The United States is pressing NATO allies to lift defense outlays to a target of 5% of GDP, a benchmark that blends “pure” military spending at 3.5% with an additional 1.5% earmarked for security-related infrastructure such as cyber capabilities and intelligence. As the alliance gathers for its annual summit, the rhetoric is high, but the path to actual spending increases remains murky. Some members are approaching the 2% threshold, while others trail far behind, and Spain has signaled resistance to moving toward the 5% target altogether. The timing of pledges versus delivery is central, with the United States and President Donald Trump—attending NATO for the first time since 2019—looking for concrete action rather than broad assurances. Across the Atlantic, officials and defense analysts warn that while commitments are easy to state, the real challenge lies in translating promises into durable, capability-enhancing procurement and sustained fiscal plans.
The 5% Target: Rationale, Composition, and Strategic Intent
The stated objective of reaching a 5% total defense expenditure as a share of GDP is built on a two-part framework designed to strengthen NATO’s enduring deterrence and resilience. The first component, a pure defense envelope of 3.5% of GDP, is intended to fund conventional military capabilities, modernization efforts, and force readiness. The second component—an additional 1.5% of GDP—recognizes the security-related infrastructure investments that underpin modern warfare and defense readiness but extend beyond traditional military hardware. This includes cyberwarfare capabilities, intelligence infrastructure, surveillance systems, integrated command-and-control networks, and other capabilities that enhance the alliance’s situational awareness and resilience in a rapidly evolving threat landscape.
As the summit approaches, there is broad verbal support for the 5% target among alliance members. Several governments have acknowledged that reaching the full 5% would require meaningful adjustments to budgets and long-range planning. Yet, there is a clear tension between ambition and feasibility. The pledge to achieve 5% is often coupled with questions about how much of that figure is truly dedicated to front-line defense versus other security-adjacent or related investments that may be categorized differently in national accounting. This distinction matters for the credibility of the pledge and for the practical capacity of European defense industries to scale up production and sustain growth over time.
Analysts emphasize that the pledge is not merely a numbers game; it is a strategic signal intended to recalibrate alliance burden-sharing and to reinforce deterrence in a time of complex crises. The overarching intent is to ensure that NATO members possess credible, interoperable capabilities that can be rapidly deployed in a crisis, support ongoing operations, and deter antagonistic actions across multiple theaters. The discussion surrounding the 5% goal thus sits at the intersection of defense policy, economic sustainability, and industrial capacity—a combination that drives both political will and technical readiness.
Several observers underscore that the messaging around 5% must be precise and credible. A misalignment between stated figures and the realities of procurement and capability development could erode trust among allies and heighten tensions with the United States, which has long urged Europe to meet higher spending benchmarks. The risk is that if European authorities overstate their commitments or overinterpret what counts toward the 5%, the resulting disconnect with actual spending could spark pushback from Washington and complicate the alliance’s unity ahead of critical security challenges.
In this context, the summit’s attendees are grappling with a core question: will the 5% pledge translate into actual capability upgrades, or will it remain a political objective that is gradually reinterpreted or diluted in national budgets? The answer depends on the interplay of political will, parliamentary approval, budget cycles, procurement processes, and the capacity of domestic defense industries to deliver the necessary systems and services on schedule. The ultimate aim is to convert rhetoric into reliable, long-term investments that can sustain a higher level of readiness and ensure that allied forces can operate together effectively in diverse environments.
Current State of NATO Defense Spending and Pledges
The gathering in The Hague comes against a backdrop in which the alliance’s members have, over the years, moved toward higher defense expenditure, but not uniformly or uniformly fast enough to satisfy the most ambitious targets. The core 2% of GDP benchmark, established more than a decade ago, remains the baseline yardstick for many observers and policymakers. By 2024, NATO data indicated that a growing number of allies had met or surpassed the 2% threshold, with several nations demonstrating substantial outlays above that line. Still, the 5% target remains elusive, and some major economies have persistently lagged behind the 2% floor.
