The drums of war in Ukraine and rising global tensions are putting NATO defense budgets under an intense spotlight. With a potential return of Donald Trump to the White House, long-standing pressure on allies to significantly increase military spending is reaching a fever pitch. Trump has historically criticized NATO members for not meeting financial obligations, even suggesting he might “encourage” Russia to attack countries failing to meet targets – a prospect that has caused considerable anxiety among European policymakers, many of whom were reportedly unprepared for his potential return.
Against this backdrop, a crucial summit in The Hague looms. Leaders are expected to face renewed calls for higher defense investment, potentially targeting a significantly steeper benchmark than the current 2% of GDP goal agreed upon a decade ago. While the 2% target itself remains a challenge for many, there’s a push for some nations to reach levels closer to 5% in the coming years. For European leaders, this presents a delicate balancing act: demonstrating commitment to Washington while navigating national economic realities and asserting strategic independence. The uncertainty surrounding future U.S. support for Ukraine, a vital ally, also amplifies the need for European nations to potentially shoulder more of the defense burden, adding urgency to the spending debate.
A recent analysis reveals stark differences across the 32-member alliance, categorizing countries based on their progress toward boosting defense spending. While many occupy a middle ground, slowly inching past the 2% benchmark, distinct groups of frontrunners, risers, and laggards have emerged in this high-stakes “arms race.”
The Frontrunners: Exceeding Expectations
Some nations, acutely aware of the security threats, particularly those bordering Russia, have rapidly accelerated their spending.
Poland: Standing out as the leader, Poland has consistently devoted a massive 4.7% of its GDP to defense. Driven by its proximity to Russia and the conflict in Ukraine, Warsaw is investing heavily in modernizing its military, from drones to fighter jets. Poland is even exploring shifting some $6.9 billion in EU green project funding towards defense needs, a move that has earned favor in Washington. Their approach includes strategically mixing defense suppliers, notably becoming the first NATO country to make significant purchases of South Korean long-range artillery to bypass delays with other providers.
Baltic States: Estonia, Lithuania, and Latvia, former Soviet territories, demonstrate strong unity on defense. Already among the alliance’s top spenders, they’ve outlined aggressive plans to hit 5% of GDP on defense by next year or soon after. They are adopting a “porcupine” strategy inspired by Taiwan, focusing on acquiring mobile, lethal weapons to deter potential aggression in the Baltic Sea.
Greece: Surprisingly, Greece is a high spender among Mediterranean countries, allocating over 3% of its GDP to defense. Prime Minister Kyriakos Mitsotakis announced a substantial 12-year, $28 billion strategy focused on modern assets like uncrewed vehicles, drones, and advanced air defense systems.
These countries illustrate a direct response to perceived threats and the pressure to meet – and exceed – U.S. expectations.
The Risers: Making Progress Amid Challenges
Several major European powers are increasing their defense budgets, yet face internal hurdles or rely on temporary measures.
United Kingdom & France: As Europe’s nuclear powers, both the UK and France have shown steady increases. The UK’s defense budget reached 2.3% of GDP in 2024, boosted by R&D and operational costs. While Prime Minister Keir Starmer aims for 2.6% by 2026 (partially by reclassifying spending), significant budget constraints make a path to 3% unclear. France hit the 2% mark last year under President Macron, but its high national debt makes finding the necessary funds for further significant increases challenging, especially as tax hikes are reportedly off the table.
Germany & Sweden: Both Germany and Sweden have revised debt rules to facilitate higher defense spending, spurred by the conflict in Ukraine – a “Zeitenwende” or turning point, particularly for Germany which had long viewed the 2% target as non-binding. Germany exceeded 2% in 2024 (2.1%) for the first time since 1990, though this partly relied on a special temporary fund rather than fully boosting combat capabilities. Sweden, after joining NATO in 2024, saw its spending surge from 1.5% to 2.2% and is also tweaking rules to allow defense loans.
Turkey: While missing the 2% target in recent years, Turkey possesses NATO’s second-largest military and a well-developed arms industry, often seen as punching above its spending weight in terms of capabilities.
These nations are navigating the complexities of national finances and political will to align with NATO goals, often under the shadow of geopolitical necessity.
The Laggards: Falling Behind the Target
Some strategically vital countries are significantly behind the spending curve, facing domestic political resistance and historical dependencies.
Canada: Spending just 1.37% of GDP on defense, Canada has notable equipment gaps. Historically prioritizing social spending and climate goals while relying on U.S. defense guarantees, Ottawa has pledged to reach 2% sooner, framing rearmament as a sovereignty issue in light of potential U.S. policy shifts. However, meeting this goal quickly requires a rapid overhaul of procurement and industrial capacity.
Spain: Excluding Iceland (which has no army), Spain remains NATO’s lowest spender at 1.3% of GDP in 2024. Despite an ambitious plan to reach 2% this year, Prime Minister Pedro Sánchez faces significant opposition from his left-wing coalition partners. Facing pressure to protect its welfare system, Spain has even reportedly sought a “carveout” from new, higher spending targets.
- Italy: Slightly above Spain at 1.5% last year, Italy’s government has also pledged to reach 2% this year. However, this may involve “clever accounting,” potentially including civilian infrastructure projects like a planned bridge to Sicily under defense-adjacent spending. High debt levels and public pressure to maintain pensions and welfare make increasing military budgets politically contentious.
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These countries highlight the difficulty of rapidly shifting entrenched spending priorities and overcoming domestic political hurdles, despite external pressure and security concerns.
Beyond the Numbers: A Strategic High-Wire Act
The push for increased defense spending is more than a budgetary exercise; it’s a critical strategic challenge. The war in Ukraine underscores the need for a more capable and ready alliance. Kyiv’s heavy reliance on U.S. aid, and the potential for that support to waver under a new administration, creates apprehension in Europe. For Ukraine, the outcome of U.S. elections can feel like a “matter of life and death,” leading them to view a Trump presidency as a “trip to the casino” – a gamble with potentially high rewards or devastating losses. This uncertainty directly fuels Europe’s imperative to boost its own capabilities and demonstrate value to Washington.
Leaders across NATO must balance placating a potentially demanding U.S. ally, demonstrating solidarity with Ukraine, addressing real security threats, and managing constrained national budgets and skeptical electorates. The path to significantly higher defense spending is paved with political and economic obstacles for many. While some nations are clearly stepping up, others face an uphill battle to meet even the existing 2% target, leaving questions about the alliance’s collective readiness for an increasingly volatile global landscape and the explicit demands from key members.
