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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 the President of the United States Donald Trump seeks to immediately solve his biggest political and economic bugbears, the back problem of NATO defense spending is likely to quickly return to the first world.
Trump’s relationship with the Western military alliance has been acrimonious during his first presidency, with the Republican leader often criticizing NATO member states for failing to meet a 2014 target of spending at least 2% of GDP in defense every year.
Ahead of his second term, Trump has signaled that the debate over military spending — and Trump’s perception that NATO members are overly dependent on the United States for their own security — will be back on the agenda. , stating that the 32 member countries of NATO must contribute. even more towards the defense.
“I think NATO should have 5% [of their GDP as a NATO contribution target],” he said in January. “Everyone can afford it, but it should be at 5%, not at 2%,” he said at a press conference in which he also refused to rule out the use of military force to take the Panama Canal or Greenland – a territory belonging to NATO member Denmark.
There has been a large increase in defense spending among NATO members since Trump was last in power. In 2018, at the height of the irritation of the head of the White House with the military blockade, only six member states also met the target of 2% of GDP.
Conversely, NATO data estimates that 23 members have met the 2% goal. in 2024. While some exceed that limit – such as Poland, Estonia, the United States, Latvia and Greece – major economic powers including Canada, Spain and Italy are among the laggards below the contribution limit .
No NATO member has reached a 5% target suggested by Trump, including Washington under the administration of his predecessor Joe Biden.
Polish President Andrzej Duda fully supported Trump’s call for higher NATO spending, telling CNBC on Wednesday that he was “Primal” that Europe is returning to Cold War era defense spending to defend against Russia and its expansionist foreign policy.
“If we want to defend against this – and we Poles decisively do – we will spend close to 5% of GDP on defense this year. We know that we have to modernize our armed forces, we have to be strong and provide a real deterrent to keep Russia’s aggression at bay,” he told CNBC’s Steve Sedgwick on Wednesday on the sidelines of the World Economic Forum in Davos, Switzerland.
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 its GDP on defense last year.
New boss, old problems?
Former Dutch Prime Minister Mark Rutte, now the secretary general of NATO, is only a few months into his new job, but he has already repeatedly asked member states to increase defense spending.
His priority, however, is to get lagging countries to reach the 2% target, he said.
“Fortunately, thanks to Trump in his first term, we stepped up 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.
The countries that have not reached the necessary goal “have to reach 2% in the coming months. It has to be done this year,” said Rutte, who himself faced why the Dutch defense spending was under to NATO’s target for much. 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.
Odd Andersen | Getty Images
Rutte said it was not impossible to increase defense contributions, pointing out that European nations could afford to shave pensions, health and social security spending or increase taxation to increase defense spending.
“Finally, this is a rich place, in Europe we have [an] incredible amounts of wealth … so on defense spending, we can do that,” he said.
Pressure from domestic spending priorities – as European nations face high food and energy costs – have limited regional governments’ ambitions to increase defense and security funding, however.
Dutch Prime Minister Dick Schoof told CNBC on Wednesday that spending 5% of national GDP on defense was a tall order.
“I think it will be very, very difficult. And if I look at the effect of these types of increases, this is almost impossible. I think that the discussion on defense spending must also be negotiated and discussed from a strategic point of view. [we must 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.
Expenditure limitations
Sweden’s Finance Minister Elisabeth Svantesson said she had to weigh the desire for higher defense spending against the need for economic growth, which has been a challenge in much of Europe.
“It’s a very strong discussion about how much [should be spent on defense]either 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 to defend ourselves and have a strong NATO. But it’s also a question of growth,” he told CNBC’s Dan Murphy in Davos on Wednesday.
“I am the 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,” he noted.
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 higher defense spending by NATO members was “right, because we have to do more in Europe,” but argued that some member states have not yet met the target of 2% and that NATO countries “with larger and. larger economies than Sweden” needed to do more.
Spain is likely to become a target for Trump’s wrath. The European Commission predicts an expansion of 3%. for the country’s economy last year, but Spain only puts 1.28% of its GDP towards security in 2024.
Spanish Prime Minister Pedro Sanchez defended Madrid’s recordtelling CNBC in Davos that the country has been working hard to increase its defense spending.
“For sure, Spain is very committed to achieving this goal of 2% of GDP on 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 figures in absolute terms, what we can say is that Spain is the 10thth the first contributor to NATO”.