Among the member states, a subset has consistently exceeded 2% and maintained significant defense budgets relative to their GDP. These include some of the alliance’s wealthier economies, whose spending is often geared toward modernization of force structures, development of advanced platforms, and enhancement of joint military capabilities designed to improve interoperability with partners. In contrast, other members face structural constraints—economic, political, or bureaucratic—that hinder rapid, sustained increases in defense spending.
Canada is frequently cited as an example of a country that has not matched the 2% threshold, with NATO estimates placing its 2024 defense outlays at around 1.3% of GDP, a level lower than several peers and noticeably below Italy, Portugal, or Montenegro in relative terms. Spain and Italy have drawn attention as significant holdouts, with neither having committed to the full 5% target, and both historically leaning toward more conservative incremental increases rather than rapid, large-scale hikes. The United Kingdom, Poland, and Germany have publicly signaled intentions to increase defense spending toward the 5% mark, but the timelines and pacing for achieving that objective remain uncertain, raising questions about whether a firm, time-bound plan exists and whether it will be implemented without delay.
Despite the general momentum toward higher spending, discussions and public messaging show a tendency to land at a practical, incremental path rather than a linear, guaranteed trajectory to 5%. The risk for the alliance is that states will offer assurances without a transparent, accountable plan for how the increases will be realized within their domestic fiscal and political constraints. The risk is compounded when national budgets must accommodate competing priorities, such as social programs, public investment, debt service, and economic stimulus measures, particularly in an environment of economic volatility or geopolitical shocks.
Critically, none of the NATO members has yet reached the 5% target, underscoring the breadth of the challenge and the need for disciplined budgeting, procurement reforms, and shared strategic planning. Analysts highlight that even those countries with high spending levels still face hurdles related to the composition and effectiveness of their investments. It is not enough to spend more; the focus must also be on ensuring that the spending translates into credible, interoperable capabilities that can be deployed in a timely manner and that support a coherent alliance posture. In this sense, the 5% target represents both a political objective and a practical instrument for reshaping defense planning and industrial strategy across Europe and North America.
Political Dynamics, Promises, and Real-World Implementation
The political landscape surrounding NATO defense spending is characterized by a mix of assertive rhetoric, careful diplomacy, and contested timelines. The United States has been openly adamant about the need for allies to elevate their defense commitments, and this stance has been echoed by top U.S. and allied officials in the weeks leading up to the summit. In public remarks and at high-level gatherings, American officials have stressed that the 5% target is both real and achievable, presenting it as a test of alliance solidarity and strategic seriousness. The emphasis on tangible results rather than mere statements is a hallmark of the current approach, and it underpins the broader objective of ensuring NATO remains capable of deterring and, if necessary, countering aggression in multiple theaters.
On the European side, voices within and among allied capitals stress the importance of credible plans and phased implementation. The concern is that some messaging could be interpreted as implying a 5% commitment that is effectively shorter in practice, such as a combination of 3.5% in conventional defense and 1.5% in security infrastructure that is not fully funded or prioritized. This kind of ambiguity risks creating friction with the United States if Washington perceives that allies are recasting the target in ways that dilute its meaning or delay action. As such, European officials are being urged to articulate specific, auditable steps, including defined milestones, budgetary revisions, procurement reform, and governance mechanisms that can track progress toward the 5% objective.
In this tense yet constructive environment, a central challenge is aligning messaging across national narratives and domestic media. Diplomats and analysts warn that some European leaders and their government communications teams may back brief their publics with figures that imply a broader commitment than what can be delivered within their fiscal constraints. The risk is that early overstatement can provoke a backlash if subsequent budgets do not materialize as promised. The United States, for its part, stresses that the 5% target is not merely aspirational; it is a practical goal tied to real capability improvements and a demonstrable increase in interoperability across the alliance.
