Fuzzy, Loose, Soft: NATO’s New Defence Spending Targets

CSDS POLICY BRIEF • 21/2025

By Elie Perot

21.7.2025

Key issues

• At the 2025 Hague Summit, NATO Allies significantly raised common spending targets, pledging 3.5% of GDP on core defence spending and 1.5% of GDP on defence- and security-related items by 2035 – a sizeable increase on the 2% of GDP Wales pledge;
• One may question, however, the practical value of these new common spending targets, to the extent that their scope is partly fuzzy, their binding nature remains disputed and their enforcement will be soft;
• As a result, NATO’s new spending targets may have created new points of contention, which will likely generate tensions and frustrations in the future, both between allies as well as within their respective domestic political systems.

Introduction

The latest North Atlantic Treaty Organisation (NATO) summit, held on 24-25 June 2025 in The Hague, Netherlands, ended with a general sigh of relief. There were indeed good reasons to worry that the meeting would descend into diplomatic chaos. President Donald Trump questioned the United States’ (US) commitment to collective defence on the plane taking him to Europe, and there was a last-minute geopolitical shock in the Middle East, caused by the conflict between Israel and Iran and the bombings of Tehran’s nuclear programme by the US. There was also public pushback by some NATO leaders, most notably by Spanish Prime Minister Pedro Sánchez, against the defence spending targets to be agreed at the Summit. But, in the end, everything went smoothly, at least on the surface.  The final declaration of the Summit reaffirmed allies’ ‘ironclad commitment to collective defence’ and Article 5 of the Washington Treaty; the conflict in the Middle East did not sow discord at the NATO table; and new benchmarks for defence spending were effectively agreed upon.

This last point was, in fact, the only real item on the agenda in The Hague – in stark contrast to what is usual for NATO summits, which normally are the occasion to take decisions on a much wider range of issues concerning the Atlantic Alliance and to adopt common positions on other pressing international issues as well. This time, however, the NATO summit was minimalistic, both in scope and duration, reflecting as much President Trump’s fixation on the level of defence spending by US allies, which the American leader has long considered insufficient, as his impatience with such large diplomatic gatherings.

Yet, although NATO’s new defence spending targets were the focus of all the attention in The Hague, many questions remain unanswered in this regard. Indeed, as this CSDS Policy Brief argues, it appears that after The Hague Summit these targets are fuzzy, in terms of what they encompass and what they do not. They are also loose, given that it is not entirely clear whether these targets are binding or not on all allies. Finally, these targets are soft, insofar as no enforcement mechanism is foreseen, apart from annual reporting, to ensure that allies will be on track to meet these targets by 2035 – a date that is, in any case, well beyond President Trump’s term in office. As a result, tensions related to NATO’s new spending targets are likely to arise in the future, both between NATO Allies and within their respective domestic political systems, in particular in NATO countries that are already facing delicate budgetary and political circumstances.

Fuzzy, at least in part 

In The Hague, NATO leaders have significantly raised the level of ambition for their common spending targets. Previous targets had been approved at the Wales Summit in 2014, following Russia’s annexation of Crimea. Back then, NATO Allies had pledged to ‘move towards’ 2% of GDP annually spent on defence, of which 20% would be invested into new equipment, ‘within a decade’. By contrast, the new “Hague Defence Investment Plan”, as NATO Secretary General Mark Rutte termed it in his closing press conference at the Summit, foresees an investment of 5% of GDP by 2035, with 3.5% going to core defence spending and 1.5% to ‘defence-and security-related spending’.

These new targets are not completely arbitrary, at least when it comes to core defence spending. Even before Donald Trump’s electoral victory in November 2024, the transatlantic mood music was that NATO Allies would ‘need to spend significantly more than 2% on defence going forward’, as former NATO Secretary General Jens Stoltenberg wrote in September 2024. This budgetary effort, going beyond the 2014 Wales pledge, was indeed seen as unavoidable to meet the new capability targets stemming from the regional defence plans, adopted in 2023 at the Vilnius Summit. Yet, at the time, no price tag was explicitly attached to these new objectives. In fact, it is reasonable to assume that had a different US president been elected, NATO would have likely avoided reintroducing rigid numerical targets for overall defence spending in favour of a more nuanced (and, arguably, more technocratic) approach, with discussions centring on how allies would effectively meet NATO’s new capability targets. Achieving these targets would necessarily have involved an increase in defence spending in most NATO countries towards 3%-3.5% of their GDPs. However, the level ultimately reached in terms of national budgetary input would not have been explicitly set, as such, as a benchmark.

