Analysis: NATO leaders agree to invest 5% of GDP on defence and security by 2035

NATO leaders meeting in the Netherlands on 25 June approved The Hague Summit Declaration, agreeing to invest 5% of GDP on defence and security by 2035. They agreed to allocate 3.5% of GDP a year on core defence requirements and 1.5% on protecting critical infrastructure and networks, ensuring civil preparedness and resilience, innovation, and strengthening NATO’s defence industrial base. 

Although NATO summit (and ministerial) declarations are reached unanimously, Spanish President Pedro Sánchez announced on 22 June 2025 that his government had reached an agreement with the alliance to spend 2.1% of GDP on defence. He said Spanish Armed Forces experts had calculated that Spain would be able to acquire and maintain all the personnel, equipment, and infrastructure requested by NATO with that level of spending. He defended this decision by saying spending 5% of GDP on defence “would force us to break our promise and squander billions of euros or, paradoxically, it wouldn’t make us any safer or better allies, since it would ultimately distance us from the true solution, which is to move towards the creation of a European Security and Defence Union”, adding, “Europe needs to advance its strategic autonomy [and] such a level of spending would be incompatible with our welfare state and our world view.” 

NATO Secretary General Mark Rutte said in his 23 June pre-summit press conference, if “Spain thinks they can achieve [NATO capability] targets on a percentage of 2.1%, [but] NATO is absolutely convinced Spain will have to spend 3.5% to get there … 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 2029.” Sánchez plans to run for re-election two years earlier, in 2027. 

Asked if all allies, not only Spain, can spend as much money as they want as long as they guarantee they will meet NATO’s capability targets, Rutte replied, the US is “already spending almost 3.5% on core defence, and no doubt they are close to spending the 1.5% on defence-related [capabilities], and countries like Estonia and Poland are very close, and for many others, it will still be a long road ahead, but [it is] really important that we do this”. 

In his 25 June press conference after the NATO summit, US President Donald Trump threatened to double tariffs on Spain in direct negotiations with the Iberian country for intending not to pay 5% of GDP on defence. However, the European Union (EU), in which Spain is a member, is negotiating tariffs collectively with the US.

The Hague Summit Declaration stated, “Allies reaffirm their enduring sovereign commitments to provide support to Ukraine, whose security contributes to ours, and, to this end, will include direct contributions towards Ukraine’s defence and its defence industry when calculating allies’ defence spending.” In his pre-summit press conference, Rutte said Canada and European NATO members had so far pledged EUR35 billion (USD41 billion) to Ukraine, adding, “Last year it was just over [EUR]50 billion for the full year. This year, not even before we reach the first of July, so the half-year mark, we’re already at over [EUR]35 billion.” Asked during his post-summit press conference if the US was prepared to sell Patriot air-defence systems to Ukraine, Trump said, “We’re going to see if we can make some available. They’re very hard to get. We need them too.” 

The Hague Summit Declaration is the shortest statement ever agreed by that level of NATO meeting. Previous alliance summit communiqués have covered every aspect of NATO activities, and during the Cold War, the views of countries not agreeing with the allied consensus were expressed in footnotes so as not to block a decision. 

NATO’s alliance-wide agreement that each member country will aim to spend funds equal to 3.5% of its GDP on defence and a further 1.5% of GDP on related costs such as infrastructure, intelligence, and cyber security by 2035 marks the coalescing of a major shift in European defence funding. 

However, despite major increases in military expenditure since Russia’s full-scale invasion of Ukraine in 2022, 11 years after the previous target of 2% of GDP was codified at NATO’s Wales summit in Cardiff in 2014, a third of the alliance remains short of that goal when judged against a consistent definition of defence expenditure. 

Excluding Iceland, which does not operate military forces and spends less than 0.2% of its GDP on defence, 11 of NATO’s 32 member states authorised military spending worth less than 2% of their economic output in 2025, with an average budget among this group of 1.5% by that metric. 

A partial explanation for the failure of all NATO allies to meet the 2% target can be found in the detail of its prescription. In NATO’s Wales Summit Declaration in 2014 countries committed to ‘aim to move towards’ the 2% target within a decade, meaning those who made any increases in the GDP metric were in technical compliance even if they fell short of meeting the benchmark. No such ambiguous language is included in The Hague Summit Declaration.