The summit also faces a crucial political dynamic: the need to balance tough diplomacy with pragmatic consideration of how to operationalize the increase in spending. This involves decisions about which platforms to modernize first, how to prioritize capabilities that support joint operations, and how to harmonize procurement across multiple national defense industries to avoid fragmentation and inefficiency. Industry partners, including major European defense firms, have highlighted the importance of long-term, predictable demand signals from governments, which would enable them to scale production, invest in supply chains, and build the capacity necessary to deliver at scale. Without such predictability, the risk is a mismatch between declared commitments and the actual capability improvements those commitments are meant to enable.
Another dimension of the political dynamic is the role of leadership and political calendars in each country. In the context of Spain, for instance, the government has signaled a slower or more cautious path toward the 5% target, emphasizing a preference for maintaining a lower but meaningful level of defense investment—specifically highlighting a 2.1% GDP threshold as meeting core military requirements—while acknowledging the right of other countries to pursue higher spending. This stance reflects a broader tension between national sovereignty over budget choices and the collective security logic of the alliance. It also raises questions about burden-sharing among European partners and how collectively credible reforms can be designed without undermining national political capital.
The exchange of ideas between defense officials, foreign ministers, and heads of state is shaping a narrative that could determine the outcome of the summit. Kurt Volker, a former U.S. ambassador to NATO and a distinguished fellow at the Center for European Policy Analysis, has warned that while the United States seeks to project strength and commitment, the messaging from European allies must be precise and credible. He cautions that if allied statements are perceived as exaggerated or flexible in a way that reduces accountability, the alliance could encounter friction or a potential clash with Washington. The dialogue around 5% is thus not only about numbers but about trust, accountability, and the ability to translate political declarations into durable policy and procurement decisions that strengthen NATO’s deterrence posture.
The Hague Summit: Timing, Expectations, and Economic Implications
As NATO leaders prepare to gather in The Hague for the annual summit, the stakes are interpreted as among the highest in the alliance’s 77-year history. The ongoing crisis in Ukraine, the broader regional volatility, and the potential spillover effects into the global economy heighten the urgency of converting pledges into concrete actions. The defense policy debate is presented as a critical test of alliance cohesion: can the members align their national priorities with a common, ambitious framework that prioritizes credible defense capabilities, while also maintaining economic stability at home?
In this context, U.S. Defense Secretary Pete Hegseth has been emphatic that the 5% target will happen, asserting a strong, unambiguous commitment to the objective. His stance, reinforced by the NATO Secretary General and other allied leaders, signals a push for unwavering consensus on a path toward the 5% goal. The exchange of promises and assurances at the summit will be closely scrutinized for their specificity: will leaders present a clear timetable with concrete milestones, cost estimates, and accountability mechanisms? Or will the discussions yield more general commitments that could be interpreted as aspirational without delivering the required procurement and capability outcomes?
The strategic environment in which the summit unfolds further intensifies the sense of urgency. The war in Ukraine continues to impose security costs and demand rapid modernization, while conflicts elsewhere—such as the Middle East—risk drawing resources away from European defense initiatives. The potential economic impact of prolonged instability also adds pressure on governments to demonstrate that increased defense spending will contribute to resilience and growth rather than placing additional strain on public finances. The balance between short-term fiscal realities and long-term security objectives will be a defining feature of the summit discussions and the resulting communiqués.
Analysts underscoring the readiness of European defense industries expect that, even with political will, the sector must manage a complex transition. The shift toward higher defense spending requires not only more funds, but also more efficient procurement, better coordination among countries, and robust industrial policies that encourage scale, reduce duplication, and protect critical supply chains. The parallel conversations about capacity expansion and demand alignment highlight a broader strategic question: how can Europe align its defense industrial base with the ambition of a 5% spending framework while maintaining competitiveness on a global stage?
Industry Perspectives: European Firms, Capacity, and the Path to Scale
European aerospace and defense companies watch the conversations about 5% with keen interest, not only for potential revenue growth but also for the implications for capability development, supply chains, and industrial strategy. Major firms such as Leonardo (Italy), Saab (Sweden), and Embraer (Brazil, with European collaborations) have publicly stated that Europe must act decisively and collectively to translate political commitments into durable investment contracts and procurement programs. They emphasize that achieving meaningful defense capacity requires more than money: it requires a coordinated approach to demand signaling, program prioritization, and streamlined procurement processes that can sustain a robust European industrial base.
