Issue. Defence Spending
The Wales Summit
Defence spending in relation to GDP has become one of the most important indicators of how committed the Allies are to the collective defence of NATO territory, of their readiness to improve their military capabilities, and of their wider commitment to transatlantic security cooperation. In 2006, NATO defence ministers established a guideline that Allies should invest 2% of their GDP in defence.[1] In 2014, following Russia’s illegal annexation of Crimea, its military interference in eastern Ukraine, and its support for the separatist so-called republics of Donetsk and Luhansk, heads of state and government formalised the guideline as the Wales Summit Defence Investment Pledge.[2]
Even after four years, only six Allies had reached the 2% target
At that time, only Greece, the UK, and the US met the goal.[3] Obviously, the remaining Allies could not align national budgets with the new NATO requirement immediately, but even after four years, only six Allies had reached the 2% target.[4] The trend over much of the following decade was that while the eastern flank Allies—those most vulnerable to the threat posed by Russia—increased their defence spending, most were unable to do so, and some even recorded a decrease. In many NATO countries, the pandemic drew attention away from defence. In others, an expectation that a return to ‘business as usual’ would be possible and that there was no need to jeopardise important economic relations with Russia, for example in energy supplies, also meant a lesser focus on defence than the Defence Investment Pledge required.
A Defence Spending Zeitenwende
This situation changed fundamentally with Russia’s full-scale invasion of Ukraine. NATO returned to a strong focus on collective defence, committing in Madrid to “significantly strengthen our deterrence and defence for the long term to ensure the security and defence of all Allies” and to fund defence “commensurate with the challenges of a more contested security order.”[5] Former German Chancellor Olaf Scholz gave the world a new term for this shift: zeitenwende, or a turning point.
The 2% target also returned to the NATO agenda. In Vilnius, in 2023, NATO stated that since the Wales Summit, “Allies have made remarkable progress, and all have increased their defence spending, [and] developed further their forces and capabilities.”[6] Nevertheless, even a year after the start of Russia’s full-scale invasion of Ukraine, only 10 Allies had reached NATO’s 2% target.[7] By the time of the 2024 Washington Summit, however, 23 of 30 Allies (including new members Finland and Sweden, but excluding Iceland and Luxembourg) were estimated to be on track to reach the target that year.[8] Almost all Allies had long-term plans to do so in the coming years, and some to significantly exceed it.[9]
Belgium, Canada, and Spain have announced intentions to increase their defence budgets to 2% years earlier than they had originally planned
The Trump-Biden-Trump Consensus
Following Donald Trump’s re-election, doubts about the degree to which the European Allies can rely on the most powerful NATO member have further impacted defence spending. Trump hinted for the first time in December 2024 that he would expect NATO member states to spend 5% of their GDP on defence. Indirectly, he also threatened to only defend Allies “if they pay their bills.”[10]
This demand from the US was, perhaps, no surprise. In his first term as president, Trump had urged European Allies to increase their defence spending to 4% of GDP.[11] But the Biden administration, too, had repeatedly called on its European partners to spend more on defence, one of the very few policy positions on which the Trump and Biden administrations overlapped.[12] US defence spending is significantly higher than that of the other 31 Allies, who, on average, spent 1.78% and 2.02% of their GDP in 2023 and 2024, even if it is nowhere near 5% (3.23% and 3.38% respectively).
New and Old Initiatives
Increasing the 2% target is not, however, a new discussion for the summer of 2025. The drive to adjust the target upwards is not solely related to Trump’s second election victory. In February 2023, Allies on NATO’s eastern flank called for a new target of 2.5% or 3%.[13] NATO was not, however, able to find consensus on this at its summit in Vilnius. Since spring 2024, more Allies have supported an increased defence spending target, usually to 2.5%, with former UK Prime Minister Rishi Sunak the most prominent supporter.[14] Since Donald Trump was re-elected, the number of proposals for a new target has, however, increased. In February 2025, NATO Secretary General Mark Rutte proposed 3% as a new minimum spending target, which was immediately supported by several Allies.[15]
In April 2025, US Secretary of State Marco Rubio once again called on all NATO member states to invest 5% of their GDP in defence.[16] As the summit approached, this figure began to be considered more seriously across the Alliance as more and more Allies connected it with convincing the president to remain committed to NATO.[17] The discussion in the lead-up to the summit has had positive practical outcomes, too. Belgium, Canada, and Spain, formerly far away from 2%, have announced intentions to increase their national defence budgets to reach NATO’s current 2% target years earlier than they had originally planned.[18]
3.5% or 5% for Defence?
