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THE HAGUE, June 23, 2025 (BSS/AFP) – NATO chief Mark Rutte on Monday said a

new defence spending pledge to be announced at a summit in The Hague was

fundamental for ensuring that the alliance can deter Russia.

US President Donald Trump has demanded that NATO allies commit to spending

five percent of their GDP on defence at their two-day gathering in The Hague,

starting on Tuesday.

“The defence investment plan that allies will agree in The Hague introduces a

new baseline, five percent of GDP to be invested in defence,” Rutte said.

“This is a quantum leap that is ambitious, historic and fundamental to

securing our future.”

The focus at the summit in the Netherlands will be on keeping Trump happy

after his return to power sparked fears that he could blow a hole in the

seven-decade-old alliance.

NATO’s 32 allies have agreed to a compromise deal to dedicate at least 3.5

percent of GDP to core military needs by 2035, and 1.5 to broader security-

related items like cybersecurity and infrastructure.

Rutte said that Spain had not been granted an “opt-out” from the pledge,

despite Madrid claiming it had agreed it would not have to reach the headline

figure of five percent.

“NATO does not have as an alliance opt-outs, side deals, etcetera, because we

all have to chip in,” Rutte said.

The NATO chief said that the increase in spending would see the alliance

boost its air defences five-fold and add thousands more tanks and armoured

vehicles to its arsenals.

“Our focus is ensuring that we have all we need to deter and defend against

any threat,” he said.

“Of course, the most significant and direct threat facing this alliance

remains the Russian Federation.”

Rutte insisted that the gathering in The Hague would also send a strong

signal of support to Ukraine — despite Trump upending the West’s stance

towards Russia’s war.

Ukraine’s President Volodymyr Zelensky will attend a state dinner with the

Dutch king but he has largely been sidelined from the summit’s main event.

Rutte said that Europe was stepping up already to fill the gap left by

Washington pulling back from supporting Ukraine.

He said that Europe and Canada had already pledged 35 billion euros ($40

billion) to help arm Kyiv so far this year.

THE HAGUE, Netherlands (AP) — The head of the NATO military alliance warned Monday that no country could have an opt-out from a massive new hike in defense spending, and that progress they make toward reaching the new target will be reviewed in four years.

At a summit in the Netherlands on Wednesday, NATO leaders are expected to endorse a goal of spending 5% of their gross domestic product on their security, to be able to fulfil the alliance’s plans for defending against outside attack.

“NATO has no opt-out, and NATO does no side deals,” NATO Secretary-General Mark Rutte told reporters in The Hague. “It is critical that each ally carries their fair share of the burden.”

However, Spain said that it has reached a deal with NATO to be excluded from the 5% target, while President Donald Trump said the figure shouldn’t apply to the United States, only its allies.

In announcing Spain’s decision Sunday, Prime Minister Pedro Sánchez said the spending pledge language in NATO’s final summit communique — a one-page text of perhaps half a dozen paragraphs — would no longer refer to “all allies.”

It raises questions about what demands could be insisted on from other members of the alliance like Belgium, Canada, France and Italy that also would struggle to hike security spending by billions of dollars. Rutte conceded that for some, reaching 5% will “still be a long road ahead.”

On Friday, Trump insisted the U.S. has carried its allies for years and now they must step up. “I don’t think we should, but I think they should,” he said. “NATO is going to have to deal with Spain.”

Trump also branded Canada “a low payer.”

NATO’s new spending goals

The 5% goal is made up of two parts. The allies would agree to hike pure defense spending to 3.5% of GDP, up from the current target of at least 2%, which 22 of the 32 countries have achieved. Money spent to arm Ukraine also would count.

A further 1.5% would include upgrading roads, bridges, ports and airfields so armies can better deploy, establishing measures to counter cyber and hybrid attacks and preparing societies for future conflict.

The second spending basket is easy for most nations, including Spain. Much can be included. But the 3.5% on core spending is a massive challenge.

Last year, Spain spent 1.28% of GDP on its military budget, according to NATO estimates, making it the alliance’s lowest spender. Sánchez said Spain would be able to respect its commitments to NATO by spending 2.1% of GDP on defense needs.

Spain also is among Europe’s smallest suppliers of arms and ammunition to Ukraine, according to the Kiel Institute, which tracks such support. It’s estimated to have sent about 800,000 euros ($920,000) worth of military aid since Russia invaded in 2022.