Industry leaders stress that if the European portion of NATO aims for 3.5% in pure defense spending, there must be corresponding enhancements in capacity and capability. They caution that meeting this target will demand not only greater financial resources but also a reconfiguration of European production ecosystems to achieve scale, interoperability, and efficiency. The challenge is to translate increased demand into concrete production capacity—an effort that includes optimizing supply chains, aligning requirements across different countries, and reducing fragmentation in defense markets. A key point raised by executives is that raw production capacity alone is not enough; the distribution of demand, the timing of orders, and the readiness of subcontractors throughout the supply chain are equally critical to ensure that capacity can be mobilized when needed.
Executives highlight several interdependent factors shaping Europe’s path to greater defense capacity. An intensified production push requires long-term investment in factories, technologies, and workforce development. It also requires a stable and predictable pipeline of orders so that suppliers can plan, invest, and upgrade their capabilities. In this environment, the defense firms emphasize that Europe must improve its capability targets and align demand with supply more effectively. They call for greater unity in European strategic planning to reduce duplication and to ensure that procurement programs maximize economies of scale and cross-border collaboration. The goal is to ensure that European industry can ramp up production of critical platforms, electronics, and technology solutions in a way that multiplies national capabilities and strengthens NATO’s combined deterrence.
Cingolani of Leonardo and Johansson of Saab point to the complexity of the defense supply chain. They describe a global ecosystem comprising thousands of suppliers across dozens of countries, underscoring the necessity of resilient procurement practices and robust risk management. They stress that supply chain vulnerabilities must be anticipated and mitigated, and that investments in materials and production capacity must be prioritized even in times of budgetary constraint. They contend that there is no simple fix for these issues and that progress will require a sustained, collaborative effort among governments, industry, and international partners to safeguard critical technologies, components, and processes.
Another important industry theme is the need for early clarity from governments about expectations and future demand. When governments set clear targets, requirements, and timelines, defense companies can plan with confidence, invest in capacity expansion, and align their global manufacturing footprints to meet anticipated demand. Conversely, uncertainty impedes investment and can lead to suboptimal outcomes, including capacity bottlenecks and slower innovation cycles. The dialogue between policymakers and industry leaders is therefore essential to creating a coherent, long-term plan that supports both national security objectives and the competitiveness of Europe’s defense sector on the international stage.
Supply chain considerations also come to the fore. Analysts note that the defense sector relies on a wide network of companies—potentially thousands of suppliers in many countries—whose operations must be synchronized to deliver complex systems. The interconnectedness of modern defense programs means that shortages of key materials, disruptions in logistics, or political decisions in one country can reverberate through the entire chain. Strategists advocate for greater resilience and diversification of suppliers, better stockpiling of critical materials, and robust collaboration with allied partners to minimize single-point weaknesses. In this sense, the push toward higher defense spending is not only about the total amount spent but about the reliability, speed, and integration of the whole defense ecosystem that supports NATO’s strategic posture.
Industry executives also stress that the success of any 5% framework hinges on aligning national strategies with European and transatlantic objectives. They argue that Europe must develop a shared procurement and technology roadmap that captures the scale advantages of a continental market while preserving the unique capabilities of individual nations. This approach would enable a more efficient distribution of work, foster cross-border partnerships, and accelerate the development and deployment of advanced platforms, sensors, and systems that collectively enhance allied military readiness. By creating a coherent European industrial policy that harmonizes requirements, invests in key technologies, and fosters collaboration, Europe can improve its competitiveness on the global stage and better support the alliance’s long-term defense goals.
In sum, the industry perspective underscores a critical reality: increased defense spending must be matched by strategic, well-coordinated action that expands capacity, reduces fragmentation, and builds durable relationships between governments and industry. The path to a robust, scalable defense industrial base in Europe requires clear demand signals, stable budgets, and an integrated approach to procurement and manufacturing. Without these elements, the ambitious 5% framework risks remaining a political aspiration rather than a driver of real and measurable improvements in NATO’s collective defense capabilities.