Most Allies now support increasing the 2% target at the summit in The Hague. A consensus has begun to emerge around a figure of 5%, consisting of two parts: 3.5% for conventional defence, and 1.5% for “broader security-related items.”[19] This is the first time that a spending target for this second category has been on the table. One bonus is that it is also achievable for small countries such as Iceland and Luxembourg. Iceland has already announced an increase in its spending on defence-related investments.[20] The likely target date for implementation is 2032, giving time for lower-spending Allies to adjust their budgets.
Challenges
There are, however, still hurdles to overcome and questions to be clarified before a new target can be adopted. NATO Secretary General Mark Rutte must, of course, first turn the growing consensus into actual consensus in The Hague. Some Allies may still be difficult to persuade, for example, those that have persistently spent less than 2% in the past decade, or those that have only recently met the target. Such member states may find the magnitude of the new core defence target—more than twice the current spending level of, for example, Belgium, Canada, Italy, Portugal, Slovenia, and Spain—problematic.
Allies have already declared national defence spending plans that are difficult to reconcile with the proposed NATO target
Major NATO Allies, meanwhile, have already declared national defence spending plans that are difficult to reconcile with the proposed NATO target. France, the least discouraging, is planning to spend 3 to 3.5% by 2030.[21] Germany currently plans to spend more than 2% until 2029, although it has also declared that its defence spending will be oriented towards NATO targets.[22] The UK’s recently released defence review suggests that defence spending will rise to 2.5% by 2027 and to 3% in the next parliament (2029-34).[23]
There is clearly much still to discuss. Even so, only Spain has publicly declared it is not prepared to meet the new target (but also that it would not veto agreement in the North Atlantic Council).[24]
For some Allies, increases of tens of billions of euros will be needed to reach the new target. Allies may thus also believe that the proposed timetable for implementation will give them too little time to increase defence spending so substantially. Indeed, the proposed timeline for implementation has proved something of a sticking point with Allies such as Spain and the UK seeking longer implementation periods.[25] By contrast, Danish Prime Minister Mette Frederiksen, among others, has questioned whether 2032 is not too late.[26] Russia will continue to rebuild its military capabilities after the end of its war in Ukraine, and European intelligence agencies have warned that it will be able to attack NATO by the end of this decade. [27]
Another unresolved issue is the apparent lack of a concrete definition for the broader security-related items that make up the 1.5% part of the target. Dick Schoof, prime minister of the Netherlands, has said that it includes infrastructure and cyber-defence among other areas. It has also become known that it could include, for example, arms deliveries to Ukraine.[28]
But without a clear definition, there is a risk that this target will be misused by Allies. Italian Foreign Minister Antonio Tajani, for example, has reportedly suggested that the Messina bridge project, which connects Calabria to Sicily, should be included on the grounds that better connections to the island mean more security.[29] The example is frivolous, but if the intention of a new spending target is partly to keep the Americans on board, Europeans must avoid the impression that broader security-related items are only being introduced because most Allies have no means to raise their core defence spending to 5%.
Conclusion
It is almost certain that the Allies will agree on a new target in The Hague. The higher it is, the better prepared Europe will be for future military challenges. It is most important, however, that spending increases are not only for the short term, but that they are sustained for the coming years and decades. A new defence spending target will contribute to a more independent Europe in terms of defence, strengthen the European pillar within NATO, and produce a fairer burden sharing between all NATO Allies.
Endnotes
[1] NATO, “Defence expenditures and NATO’s 2% guideline,” 3 April 2025.
[2] NATO, “Wales Summit Declaration. Issued by the Heads of State and Government participating in the meeting of the North Atlantic Council in Wales,” press Release (2014) 120, 5 September 2014, para. 14.
[3] All defence spending figures in this brief: NATO, “Defence Expenditure of NATO Countries (2014-2024),” 17 June 2024.
[4] The original three, plus Estonia, Latvia and Poland.