Beyond Spain’s economic challenges, Sánchez has other problems. He relies on small parties to govern and corruption scandals have ensnared his inner circle and family members. He is under growing pressure to call an early election.

Why the spending increase is needed

There are solid reasons for ramping up spending.

The Europeans believe Russia’s war on Ukraine poses an existential threat to them. Moscow has been blamed for a major rise in sabotage, cyberattacks and GPS jamming incidents. European leaders are girding their citizens for the possibility of more.

The alliance’s plans for defending Europe and North America against a Russian attack require investments of at least 3%, NATO experts have said. All 32 allies have endorsed these. Each country has been assigned “capability targets” to play its part.

Spanish Foreign Minister José Albares said Monday that “the debate must be not a raw percentage but around capabilities.” He said Spain “can reach the capabilities that have been fixed by the organization with 2.1%.”

Countries much closer to Russia, Belarus and Ukraine all have agreed to reach the target, as well as nearby Germany, Norway, Sweden and the Netherlands, which is hosting the two-day summit starting Tuesday.

The Netherlands estimates NATO’s defense plans would force it to dedicate at least 3.5% to core defense spending. That means finding an additional 16 billion to 19 billion euros ($18 billion to $22 billion).

Setting a deadline

It’s not enough to agree to spend more money. Many allies haven’t yet hit an earlier 2% target that they agreed in 2014 after Russia annexed Ukraine’s Crimean Peninsula. So the incentive of a deadline is required.

The U.S. insists it cannot be an open-ended pledge and a decade is too long. Still, Italy says it wants 10 years to hit the 5% target.

The date of 2032 was initially floated, but 2035 appears to be the year that will be settled on. An official review of progress is likely to be conducted in early 2029, just after elections are scheduled to take place in the United States.

“NATO is absolutely convinced Spain will have to spend 3.5%,” Rutte said. “Each country will now regularly report on what they are doing in terms of spending and reaching the targets. So we will see. And anyway, there will be a review in ’29.”

Copyright 2025 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

NATO chief Mark Rutte said that the increase in spending would see the alliance boost its air defences five-fold – Copyright AFP LOUAI BESHARA

Max DELANY

NATO allies are poised to take a “quantum leap” by hiking defence spending to counter the threat of Russia, Secretary General Mark Rutte said on Monday, on the eve of a two-day summit.

The 32 members of the alliance will pledge to boost defence expenditure to five percent of gross domestic product, a key demand of President Donald Trump, who has long grumbled that the US pays too much for NATO.

NATO’s members have thrashed out a compromise deal to dedicate at least 3.5 percent of GDP to core military needs by 2035, and 1.5 percent to broader security-related items like cybersecurity and infrastructure.

“The defence investment plan that allies will agree in The Hague introduces a new baseline, five percent of GDP to be invested in defence,” Rutte told reporters at a pre-summit news conference.

“This is a quantum leap that is ambitious, historic and fundamental to securing our future.”

The focus at the summit in the Hague will be on keeping Trump happy after his return to power sparked fears he could blow a hole in the seven-decade-old alliance.

In the run-up to the meeting, Spain had sparked fears of undermining a carefully choreographed unity by refusing to commit to the headline figure of five percent.

But Rutte stressed that Spain had not been granted an “opt-out” from the pledge.

“NATO does not have as an alliance opt-outs, side deals, etcetera, because we all have to chip in,” Rutte said.

The NATO chief said that the increase in spending would see the alliance boost its air defences five-fold and add thousands more tanks and armoured vehicles to its arsenals.

“Our focus is ensuring that we have all we need to deter and defend against any threat,” he said.

“Of course, the most significant and direct threat facing this alliance remains the Russian Federation.”

– Iranian ‘stranglehold’ –

Rutte insisted that the summit would also send a strong signal of support to Ukraine — despite Trump upending the West’s stance towards Russia’s war on Kyiv.

Ukraine’s President Volodymyr Zelensky will attend a state dinner with the Dutch king but he has largely been sidelined from the summit’s main event.

Rutte said that Europe was stepping up already to fill the gap left by Washington pulling back from supporting Ukraine.

