The winners and losers in Trump's NATO arms race

Politico

4 hours ago

NATO members are rushing to show President Donald Trump they're shoveling money into defense — some with a dose of creative math — as Russia's battle with Ukraine grinds on and war threatens to consume the Middle East.
The group's summit this week in The Hague, which Trump plans to attend, will attempt to set a deadline for members to spend 5 percent of GDP on defense. Trump has complained about European defense budgets since his first term, claiming the U.S. gets ripped off by countries that rely on Washington for a security blanket.
The way allies approach this at the summit is critical. Leaders will need to walk a tightrope between staying on the president's good side — and continuing to benefit from America's role in NATO — and declaring more independence from Washington.
As Trump increases pressure, members are touting new investments and shuffling around money — from a 'defense-adjacent' Sicilian bridge to a stopgap German fund.
A POLITICO analysis reveals telling gaps between the big spenders in Eastern Europe and those further afield from Russia, who are still creeping toward a decade-old target. The 32 member states break down into three groups: the winners, the risers and the laggards. Most countries occupy a crowded middle ground, not quite racing toward the new 5 percent goal, but making solid progress in exceeding the current 2 percent mark.
'Most of NATO recognizes that it has to be better,' said a U.S. Defense Department official, who like others, was granted anonymity to discuss internal conversations. 'We're looking at these meetings as a very public chance, with the president watching, for them to step up.'
Here's how NATO members are faring in the race to spend.
Poland has led the pack for the last several years, spending 4.7 percent of its GDP on defense as it splurges on everything from drones to fighter planes. The country, which borders Russia and has dealt with errant missiles killing citizens, is keenly aware of the threat from its eastern flank.
That kind of wake-up call has spurred Warsaw to ask the European Commission to shift $6.9 billion of its funding in green projects to defense. The bigger spending has made Poland a favorite in Washington.
The Poles are getting creative in their weapons purchases by mixing systems and suppliers from multiple countries to get equipment delivered faster. Poland was the first NATO member to spend billions on South Korean long-range artillery and other systems — a move that other countries frustrated with delayed shipments of U.S. weapons, such as Finland, are emulating.
Countries will do 'whatever works' to get to 5 percent, said a diplomat from a NATO member country, including folding infrastructure upgrades into defense spending to push the overall number higher.
Estonia, Lithuania and Latvia — former Russian territories that tend to march in lockstep when it comes to defense spending — have outlined plans to hit 5 percent by next year or soon after. They're already among the alliance's top spenders.
Baltic officials are embracing a 'porcupine' strategy, modeled off Taiwan's efforts to ward off a Chinese invasion. This involves using small, mobile and lethal weapons fired from shore at any Russian Baltic Sea fleet ships that might threaten them.
Greece is a surprise spender on defense, bucking the trend of most Mediterranean countries by dishing out more than 3 percent of its GDP. Prime Minister Kyriakos Mitsotakis in April announced a 12-year, $28 billion defense strategy that will focus on uncrewed vehicles, munitions, drones, satellites and its Achilles' Shield air defense system.
The U.S. spends more than any other member on defense, but it still only reaches 3.4 percent of GDP. The country faces its own political challenges in reaching the NATO goal, even with a potential 2035 deadline that allies may recommend at the summit.
The United Kingdom and France, Europe's two nuclear states, have made steady increases in recent years but face issues behind the scenes.
Britain's defense budget rose from 2.2 percent of GDP in 2023 to 2.3 percent in 2024, with a sharp increase in research and development spending. It also paid extra for major operations such as air defense in the Red Sea and aircraft carriers deployed to the Pacific. Prime Minister Keir Starmer has promised to take that figure to 2.6 percent by 2026 — thanks in part to folding in intelligence and slashing spending on foreign aid. But he's beset by severe budget issues and has not yet set out a path to his goal of hitting even 3 percent.
Paris has steadily increased defense spending since President Emmanuel Macron came to power in 2017. But it only hit 2 percent last year. France is one of the European Union's most indebted countries, and public finances are dire. It's unclear how the government would find extra money to reach the 5 percent goal, especially as Macron has ruled out raising taxes.
Germany and Sweden have both rewritten their debt rules as they reach 2 percent and aim higher. German governments saw the NATO target as non-binding for years, and only the advent of war in Europe — dubbed the Zeitenwende, or turning point, by former German Chancellor Olaf Scholz — prompted the country to change course.
Berlin in 2024 reported 2.1 percent of GDP on defense spending, exceeding the alliance benchmark for the first time since 1990. But the increase doesn't boost combat strength and relies on some fancy accounting. A sizable chunk of the 2024 defense budget came from a special temporary spending fund.
Sweden's defense spending surged following its 2024 accession to NATO from 1.5 percent to 2.2 percent of GDP last year. Stockholm is tweaking its debt rules to allow for up to about $30 million in defense loans by 2035.
Then there's Turkey. While Ankara has missed the 2 percent mark in recent years, it has a well-developed arms industry and punches above its spending weight in weapons and the size of its military — the second-largest in NATO.
Several strategically vital countries hang well below the 5 percent goal, particularly Canada, Spain and Italy. All three have made pledges to catch up. But politics, accounting tricks and historical habits are slowing progress.
Canada spends just 1.37 percent of GDP on defense, with key equipment gaps across its forces. Prime Minister Mark Carney this month promised to hit 2 percent 'this fiscal year,' bringing forward a target initially set up for 2029.
The lag has deep roots. Ottawa has long relied on U.S. defense guarantees while prioritizing social spending and climate goals. Carney is framing rearmament as a sovereignty issue in light of Trump's threats to annex Canada, but that would require a rapid ramp-up in procurement and industrial capacity.
Spain remains NATO's lowest spender, aside from Iceland, which has no army. Madrid spent 1.3 percent of GDP on defense in 2024. Prime Minister Pedro Sánchez has rolled out an €11 billion military upgrade plan to reach 2 percent this year. It's the country's most ambitious defense posture in decades.
But Sánchez is boxed in by his governing coalition. Left-wing allies remain opposed to higher military budgets, and previous attempts to raise spending triggered a backlash. He asked Rutte this month, in a letter obtained by POLITICO, for a carveout to the new spending target.
'It is the legitimate right of every government to decide whether or not they are willing to make those sacrifices,' he wrote, saying it would jeopardize the country's welfare system.
Italy was only slightly higher at 1.5 percent last year. Prime Minister Giorgia Meloni said the government will hit the 2 percent target this year, but officials suggest that may happen more through clever accounting.
Rome wants civilian infrastructure, such as a planned bridge to Sicily, to count as a defense-adjacent goal. Defense spending remains a politically fraught topic as the country faces high debt levels and strong pressure to protect pensions and welfare.
This text is a collaboration of the Axel Springer Global Reporters Network.
Paul McLeary reported from Washington, Chris Lunday reported from Berlin and Esther Webber reported from London.
Jacopo Barigazzi in Brussels, Mike Blanchfield in Ottawa, Jack Detsch in Washington, WELT's Philipp Fritz in Warsaw, Max Griera in Brussels, WELT's Thorsten Jugholt in Berlin and Laura Kayali in Paris contributed to this report.