BRUSSELS/MADRID (Reuters) — NATO members agreed on Sunday to a big increase in their defense spending target to 5 percent of gross domestic product, as demanded by US President Donald Trump, but Spain said it did not need to comply just days before a summit in The Hague meant to be a show of unity.

NATO officials had been anxious to find consensus on a summit statement on a new spending commitment ahead of Wednesday’s gathering. But Spanish Prime Minister Pedro Sanchez declared on Thursday he would not commit to the 5 percent target.

NATO boss Mark Rutte has proposed to reach the target by boosting NATO’s core defense spending goal from 2 percent to 3.5 percent of GDP and spending an extra 1.5 percent on related items like cybersecurity and adapting roads and bridges for military vehicles.

After diplomats agreed on a compromise text on Sunday, Sanchez swiftly proclaimed Spain would not have to meet the 5 percent target as it would only have to spend 2.1 percent of GDP to meet NATO’s core military requirements.

“We fully respect the legitimate desire of other countries to increase their defense investment, but we are not going to do so,” Sanchez said in an address on Spanish television.

Spain spent 1.24 percent of GDP on defense in 2024, or about 17.2 billion euros ($19.8 billion), according to NATO estimates, making it the lowest spender in the alliance as a share of its economic output.

NATO officials argue big defense spending increases are needed to counter a growing threat from Russia and to allow Europe to take on more responsibility for its own security as the United States shifts its military focus to China.

Sanchez’s stance risked setting up a summit clash with Trump, who has frequently accused European countries of not spending enough on defense and threatened not to defend them if they do not meet their targets.

On Friday, Trump said Spain “has to pay what everybody else has to pay” and Madrid was “notorious” for low defense spending.

However, he also suggested the US should not have to meet the new target, as the US had spent large amounts to protect the continent over a long period. Washington spent an estimated 3.19 percent of GDP on defense in 2024, NATO says.

But Sanchez argued it was not necessary for Spain to meet the new target and trying to do so would mean drastic cuts on social spending, such as state pensions, or tax hikes.

NATO did not release the compromise summit text, which will only become official when it is endorsed by the leaders of NATO’s 32 members at the summit.

But diplomats said one tweak in the language on the spending commitment, from “we commit” to “allies commit,” allowed Spain to say the pledge does not apply to all members.

In a letter seen by Reuters, Rutte told Sanchez that Spain would have “flexibility to determine its own sovereign path” for meeting its military capability targets agreed with NATO.

A NATO diplomat said Rutte’s letter was simply “an affirmation that allies chart their own course for making good on their commitments” to meet their capability targets.

NATO officials have expressed scepticism that Spain can meet its military capability targets by spending just 2.1 percent of GDP, as Sanchez has suggested. The targets are secret, so their costs cannot be independently verified.

“All allies have now agreed to the summit statement, which includes the new defense investment plan,” said the diplomat, speaking on condition of anonymity to discuss internal matters.

Rutte had originally proposed countries meet the new target by 2032 but the deadline in the final text is 2035, according to diplomats. There will also be a review of the target in 2029.

When the leaders of NATO’s thirty-two allies meet at The Hague on June 24-25, they are likely to agree on a landmark new burden-sharing goal. What was once thought of as improbable, even preposterous—that allies might agree to spend the equivalent of 5 percent of their gross domestic product (GDP) on defense—now seems imminent.

However, the only way this goal can be fulfilled is by changing the way the Alliance defines “defense.” There is some justification for broadening the definition to include spending on cybersecurity, resilience measures, and critical infrastructure, especially given Russia’s increasing use of hybrid warfare across the Euro-Atlantic. However, the Alliance risks a slippery slope in broadening the definition too much. To guard against this risk, NATO should take steps to identify and define what might be considered truly defense-related and what might be considered mostly civilian-related. Otherwise, the new defense spending goal will not assuage US concerns, reassure allied citizens, or strengthen deterrence against Russian aggression.