Regional and Country-Specific Trajectories: Spain, Italy, the UK, Poland, Germany, Canada
Across NATO’s diverse membership, the trajectories toward higher defense spending differ markedly from one country to another. Spain and Italy have faced particular scrutiny as holdouts against the 5% target, even as they acknowledge the importance of increasing defense investment. Spain, in particular, has argued that it can meet core military requirements by allocating around 2.1% of GDP to defense, signaling a cautious strategy that favors foundational capability improvements over a rapid ascent to the 5% figure. This stance has drawn attention and debate within allied discussions about the balance between national sovereignty in budget decisions and the security needs of the alliance.
In contrast, the United Kingdom, Poland, and Germany have publicly indicated intentions to raise defense spending to align more closely with the 5% target. However, the timelines for achieving these ambitions remain unclear, raising questions about whether political calendars, parliamentary approvals, and budgetary constraints will permit a swift transition. The UK, for example, has been reported to be considering a multi-year path that could delay the full realization of 5% spending while still signaling a commitment to robust defense modernization. The precise sequencing of investments and the pace of increases will be critical to whether these countries can deliver tangible improvements in capabilities and interoperability within an acceptable horizon.
Canada presents a contrasting picture. NATO estimates show that Canada’s defense spending in 2024 amounted to approximately 1.3% of GDP, placing it well below Italy, Portugal, or Montenegro in relative terms. This position underscores Canada’s challenge in achieving the alliance’s more ambitious benchmarks and highlights the varying degrees of fiscal and political willingness to elevate defense outlays. For Canada and other non-European members, the path toward higher spending will likely hinge on domestic budgetary realities, policy priorities, and the strategic value they place on contributing to NATO’s collective deterrence.
Poland and the Baltic states have historically led the way among European allies in defense spending relative to GDP, often exceeding the 2% threshold and maintaining a relatively high level of defense modernization. These countries have prioritized investments in air power, land forces, and deterrence capabilities designed to counter potential threats from nearby adversaries and to strengthen NATO’s eastern flank. Their approach demonstrates a willingness to accept significant fiscal commitments as a means of reinforcing security assurances and mutual defense guarantees that underpin NATO’s unity and resilience in a volatile European security environment.
Germany presents a nuanced case. While the country has signaled an intent to increase defense spending and modernize its armed forces, its path may be marked by a careful balance between defense priorities and domestic social and economic considerations. The German government faces the challenge of navigating internal political dynamics, public opinion, and coalition governance as it pursues a broader strategic realignment of its security posture. The outcome will influence not only Germany’s own capabilities but also the broader pattern of European defense collaboration and the pace at which the continent strengthens its deterrence capabilities within the NATO framework.
Italy’s position is similarly consequential for the European defense landscape. As part of Europe’s southern bloc, Italy’s defense investment decisions interact with broader regional dynamics, industrial capacity, and alliance cohesion. Italy’s stance on the 5% target reflects internal deliberations about how to allocate resources to defense while balancing other priority domains, such as social welfare, economic reform, and energy security. The interplay between national policy and alliance expectations is central to how Italy contributes to NATO’s overall strength and the ability of the bloc to mobilize rapid and effective defense responses if needed.
Spain’s approach, in particular, emphasizes the ongoing debate about the optimal mix of defense spending and core security investments. Spain’s leadership has framed its position as a practicalization of capability needs rather than a blanket rejection of higher spending. The country acknowledges the importance of another dimension within the 5% framework—the 1.5% earmarked for security-related infrastructure. Yet the decision to limit immediate increases to 2.1% GDP suggests a selective strategy aimed at ensuring that the country’s defense investments remain aligned with domestic fiscal realities and long-term strategic goals.