He said that Europe and Canada had already pledged 35 billion euros ($40 billion) to help arm Kyiv so far this year.

Dismissing the idea that the fresh conflict between Israel and Iran could deflect attention from the summit, Rutte stressed that Tehran should not be permitted to possess a nuclear weapon.

He said his “greatest fear” was that Iran would secure access to a nuclear bomb, giving it a “stranglehold” over Israel, the region, and the wider world.

Over the weekend, Trump said that US warplanes had used “bunker buster” bombs that had “obliterated” Iran’s nuclear capabilities.

Other officials said it was too soon to assess the true impact on Iran’s nuclear programme, which Israel and some Western states consider an existential threat.

Pressed over the legality of Washington’s strikes against Iran, the NATO chief replied: “I would not agree that this is against international law, what the US did.”

The deal to increase NATO member countries’ defense spending reportedly went through after Spain secured an exemption, following its staunch opposition. Spain called the rise to 5% “disproportionate and unnecessary.”

NATO members agreed on Sunday to increase defense spending to 5% of their countries’ GDP, a benchmark long sought by President Donald Trump, who had complained more vocally than other US presidents that his country had shouldered much of Europe’s security for too long.

Spain had sought to block the measure, but ultimately dropped its opposition after a deal was reached for it to be exempt.

It is expected that NATO members will vote in favor of ramping up defense spending to 5% during the upcoming two-day NATO meeting set to start Tuesday in The Hague.

Once adopted, all member nations except Spain will have until 2035 to reach the goal of 5%.

The agreement calls for at least 3.5% of national GDP to be spent on core military needs, while an additional 1.5% can be allocated for related expenditures.

Why Spain is opting out of NATO’s 5% defense target To view this video please enable JavaScript, and consider upgrading to a web browser that supports HTML5 video

Spain claims exemption

Spanish Prime Minister Pedro Sanchez fought the deal. In a blistering letter to NATO chief Mark Rutte, Sanchez said the 5% figure “would not only be unreasonable, but also counterproductive.”

Sanchez went further during a national address on Spanish television. “A 5% spending would be disproportionate and unnecessary,” he said.

“We fully respect the legitimate desire of other countries to increase their defense investment, but we are not going to do it,” he said, adding that Spain could meet all its commitments to NATO, in terms of staff or equipment, by spending only 2.1% of its GDP.

Of all of NATO’s members, Spain has been one of the lowest-spending on defense in relative terms.

Sanchez has also been facing political pressure at home, where a corruption scandal threatens his government. Sanchez’s junior coalition partner, the far-left alliance Sumar, is openly hostile to increasing military spending.

Edited by Sean Sinico

US Secretary of Defense Pete Hegseth holds a bilateral meeting with NATO Secretary General Mark Rutte (2nd L) at the Pentagon in Washington, DC, April 24, 2025. Brendan Smialowski | AFP | Getty Images

Fireworks could kick off during NATO’s annual summit this week, as the U.S. pushes its allies to sharply increase their defense spending to 5% of their gross domestic product (GDP). The 5% figure is made up of 3.5% of GDP that should be spent on “pure” defense, with an extra1.5% of GDP going to security-related infrastructure, such as cyber warfare capabilities and intelligence. While member states say they’re happy to hit that milestone, and some countries are not too far off that mark, others don’t even meet the 2% threshold that was agreed over a decade ago. While they might pledge to increase defense spending, whether these promises materialize will be the key question. Talk is cheap and timelines can be vague — but concerted action is what the U.S. and President Donald Trump, who’s attending a NATO summit for the first time since 2019, will want to see. NATO members on Sunday agreed in principle to a big increase in their defense spending, Reuters reported, but Spain has already pushed back. After diplomats on Sunday agreed on a compromise text pertaining to the spending rise, Spanish Prime Minister Pedro Sanchez said Spain would not have to meet the 5% target as it would only have to spend 2.1% 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, according to the news agency.