Consensus emerging on 5 percent

At the Wales summit in 2014, NATO allies agreed to reach 2 percent of GDP on defense spending by 2024, making that figure a benchmark, among other measures, to guide burden sharing. Although nearly all NATO allies have reached 2 percent or announced plans to do so, the geopolitical environment has shifted. There is now broad consensus within the Alliance that 2 percent is no longer sufficient to meet today’s security challenges. Four separate yet mutually reinforcing demands are driving that assessment.

First, since February 2022, NATO allies have been pouring military assistance into Ukraine to fortify Kyiv’s war effort, and the conflict shows no signs of ending.

Second, allies need to replenish their own stocks and warehouses that have been emptied in support of Ukraine.

Third, allies must fulfill the capability and capacity requirements for the NATO operations plans that were adopted at the Vilnius summit in 2023. These plans outline the specific forces necessary to defend allied territory.

And finally, although plans are not yet finalized, many allies expect the United States to reduce its role in the conventional defense of Europe, given comments made by US Secretary of Defense Pete Hegseth in Brussels earlier this year. A reduced US commitment to conventional defense in Europe would require European allies to contribute even more capabilities to ensure that US decisions do not result in gaps in NATO’s ability to deter and defend.

As a result of these demands, allies are expected to agree to a higher threshold of 5 percent defense spending this month. But why 5 percent?

It’s possible that this figure is driven by the relative spending levels of Russia or, to a lesser degree, China. Experts estimate that Russia directed the equivalent of 6.7 percent of its GDP toward defense and related expenditures in 2024, representing a nearly 40 percent increase from the previous year. Meanwhile, China reportedly increased its defense budget to the equivalent of 7.2 percent of GDP this year as it continues to modernize its armed forces and invest in new capabilities.

However, the most logical reason why the allies are likely to settle on 5 percent is because US President Donald Trump demanded it. Allied fears of US abandonment run deep, and many recall the moment at the 2018 Brussels summit when Trump nearly threatened to pull the United States out of the Alliance.

Challenges on the horizon

Are allies really prepared to spend the equivalent of 5 percent of their GDP on defense? Of course not. Most lack the economic wherewithal to achieve this spending. Many have relatively low or anemic economic growth rates that make it difficult to increase defense spending without painful offsets in other budgetary categories, such as social welfare spending. Moreover, few of the larger allies have the debt “headroom” to engage in deeper borrowing to finance higher defense budgets.

The only viable way to reach 5 percent defense spending is to redefine “defense spending.” Luckily for most European allies and Canada, the United States has signaled its willingness to entertain this lexical exercise. Allies are therefore likely to agree on a target of 3.5 percent for so-called “hard defense” spending and another 1.5 percent for “defense-related” spending, such as infrastructure, technology, and resilience.

Although this rhetorical sleight of hand may enable allies to reach the magic number, it also carries significant risk insofar as allies may seek to count any number of questionable budgetary expenditures as “defense-related.” For instance, to enable the mobility and movement of troops and their equipment, allies must have the requisite road, rail, and port infrastructure—infrastructure that is clearly civilian in nature but may be used by the military. Such items might be considered “defense-related” and therefore count toward the 5 percent goal. But where is the line drawn on such projects? Should all upgrades to ports, highways, railways, and airfields be included as defense measures, under the logic that any European road could be utilized for defense purposes?

Identifying standards and priorities

Russian tanks can’t be defeated by allied rail cars. At the same time, NATO tanks are only as useful as their ability to get to a potential front. Therefore, it’s clear that the Alliance requires both defense-specific capabilities and what might be considered dual-use capabilities to facilitate military mobility, strengthen resilience, and permit NATO to engage and sustain multi-domain operations.