The Canadian and European mix of trajectories demonstrates that, while the alliance shares a common objective, the execution path is diversified by national circumstances, political will, and economic conditions. The result is a complex, contingent process in which the 5% vision serves as a guiding beacon, while individual nations chart their own routes toward greater security and resilience.
Strategic Implications for NATO’s Future and Global Security
The push toward higher defense spending within NATO carries broad implications for alliance cohesion, global security dynamics, and the balance between deterrence and diplomacy. A successful transition to a more capable and interoperable force posture would strengthen NATO’s credibility and respond to evolving threats, including conventional military challenges, cyber operations, and hybrid warfare. The emphasis on both conventional defense and security-related infrastructure suggests a comprehensive approach to modernization—one that recognizes that modern security requires investments in people, systems, and networks as much as in platforms and weapons.
At the same time, the path to the 5% target is likely to be asynchronous and asymmetrical across member states. Some allies may accelerate their spending and modernization, while others proceed more slowly due to budgetary constraints, political considerations, or domestic priorities. The result could be a period of uneven capability development across the alliance, which would require robust coordination, standardized procurement practices, and shared investment strategies to maintain alliance unity and operational readiness. The potential for friction between members over cost sharing and strategic priorities cannot be ignored, but a credible and well-structured approach could also serve as a catalyst for greater collaboration and a more integrated European defense industry.
The defense industry’s role in enabling the 5% ambition is pivotal. European manufacturers must scale up, invest in advanced technologies, and align their production capabilities with a clear and stable demand signal from governments. The partnerships between government buyers and industry players will be tested as planners seek to synchronize requirements and avoid fragmentation. A successful industrial mobilization would enhance Europe’s technological leadership, reduce dependency on external suppliers, and strengthen NATO’s overall deterrence posture. It would also impact regional economies by creating jobs, fostering innovation, and expanding the export potential of European defense capabilities—factors that carry long-term strategic significance beyond the immediate security landscape.
For the United States, the 5% goal represents a test of alliance cohesion and credibility. Washington’s strategy hinges on ensuring that allies commit to meaningful, auditable, and accountable action that translates into tangible improvements on the battlefield and in cyberspace. The effectiveness of American diplomacy will hinge on the ability to move from aspirational rhetoric to concrete policy measures, risk-sharing arrangements, and sustained investment that aligns with the alliance’s evolving security needs. In this sense, the summit is not merely a fiscal debate; it is a crucible for NATO’s future, testing the willingness of member states to stand together in a time of global volatility and to translate political promises into persistent, outcome-driven action.
Conclusion
The NATO summit in the coming days is set to be a defining moment for the alliance’s approach to defense spending, deterrence, and industrial capacity. The central question—whether allies can adopt and implement a credible 5% spending framework that includes both pure defense and security-related infrastructure—will shape how NATO responds to ongoing crises and geopolitical shifts. While many members have voiced support for higher spending and modernization, the path from pledges to measurable capability gains is complex, requiring disciplined budgeting, transparent accountability, and coordinated procurement across a diverse set of national contexts.
Spain’s cautious stance, Italy’s and other holdouts’ positions, and the commitments of the United Kingdom, Poland, Germany, Canada, and others will all influence the direction of alliance policy for years to come. The European defense industry faces the dual challenge of ramping up production capacity while ensuring that procurement remains efficient, geographically diversified, and aligned with strategic needs. The interplay between political messaging and real-world delivery will be closely watched, as any perceived gap between rhetoric and results could undermine trust among allies and complicate NATO’s ability to respond swiftly to future threats.
Ultimately, the success of the 5% objective will depend on a sustained, collaborative effort that links national fiscal strategy, defense policy, and industrial strategy in a way that strengthens NATO’s deterrence and readiness. It requires a clear, credible plan with defined milestones, robust governance, and a shared commitment to building a defense architecture that not only meets today’s security challenges but anticipates those of tomorrow. If NATO members can translate intent into action—through disciplined budgeting, coherent procurement, and strategic industrial investment—the alliance can reinforce its unity, bolster its deterrent power, and safeguard regional and global security in a volatile, fast-changing world.