US President Donald Trump attends a meeting with NATO Secretary General Jens Stoltenberg before the NATO summit in Watford, in London, Britain, December 3, 2019.
Kevin Lamarque | Reuters
As US President Donald Trump looks to immediately fix his biggest political and economic concerns, the thorny issue of NATO's defense spending is likely to quickly return to the global forefront.
Trump's relationship with the Western military alliance was tense during his first presidency, with the Republican leader often criticizing NATO member states for not adhering to a 2014 goal of spending at least 2% of gross domestic product on defense each year.
Ahead of his second term in office, Trump signaled that the debate over military spending — and Trump's perception that NATO members are overly dependent on the United States for their security — would return to the agenda, suggesting that NATO's 32 member states should contribute even more toward Defense.
“I think NATO should get 5% (of its GDP as a NATO contribution target)” He said in January. “They can all afford it, but it should be 5%, not 2%,” he told a news conference. He also refused to rule out the use of military force to seize the Panama Canal or Greenland – A region belonging to Denmark, a member of NATO.
There has been a widespread increase in defense spending among NATO members since Trump last took office. In 2018, at the height of the White House leader's unease with the military bloc, only six member states managed to meet the 2% of GDP target.
In contrast, NATO data estimates that 23 members met the 2% target. in 2024. While some have crossed this threshold – such as Poland, Estonia, the United States, Latvia and Greece – major economic powers, including Canada, Spain and Italy, are among those lagging behind the contribution threshold.
No NATO member has reached the 5% target proposed by Trump, 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 “more important” for Europe to return to Cold War-era defense spending To defend against the likes of Russia and its expansionist foreign policy.
“If we want to defend against this – and we Poles are doing it decisively – we are spending almost 5% of GDP on defense this year. We realize that we have to modernize our armed forces, and we have to be strong and save,” CNBC's Steve Sedgwick said on Wednesday on the sidelines of the World Economic Forum in Davos, Switzerland: “A real deterrent to keep Russian aggression at bay.”
It is perhaps understandable that given its border with war-torn Ukraine, Poland spends the highest proportion of its GDP on defence, compared to other NATO members. NATO estimates 2024 It notes that Warsaw spent 4.12% of its GDP on defense last year.
New leader, old problems?
It has only been a few months since former Dutch Prime Minister Mark Rutte, now NATO Secretary General, took up his new post, but he has repeatedly called on member states to increase defense spending.
But he said that his priority is to convince underdeveloped countries to reach the 2% target.
“Fortunately, thanks to Trump in his first term, we increased defense spending,” he told CNBC correspondent Steve Sedgwick at the World Economic Forum in Davos on Thursday. “But we all have to get to 2%.”
Rutte, who himself has faced criticism over why Dutch defense spending has been below NATO's target for a long time, noted that countries that have not yet reached the target “have to reach 2% in the coming months. It has to be done this year.” During 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 | Getty Images
Rutte said it is not impossible to increase defense contributions, noting that European countries are able to cut pensions, health and social security spending or increase taxes in order to boost defense spending.
“At the end of the day, this is a rich place, in Europe we have incredible amounts of wealth… so in terms of defense spending, we can do that,” he said.
However, pressing domestic spending priorities – as European countries face rising food and energy costs – have constrained regional governments' ambitions to increase funding for defense and security.
Dutch Prime Minister Dick Schoof on Wednesday told CNBC that spending 5% of national GDP on defense is difficult.
“I think that's going to be very difficult. And if you look at the impact of these kind of increases, it's almost impossible. And I think the defense spending discussion should also be negotiated and discussed from a strategic standpoint. (We should),” he told CNBC's Dan Murphy. “Where we want to be with NATO…then we decide what kind of money we will allocate.”
Spending restrictions
Swedish Finance Minister Elisabeth Svantesson noted that she had to balance the desire to increase defense spending with the need for economic growth, which was a challenge in much of Europe.
“It's a very robust discussion about how much (should be spent on defence), whether it's 2% or 5% (of GDP). But the question is, from my point of view, is that we have to do what we have to do,” he added. . “Defending ourselves and having a strong NATO, but it's also an issue of growth,” she told CNBC's Dan Murphy in Davos on Wednesday.
She added, “I am the Minister of Finance… It depends on growth. First of all, we need growth in Europe, and then we need to see what we can do in terms of military spending.”
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 view on the need to increase NATO members' defense spending was “fair, because we have to do more in Europe,” but he said some member states had not even met the 2 percent target and that NATO countries “have more and more.” “Economies larger than Sweden” need to do more.
Spain is likely to become a target of Trump's wrath. European Commission Expected expansion of 3% As for the country's economy last year, Spain allocated only 1.28% of its GDP towards security in 2024.
Spanish Prime Minister Pedro Sanchez defended Madrid's recordHe told CNBC in Davos that the country has worked hard to increase its defense expenditures.
“Rest assured, Spain is very committed to achieving this target of allocating 2% of GDP to 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 these numbers in absolute terms, what we can say is that Spain is in tenth placey largest contributor to NATO.”