[5] NATO, “Madrid Summit Declaration. Issued by NATO Heads of State and Government participating in the meeting of the North Atlantic Council in Madrid 29 June 2022,” press Release (2022) 095, 29 June 2022, para. 9, 19.
[6] NATO, “Vilnius Summit Communiqué. Issued by NATO Heads of State and Government participating in the meeting of the North Atlantic Council in Vilnius 11 July 2023,” press Release (2023) 001, 11 July 2023.
[7] Denmark, Finland, Hungary, and Lithuania had also achieved the goal.
[8] Luxembourg has a special arrangement: Jan Kreller, ”NATO bestätigt Luxemburgs Sonderweg [NATO confirms Luxembourg’s special path],” Luxemburger Wort, 12 July 2023.
[9] Felix Gasper and Tony Lawrence, “Defence Spending: Who Is Doing What? July 2024,” ICDS, 3 July 2024.
[10] Victor Goury-Laffont, “Trump reportedly wants NATO members to boost defense spending to 5 percent of GDP,” Politico, 21 December 2024.
[11] “Trump urges Nato members to double military funding target,” BBC, 11 July 2018.
[12] “75. Jahrestag der Nato: Biden bekräftigt die US-Mitgliedschaft im Militärbündnis [75th anniversary of NATO: Biden reaffirms US membership in the military alliance],” Tagesspiegel, 4 April 2024.
[13] Robbie Gramer, Amy Mackinnon, Jack Detsch, “Eastern Europe Wants NATO to Beef Up Defense Spending,” Foreign Policy, 2 February 2023.
[14] Noah Keate, “UK wants NATO defense target upped to 2.5 percent,” Politico, 24 April 2024.
[15] Paul McLeary, Joshua Posaner, “Rutte: NATO spending target will be ‘considerably more than 3 percent’,” Politico, 15 February 2025.
[16] Philippe Jacqué, “Marco Rubio on a mission to reassure Europe about NATO,” Le Monde, 4 April 2025.
[17] William Jackson, “NATO weighs increasing defense spending to 5% under US pressure,” Straight Arrow News, 14 May 2025.
[18] Maïthé Chini, “New €10-billion plan aims to beef up Belgium’s defence capacity,” The Brussels Times, 4 March 2025; Ali Abbas Ahmadi, “Canada pledges to meet Nato’s 2% defence spending target within a year,” BBC, 9 June 2025; Sam Jones, “Spain unveils €11bn plan to reach long-delayed Nato defence spending target,” The Guardian, 22 April 2025,
[19] “NATO’s Rutte says he assumes alliance will agree on 5% spending target,” Reuters, 26 May 2025.
[20] Alice Tidey, “Military-free Iceland should have ‘skin in the game’ in securing Arctic region, PM says,” Euronews, 28 May 2025.
[21] Leigh Thomas, “French fiscal woes crimp Macron`s defence spending plans,” Reuters, 5 March 2025.
[22] CDU, CSU, SPD, “Verantwortung für Deutschland [Responsibility for Germany],” April 2025.
[23] Dan Sabbagh, “UK yet to commit to Nato plan for rise in defence spending to 3.5% of GDP,” The Guardian, 11 June 2025.
[24] Henry Foy, Barney Jopson, “Spain left as sole major holdout on Nato’s 5% defence spending goal,” Financial Times, 24 May 2025; “Spain will stick to 2% of GDP defence spending goal, defence minister says,” Reuters, 5 June 2025.
[25] Laura Kayali and Jacopo Barigazzi, “Trump’s 5 percent defense spending target seemed far-fetched. Now not so much,” Politico, 4 June 2025.
[26] “NATO defence spending target may come ‘too late’ for Ukraine crisis: Denmark,” RFI, 2 June 2025.
[27] Katrin Jochecova, “Russia could start a major war in Europe within 5 years, Danish intelligence warns,” Politico, 11 February 2025.
[28] Aurelie Pugnet, “NATO countries would count Ukraine military aid toward new 5% defence spending target,” Euractiv, 3 June 2025.
[29] “Brussels Playbook,” Politico, 12 June 2025.
Disclaimer: The views and opinions contained in this paper are solely of its author(s) and do not necessarily represent the official position of the International Centre for Defence and Security or any other organisation.
Read our series of briefs that examine some of the key issues of The Hague Summit.