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US President Donald Trump attends a meeting with NATO Secretary General Jens Stoltenberg ahead of the NATO summit in Watford, London, Britain, December 3, 2019.
Kevin Lamarque | Reuters
As US President Donald Trump seeks to immediately resolve his biggest political and economic problems, the thorny issue of NATO defense spending is likely to quickly return to the global spotlight.
Trump’s relationship with the Western military alliance was rocky during his first presidency, with the Republican leader frequently criticizing NATO member states for failing to meet a 2014 goal of spending at least 2% of GDP on defense each year. .
Ahead of his second term, Trump signaled that the debate over military spending (and Trump’s perception that NATO members are too reliant on the United States for their own security) will be back on the agenda, stating that the 32 countries NATO members should contribute. even more towards defense.
“I think NATO should have a contribution goal of 5% (of its GDP).” he said in January. “Everyone can afford it, but they should be at 5%, not 2%,” he said in a press conference in which He also refused to rule out the use of military force to seize the Panama Canal or Greenland. — a territory that belongs to Denmark, a member of NATO.
There has been a broad increase in defense spending among NATO members since Trump was last in power. In 2018, at the height of the White House leader’s irritation with the military bloc, only six member states even reached the 2% GDP target.
On the contrary, NATO data estimates that 23 members met the 2% target in 2024. While some have surpassed that threshold (such as Poland, Estonia, the United States, Latvia and Greece), major economic powers, such as Canada, Spain and Italy, are among the stragglers below the contribution threshold.
No NATO member has met Trump’s suggested 5% target, including Washington under the administration of his predecessor Joe Biden.
Polish President Andrzej Duda fully supported Trump’s call for increased spending across NATO, telling CNBC on Wednesday that it was It is “essential” that Europe returns to the defense spending of the Cold War era to defend itself from countries like Russia and its expansionist foreign policy.
“If we want to defend ourselves against this – and we, the Poles, strongly want to – we will spend about 5% of GDP on defense this year. We are aware that we have to modernize our armed forces, we have to be strong and provide a real element deterrent to keep Russian aggression at bay,” he told CNBC’s Steve Sedgwick on Wednesday on the sidelines of the World Economic Forum in Davos, Switzerland.
It is perhaps understandable, given that it borders war-torn Ukraine, that Poland spends the largest proportion of its GDP on defense compared to other NATO members. NATO estimates for 2024 They suggest that Warsaw spent 4.12% of its GDP on defense last year.
New leader, old problems?
Former Prime Minister of the Netherlands Mark Rutte, now Secretary General of NATO, has only been in his new role for a few months, but he has already repeatedly called on member states to increase defense spending.
His priority, however, is to get lagging countries to reach the 2% goal, he said.
“Fortunately, thanks to Trump in his first term, we have increased defense spending… but we all have to get to 2%,” he told CNBC’s Steve Sedgwick at the World Economic Forum in Davos on Thursday.
Countries that have not yet reached the required target “have to get to 2% in the coming months. It has to be done this year,” said Rutte, who has also faced criticism over why Dutch defense spending fell short of the target. of NATO for a long time. of his time in office.
Outgoing Dutch Prime Minister Mark Rutte speaks to the media on the first day of the 2023 NATO Summit on July 11, 2023 in Vilnius, Lithuania.
Strange Andersen | fake images
Rutte said it was not impossible to increase defense contributions, noting that European nations could afford to cut spending on pensions, health and social security or raise taxes to boost defense spending.
“In the end, this is a rich place, in Europe we have incredible amounts of wealth… so in terms of defense spending, we can do this,” he said.
However, pressing domestic spending priorities – as European nations face high food and energy costs – have limited regional governments’ ambitions to increase defense and security funding.
Dutch Prime Minister Dick Schoof told CNBC on Wednesday that spending 5% of the national GDP on defense was a difficult task.
“I think it’s going to be very, very difficult. And if I look at the effect of those types of increases, that’s almost impossible. I think the discussion on defense spending should also be negotiated and discussed from a strategic point of view (we should do it ), decide) where we want to be with NATO… and then decide what kind of money we’re going to put in,” he told CNBC’s Dan Murphy.
Spending restrictions
Swedish Finance Minister Elisabeth Svantesson said she had to balance the desire for more defense spending with the need for economic growth, which has been a challenge in much of Europe.
“It is a very strong discussion about how much (should be spent on defense), whether 2% or 5% (of GDP). But the issue, from my point of view, is that we have to do what we have to do. defend ourselves and having a strong NATO, but it’s also a matter of growth,” he told CNBC’s Dan Murphy in Davos on Wednesday.
“I am finance minister… it depends on growth. First of all, we need growth in Europe, and then we need to know what we can do in terms of military spending,” she said.
Sweden, which joined as NATO’s newest member in 2024, announced last year that it plans to increase defense spending to 2.4% of GDP in 2025 and 2.6% of economic output by 2028.
Svantesson said Trump’s perspective on the need for more defense spending by NATO members was “fair, because we have to do more in Europe”, but argued that some member states were not even meeting the 2% target. and that NATO countries “with larger and larger economies than Sweden” needed to do more.
Spain is likely to become the target of Trump’s wrath. The European Commission forecasts an expansion of 3% for the country’s economy last year, but Spain allocated only 1.28% of its GDP to security in 2024.
The president of the Spanish Government, Pedro Sánchez, defended Madrid’s recordtelling CNBC in Davos that the country has worked hard to increase its defense spending.
“Rest assured that Spain is very committed to achieving this goal of 2% of GDP in defense spending, but let me also tell you that, in the last 10 years, we have also increased our total defense spending by 70%” , he stated on Wednesday. . “If we take these figures in absolute terms, what we can say is that Spain is the tenthth main contributor to NATO.”