However, the Alliance should establish a process or mechanism to clearly identify standards and priorities for “defense-related” expenditures that strengthen collective defense and societal resilience. The most obvious entity capable of identifying the infrastructure elements necessary to fulfill Alliance operations plans is the relatively new Joint Support and Enabling Command (JSEC). The JSEC, based in Ulm, Germany, is focused on the reinforcement, enablement, and sustainment of NATO forces. It’s building a continent-wide logistical operational picture with a 360-degree approach—for this reason, JSEC is best positioned to identify the infrastructure elements necessary for Alliance operations, plans, and exercises.

At the same time, NATO could turn the European Centre of Excellence for Countering Hybrid Threats (Hybrid COE) into a formal, subordinate Alliance organization. At present, the Helsinki-based Hybrid COE is merely affiliated with NATO (and the European Union) and is not formally part of the Alliance’s civilian or military structure. Pulling the Hybrid COE into NATO’s organizational structure and its chain of command could better enable the Alliance to leverage the Hybrid COE’s expertise for the purposes of identifying approved resilience-related defense spending. As with the JSEC, the Hybrid COE has the expertise necessary to help the Alliance determine which resilience efforts might be appropriately labeled “defense-related.”

Finally, the Alliance should consider augmenting the mission and capabilities of the NATO Science & Technology Organization (STO) so that it can play a role in identifying the technologies that will be necessary for tomorrow’s battlefields. Today, the NATO STO generates, shares, and disseminates advanced scientific knowledge, technological developments, and innovation. In effect, it acts as a research-enabler and a clearinghouse for information. By further empowering it and expanding its mission, the Alliance can better leverage it for the purposes of identifying defense technology investment priorities.

If NATO empowers these organizations to set clear standards on what contributes to the 5 percent goal, the Alliance can ensure that the commitment at The Hague is more than just a headline. NATO must ensure that “defense-related” items truly contribute to collective defense—strengthening deterrence and reassurance.

John R. Deni, PhD, is a nonresident senior fellow with the Transatlantic Security Initiative at the Atlantic Council’s Scowcroft Center for Strategy and Security, and a research professor at the US Army War College.

Ryan Arick is an associate director with the Transatlantic Security Initiative.

Further reading

Image: June 5, 2025: NATO countries ministers attend the meeting of the North Atlantic Council in Defence Ministers’ Session at NATO headquarters in Brussels, Belgium, Wednesday, 05.06.2025. Ministers debate a proposal to increase the alliance’s defense spending goal to 5 percent of GDP, a move expected to be approved at a high-stakes summit in The Hague later this month. Photo by Wiktor Dabkowski (Credit Image: © Wiktor Dabkowski/ZUMA Press Wire) REUTERS

Open this photo in gallery: Spain was exempted from the 5 per cent defence spending goal after Prime Minister Pedro Sanchez blocked an earlier version of the statement.Ng Han Guan/The Associated Press

NATO countries agreed on a statement on Sunday for their upcoming summit that sets a goal of 5 per cent of GDP for annual defence and security-related spending by 2035, overcoming objections from Spain, diplomats said.

The statement has the green light from all 32 NATO members, diplomats said, but will only become official when it is approved by leaders including U.S. President Donald Trump at their summit in The Hague on Wednesday.

Spanish Prime Minister Pedro Sanchez had blocked an earlier version of the text, saying that committing to a 5 per cent target would be unreasonable and counterproductive. Spain spent 1.24 per cent of GDP on defence in 2024, according to NATO estimates

Diplomats overcame Sanchez’s objections by adjusting the text on the spending pledge, changing the language from “we commit” to “allies commit,” diplomats said. That allowed Sanchez to claim the commitment would not apply to Spain.

“We fully respect the legitimate desire of other countries to increase their defence investment, but we are not going to do so,” Sanchez said in an address on Spanish television Sunday.

NATO operates by consensus so all of its 32 members have to approve a statement for it to be adopted.

NATO officials argue that big defence spending increases are needed to counter a growing threat from Russia and to allow Europe to take on more responsibility for its own security as the United States shifts its military focus to China.

