NATO's Bold New Defense Spending Goals: What You Need to Know

NATO leaders are poised to endorse a new defense spending target of 5% of GDP, with Spain securing an exemption from this requirement. This decision raises questions about the financial commitments of other member nations, particularly those struggling to increase their military budgets. As tensions with Russia escalate, European leaders are emphasizing the need for enhanced defense capabilities. The proposed spending framework includes a core defense spending increase to 3.5% of GDP and additional investments in military infrastructure. With a potential deadline of 2032 for meeting these targets, the implications for NATO's future defense strategy are significant. Read on to explore the details of this pivotal agreement.

By Narendra Chaudhary Jun 23, 2025, 17:17 IST

NATO Leaders Set Ambitious Defense Spending Targets

In a significant move, NATO leaders are anticipated to endorse a new directive this week, mandating member nations to allocate 5% of their GDP towards defense. However, this investment commitment will not be uniformly applicable to all member states.

Spain has successfully negotiated an exemption from this 5% GDP spending requirement, while President Donald Trump has indicated that this target should not be imposed on the United States, but rather on its allies.

During an announcement on Sunday, Prime Minister Pedro Sanchez of Spain revealed that the final summit communique from NATO would omit the phrase 'all allies' regarding the spending pledge.

This development raises concerns about the potential expectations for other NATO members, such as Belgium, Canada, France, and Italy, who may also find it challenging to significantly increase their defense budgets.

On Friday, Trump emphasized that the U.S. has been shouldering the burden for its allies for years and insisted they must now contribute more. He remarked, 'I don’t think we should, but I think they should,' adding that NATO must address Spain's situation.

Trump also criticized Canada for being a 'low payer.'

Understanding NATO's New Spending Framework

The proposed 5% spending goal consists of two components. Firstly, NATO allies would agree to increase their core defense spending to 3.5% of GDP, up from the current minimum of 2%, a target already met by 22 of the 32 member countries. Additionally, expenditures aimed at supporting Ukraine will also be included.

The second component, accounting for 1.5%, encompasses investments in infrastructure such as roads, bridges, ports, and airfields to enhance military deployment capabilities, as well as measures to combat cyber and hybrid threats and prepare societies for potential conflicts.

While the second spending category may be manageable for many nations, including Spain, the 3.5% core spending target poses a significant challenge.

According to NATO estimates, Spain's military budget accounted for only 1.28% of its GDP last year, making it the lowest among alliance members. Sanchez stated that Spain aims to meet its NATO commitments by increasing defense spending to 2.1% of GDP.

Moreover, Spain ranks among the smallest contributors of arms and ammunition to Ukraine, with an estimated military aid contribution of around 800,000 euros ($920,000) since Russia's invasion in 2022.

The Rationale Behind Increased Defense Spending

There are compelling reasons for the proposed increase in defense spending.

European leaders perceive Russia's aggression in Ukraine as a direct threat to their security. Moscow has been implicated in a surge of sabotage, cyberattacks, and GPS jamming incidents, prompting European leaders to prepare their citizens for potential escalations.

NATO experts assert that defending Europe and North America against a Russian offensive necessitates investments of at least 3%. All 32 member nations have agreed to this, with each country assigned specific 'capability targets' to fulfill.

Spanish Foreign Minister Jose Albares emphasized that the focus should not solely be on percentages but rather on capabilities. He asserted that Spain can achieve the required capabilities with a 2.1% defense budget.

Countries in closer proximity to Russia, including Belarus and Ukraine, have committed to reaching the target, along with neighboring nations like Germany, Norway, Sweden, and the Netherlands, which is hosting the upcoming two-day summit.

Setting a Timeline for Defense Spending Goals

Merely agreeing to increased spending is insufficient. Many NATO allies have yet to meet the previous 2% target established in 2014 following Russia's annexation of Crimea, necessitating an incentive.

A deadline of 2032 has been proposed, which is significantly shorter than previous NATO timelines. Military analysts predict that Russian forces could potentially launch an attack on an ally within the next five to ten years.

The U.S. has stated that the pledge cannot be open-ended, arguing that a decade is too lengthy. However, Italy has expressed a desire for a ten-year timeframe to meet the 5% target.

Discussions among NATO representatives have also considered extending the deadline to 2035, with a formal review of progress potentially scheduled for 2029.