NATO is considering a significant increase in its defence spending target, aiming to address critical capability gaps amid heightened security concerns from Russia and pressures for greater European military self-reliance. As told to Bloomberg, officials familiar with the discussions, the alliance is planning to raise the benchmark from the current 2% of GDP to as much as 3% by 2030. The proposed targets include bolstering air defences, offensive weaponry, and nuclear deterrence capabilities.
Gradual Increase in Defence Goals
The plan suggests an interim spending goal of 2.5% GDP before achieving the 3% target by the end of the decade. NATO Secretary General Mark Rutte, speaking on the need for enhanced capabilities, remarked, “I have a number in my mind, but I’m not going to mention it now. But clearly, when you look at the capability targets, [when] you look at the gaps still there … It is clear that, with 2%, you cannot get there.”
The alliance’s foreign and defence ministers are expected to address these targets in their February meeting, with a final agreement anticipated at the 2024 leaders’ summit in The Hague. However, officials acknowledge that meeting this timeline may be challenging.
Push from the US and European Responsibilities
The proposal aligns with calls from the United States for NATO members to assume a greater share of defence responsibilities. Former President Donald Trump previously pressured European allies to increase their contributions, warning that the US could withdraw from the alliance if spending levels did not rise.
“There are capability gaps we need to fill to be able to defend Europe from Russia without the US,” said Armida van Rij, a senior research fellow at Chatham House, emphasising the importance of European defence independence, as told to Bloomberg. This sentiment is echoed by Rutte, who has stressed the need to strengthen Europe’s military industrial base, calling reliance on US resources unsustainable.
Disparities Among NATO Members
Defence spending varies widely across NATO’s 32 members. While countries like Poland are leading with a record 4.7% of GDP allocated to defence, others, including Italy and Spain, fall significantly short of the current 2% benchmark. Italy, which spends 1.49% of its GDP on defence, is already under scrutiny for budgetary overspending under the EU’s Excessive Deficit Procedure.
Prime Minister Giorgia Meloni’s government has committed to reaching 2% by 2028 but acknowledges the challenges of going beyond that. Italian Defence Minister Guido Crosetto said, “I don’t know in what timeframe, but certainly Trump will accelerate this push … It will not even be 2%. It will be 2.5% if not 3%.”
Similarly, Spain, contributing only 1.28% of GDP to defence, has sought to shift focus toward other benchmarks, such as its commitment to allocate 20% of defence spending to research and development. Prime Minister Pedro Sánchez highlighted this aspect, noting Spain’s substantial troop contributions to NATO missions.
Urgent Modernisation Needs
European leaders and analysts agree that current spending levels are insufficient to meet NATO’s evolving defence needs, particularly given the ongoing war in Ukraine. German Defence Minister Boris Pistorius warned, “Russia would be in a position to attack a NATO country by 2029.” Germany has recently met the 2% target for the first time and supports increased spending to prepare for future threats.
The UK, which spends 2.3% of GDP on defence, plans to increase this to 2.5%. However, defence officials admit that even this level may fall short of enabling the UK to meet NATO’s updated requirements. “The UK can’t meet its current NATO ‘ask’ at 2.5% of GDP,” a senior British military official told the Financial Times.
Broader Financial and Political Challenges
While increasing defence spending is seen as a necessary step to address security threats, it poses significant challenges for European economies already strained by fiscal pressures. Rutte acknowledged these difficulties, stating, “Politics is making choices in scarcity, and there’s always a lack of money and always too many priorities … Keeping a country safe should be a critical priority for leaders.”
Additionally, the EU is exploring innovative financial mechanisms to support defence investments. Andrius Kubilius, the EU’s new defence commissioner, proposed a joint borrowing mechanism secured against European NATO members’ spending commitments. This initiative is part of a broader plan to secure €500 billion for defence over the next decade.
Strategic Implications for NATO
The proposed increase in spending targets aims to address both immediate security concerns and long-term strategic challenges. NATO’s non-US members have collectively raised defence spending by approximately $100 billion over the past two years, largely in response to Russia’s invasion of Ukraine.
“With all the tasks facing us, in terms of the defence of Ukraine and NATO’s minimum capability requirements, this discussion is going to come, whatever happens,” a German official said in a Financial Times report, highlighting the urgency of the issue.
The upcoming summit in The Hague will serve as a critical platform for finalising these commitments. If successful, the new targets could mark a pivotal shift in NATO’s approach to collective defence, strengthening its ability to respond to future threats while fostering greater financial and operational independence within Europe.
(With inputs from Bloomberg)