The alliance’s current defence spending target is 2 per cent of GDP but Trump insisted it should rise to 5 per cent – although he suggested on Friday that target should not apply to the United States.

Under a plan by NATO boss Mark Rutte, countries would reach 5 per cent of GDP by boosting their core defence spending goal from 2 per cent to 3.5 per cent and spending a further 1.5 per cent on related items like adapting roads and bridges for military vehicles and cyber security.

Rutte had originally proposed countries meet the new target by 2032 but the deadline in the final text is 2035, according to diplomats. There will also be a review of the target in 2029.

Norway to spend 5% of GDP on defense

Reuters, OSLO

Norway plans to raise overall spending on defense and broader security to 5 percent of GDP, its prime minister said yesterday, in line with a planned common goal among NATO states.

Europe is scrambling to boost defenses against a potential Russian attack after the administration of US President Donald Trump made clear that the US was no longer willing to be the main guarantor of Europe’s security.

NATO Secretary-General Mark Rutte has proposed that member nations should each agree to aim to spend 5 percent of their GDP on defense and broader security measures when they meet on Tuesday and Wednesday in The Hague, Netherlands.

Norwegian Prime Minister Jonas Gahr Store speaks during a news conference about Norway’s contribution to NATO at the prime minister’s office in Oslo yesterday. Photo: EPA-EFE

“We must do more to secure our country and contribute to our common security with our allies in NATO,” Norwegian Prime Minister Jonas Gahr Store told a news conference yesterday.

“Security for Norway is about having a defense that is reliable, that has the right equipment, enough people and good plans,” he said.

Norway, which shares a border with Russia, plans to spend 3.5 percent of GDP on traditional defense, including its financial support to Ukraine’s military, and a further 1.5 percent on broader security, in line with Rutte’s proposal, he said.

Norway last year spent an estimated 2.2 percent of GDP on defense, up from a low of 1.4 percent in 2022, the Norwegian national statistics agency said in April.

The Norwegian government last month said it aims to spend 3.3 percent this year.

The Nordic country would probably reach the 5 percent spending target sometime in the years following 2030, depending on decisions made at next week’s NATO summit, the prime minister said.

Asked about Spain’s request to opt out of NATO’s 5 percent plan, Stoere said he assumed that work would be done to reach a consensus at next week’s summit.

Norway is the only country in Europe that can finance increased military spending without having to borrow more, as it has a nearly US$2 trillion sovereign wealth fund, the world’s largest, at its disposal.

In order to bring Madrid on board, the new language that leaders will approve on Wednesday was changed from “we commit” to “allies commit” to spend 5 percent on defense, a NATO official said. That would allow Spain spending flexibility as long as it meets NATO’s updated capability targets approved by alliance defense ministers on June 5.

In a statement on Sunday, Sánchez described the outcome as a “success,” which will allow Spain to “fulfill its commitments to the Atlantic alliance and preserve its unity, without having to increase defense spending to 5 percent of GDP.”

“Each NATO member … has the right and the obligation to choose whether or not to assume those sacrifices, and we as a sovereign country choose not to do so,” Sánchez said.

He added that Spain will spend 2.1 percent of its GDP on defense “to acquire and maintain all the personnel, equipment and infrastructures requested by the alliance to confront these threats with our capabilities.”

The demand was originally raised by U.S. President Donald Trump and will be confirmed by NATO leaders meeting in The Hague. | Pool Photo by Carlos Barria via EPA

That view was confirmed by NATO Secretary-General Mark Rutte in a note to Sánchez: “I can hereby confirm that the agreement at the upcoming NATO Summit will give Spain the flexibility to determine its own sovereign path for reaching the Capability Target goal and the annual resources necessary as a share of GDP, and to submit its own annual plans.”

He added that the alliance will review its spending trajectory in 2029.