US President Donald Trump arrives for the NATO summit at the Grove hotel in Watford, northeast of London on December 4, 2019. Christian Hartmann | AFP | Getty Images

“The U.S. is looking for everybody to say, ‘Yeah, we mean it. We have a plan. 5% is real. We’re going to get there’,” Kurt Volker, former U.S. ambassador to NATO and distinguished fellow at the Center for European Policy Analysis (CEPA), said Wednesday. “But one thing to watch for is if the messaging is actually on point. Some of the messaging from some of our European allies, at least when they back brief their own media and their own parliaments is, ‘Yeah, 5% but it’s really 3.5% and 1.5%, and that can be pretty much anything’ … So there’s going to be a whittling down [of defense spending pledges] almost immediately,” Volker noted at a CEPA briefing ahead of the NATO summit. “And if that is over emphasized, you’re going to have a clash with the U.S.,” Volker added.

High stakes, low expectations

The stakes are high as allies meet in The Hague in the Netherlands on June 24-25, given ongoing conflict in Ukraine and war in the Middle East threatening to destabilize the global economy. Defense analysts say this year’s meeting could be the most consequential in the alliance’s 77-year history, with the U.S.’ spend-pushing heavily forewarned before the summit. U.S. Defense Secretary Pete Hegseth was emphatic as he said 5% “will happen” at a separate NATO gathering earlier this month, with NATO Secretary General Mark Rutte also widely plugging that message to allies too.

German Air Force helicopters are pictured at the airfield of Pajuostis in Panevezis, Lithuania on May 6, 2025, during the Griffin Lightning 2025″ military exercises. Petras Malukas | Afp | Getty Images

Defense spending has been a thorny subject for NATO members for years, and a persistent source of annoyance and anger for Trump, who was demanding that allies double their spending goals from 2% to 4% of GDP all the way back in 2018. NATO defense expenditure has nevertheless sharply picked up among NATO members since Trump was last in power.

Back then, and arguably at the height of the White House leader’s irritation with the bloc, only six member states met the 2% target, including the U.S. Times have changed, however; by 2024, 23 members had reached the 2% threshold, according to NATO data. While some greatly surpassed that target — such as Poland, Estonia, the U.S., Latvia and Greece — major economies including Canada, Spain and Italy have lagged below the contribution threshold. No NATO member has so far reached the 5% spending objective, and some are highly likely to drag their feet when it comes to getting to that milestone now.

Picture taken during a visit of NATO military exercise “Dacian Spring” in Romania, on Monday 12 May 2025. Dirk Waem | Afp | Getty Images

The U.K., Poland and Germany have already said they intend to increase defense spending to the requisite target, but their timeline is unclear. The UK is also reportedly trying to delay the spending rise among by three years, according to the i newspaper. CNBC has reached out to Downing Street for comment. Spain and Italy are seen as major holdouts against the 5% target, after only committing to reach the 2% threshold in 2025. Canada meanwhile spent 1.3% of GDP on defense in 2024, NATO estimates suggest, even less than Italy, Portugal or Montenegro. Spending 5% on defense is a target, but not a given, Jason Israel, senior fellow for the Defense Technology Initiative at CEPA, said Wednesday. “Every single country … is trying to figure out how they’re going to thread that needle of being able to make the commitment, but also make the accounting work when every single nation has to make trade offs against what is generally unpopular, massive increases in defense spending,” he noted, stressing it’s a “long way from commitments … to actual capability,”

Europe must commit

European aerospace and defense companies are following NATO spending commentary and commitments closely, but say they’re stuck in limbo between pledges and action by way of concrete government procurement. The leaders of Leonardo, Embraer and Saab told CNBC last week the continent needs to act decisively and collectively to make long-term commitments to defense spending and investment contracts to enable companies like theirs to scale-up their production capacity and manufacturing capabilities. “If we go for 3.5% [of pure defense spending] across the European part of NATO, that will mean a lot, and more will be needed in terms of capacity. But we need to understand the capability targets better,” Micael Johansson, the chief executive of Swedish defense company Saab, told CNBC.

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“We can do more, and I think we need to come together in Europe to create more scale, also in what we do to align demand, align requirements, so we can actually be competitive player in internationally. So there’s a lot to do still,” he said. Roberto Cingolani, CEO of Italian defense firm Leonardo, agreed that “there’s a lot of work to be done.” “Leonardo has a capacity boost program at the moment because we are quite aware of the fact that we have to increase the production of specific platforms, defense systems, electronics and technology solutions. It is not only matter of money, it’s matter of priority. It’s matter of reducing the fragmentation among countries in Europe,” he told CNBC’s Charlotte Reed at the Paris Air Show.

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