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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 on 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’s defense spending is likely to quickly return to the global stage.
Trump’s relationship with the Western military alliance was strained during his first term in office, with the Republican leader often accusing NATO member states of failing to meet a 2014 target of spending at least 2% of their GDP on defense each year.
Ahead of his second term, Trump indicated that the debate over military spending — and Trump’s claim that NATO members are too dependent on the US for their security — would be back on the agenda, and that all 32 NATO countries should contribute. even more so for defense.
“I think NATO should have 5% (as a target contribution to NATO of their GDP)” he said in January. “Everyone can pay, but they should be at 5%, not 2%,” he said at the press conference. He refused to use military force to take the Panama Canal or Greenland — Denmark’s member territory of NATO.
Defense spending among NATO members has increased since Trump was last in power. In 2018, at the time of the White House leader’s anger with the military bloc, only six member states met the 2% of GDP target.
On the contrary, According to NATO data, 23 members met the 2% target in 2024 While some exceeded this threshold – such as Poland, Estonia, the USA, Latvia and Greece – major economic powers such as Canada, Spain and Italy are among those below the contribution threshold.
No NATO member has reached the 5% target suggested by Trump, including in Washington, under his predecessor Joe Biden’s administration.
Polish President Andrzej Duda fully supported Trump’s call for more spending across NATO, he told CNBC on Wednesday. Europe’s “significant” return to Cold War-era defense spending. To defend against Russia and its expansionist foreign policy.
“If we want to defend against that – and we Poles do resolutely – we’re spending about 5% of GDP on defense this year. We know we need to modernize the armed forces, make them strong and provide a real deterrent to keep Russian aggression at bay,” he told CNBC’s Steve on Wednesday. Sedgwick on the sidelines of the World Economic Forum in Davos.
Perhaps understandably, given that it borders war-torn Ukraine, Poland spends the highest proportion of its GDP on defense compared to other NATO members. NATO 2024 estimates suggests that Warsaw spent 4.12% of GDP on defense last year.
New leader, old problems?
Former Dutch Prime Minister Mark Rutte, now NATO Secretary General, is only a few months into his new job, but he has already repeatedly called on member states to increase defense spending.
His priority, however, is for the lagging countries to reach the 2% target, he said.
“Thankfully, thanks to Trump in his first term, we’ve 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 reached the required target “must reach 2% in the coming months. It has to be done this year,” said Rutte, who questioned the Netherlands’ defense spending for being below the NATO target. his time in office.
Dutch Prime Minister Mark Rutte speaks to the media on the first day of the 2023 NATO Summit July 11, 2023 in Vilnius, Lithuania.
Odd Andersen | Getty Images
Rutte said it was not impossible to increase defense contributions, pointing out that European nations could cut pensions, health and social security spending or raise taxes to increase defense spending.
“At the end of the day, this is a rich place, we have an incredible amount of wealth in Europe … so we can do this in defense spending,” he said.
Pressure on domestic spending priorities – with European nations facing high food and energy costs – has limited regional governments’ ambitions to increase defense and security funding.
Dutch Prime Minister Dick Schoof told CNBC on Wednesday that spending 5% of national GDP on defense was a big deal.
“I think that’s going to be very, very difficult. And if I look at the impact of those increases, that’s almost impossible. I think the defense spending debate should also be negotiated and discussed from a strategic perspective. 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 limits
Swedish Finance Minister Elisabeth Svantesson said the desire for higher defense spending had to be balanced with the need for economic growth, which has been a challenge across Europe.
“It’s a very strong debate about how much (should be spent on defence), whether it’s 2% or 5% (of GDP). But the point is, from my point of view, we have to do what we have to do to defend ourselves and to make NATO strong. But it’s also a question of growth ” he told CNBC’s Dan Murphy in Davos on Wednesday.
“I am the Minister of Finance… 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,” he said.
Sweden, which joined NATO as the newest member in 2024, announced last year that it planned to increase defense spending to 2.4% of GDP in 2025 and to 2.6% of economic output by 2028.
According to Svantesson, Trump’s view on the need for higher defense spending by NATO members “has been fair, because we need to do more in Europe”, but argued that some member states are not even meeting the 2% target and NATO countries are “getting bigger and bigger”. Larger economies than Sweden” needed to do more.
Spain is likely to become the target of Trump’s wrath. European Commission It predicts an expansion of 3% last year for the country’s economy, but Spain only allocated 1.28% of GDP to security in 2024.
Pedro Sanchez, the president of the Spanish government, defended Madrid’s recordTelling CNBC in Davos that the country has worked hard to increase defense spending.
“Relax, Spain is very committed to achieving this goal of 2% of GDP in defense spending, but let me also say that in the last 10 years, we have also increased our total defense spending by 70%,” he said on Wednesday. . “If we take those figures in absolute terms, what we can say is that Spain is 10th NATO’s main contributor.”