By contrast to core defence spending, the additional 1.5% of GDP to be allocated to items that indirectly contribute to the security and defence of NATO Allies is much fuzzier and can be seen essentially as a creative accounting exercise, aimed at reaching the symbolic threshold of 5% of GDP and thus at offering President Trump a symbolic win. Indeed, whereas a long-standing and relatively detailed definition of defence expenditure, agreed by all NATO Allies, helps them calculate their respective contributions year after year, the scope of this new second category of ‘defence- and security-related’ items remains to be defined more precisely. The Hague declaration mentions that this will include allies’ expenditures to ‘protect [their] critical infrastructure, defend [their] networks, ensure [their] civil preparedness and resilience, unleash innovation, and strengthen [their] defence industrial base.’ Yet, while efforts to make NATO countries more resilient and innovative are, here too, undoubtedly necessary, there is a risk that without a commonly agreed-upon methodology, allies will include questionable investments under this second category to nominally reach 1.5% of GDP. The case of Italy illustrates this already, as it appears that the Italian government is considering the possible inclusion of the costly project (worth some €13.5 billion) of building a bridge over the Strait of Messina under its NATO commitments, even though the contribution of this infrastructure to the security of the Atlantic Alliance is far from obvious, at least when it comes to countering the Russian threat.

Binding on all allies?  

Another question about NATO’s new defence spending targets that still lingers even after the summit is whether these are truly binding on all allies. Secretary General Rutte argued indeed at the beginning of The Hague Summit that ‘NATO has no opt-out, and NATO doesn’t know side deals’, while Prime Minister Sánchez insisted, by contrast, that he had obtained an exemption for Spain from NATO’s new spending targets. Interestingly, if one takes a closer look at the final declaration of the summit, both sides can claim to be right, thanks to two linguistic tricks.

The first trick, as reported by journalists, was to change the traditional formula by which allied heads of state and government refer to themselves in NATO summit communiqués and declarations. To show their unanimous agreement, NATO leaders usually use the word “we”. Yet, in the two key paragraphs in The Hague declaration relating to NATO’s new defence spending targets, the formula “Allies” was used instead (e.g. ‘Allies commit to invest 5% of GDP annually on core defence requirements as well as defence- and security-related spending by 2035’, instead of ‘we commit…’). A way to interpret this wording is that only some allies – but not necessarily all of them – are committed to meeting the alliance’s new spending targets as expressed as a percentage of their GDPs. Accordingly, it would thus be the interpretation backed by the Spanish government that would seem to be correct.

Yet, this is where the second linguistic trick comes into play. The latter consists of having two subtly different versions of the summits’ declarations in English and French, NATO’s other official language. In the two key paragraphs mentioned above, the French version of the final declaration uses the expression “les Alliés” (in English, “the Allies”) and not “des Alliés”, which would have been the correct translation of “Allies”. Thus, the French version of The Hague declaration unmistakably implies, unlike the English version, that all NATO Allies commit to the Alliance’s new defence spending targets. As the English and French versions of the declaration have equal validity, either one can be legitimately invoked, despite their substantive difference. (This second trick echoes the well-known discrepancy between the English and French versions of Resolution 242 of the United Nations Security Council, which, in English, called for the withdrawal of Israeli armed forces ‘from territories occupied in the recent conflict’ [i.e. the 1967 Six-Day War], while its French version spoke of a withdrawal ‘des territoires occupés lors du récent conflit’ [i.e. from all the territories occupied then by Israel and not just some of them]). In short, what matters here is that the confusion over whether NATO’s new defence spending targets are mandatory or advisory was, in all likelihood, deliberate, as a diplomatic compromise, and is therefore likely to endure.

Soft enforcement

Finally, the aspect regarding NATO’s new defence spending targets that remains mostly unclear after The Hague Summit is how these will be enforced, if necessary. Of course, the problem here is not specific to these new targets per se, nor even to NATO, but confronts all international organisations that attempt to make member countries abide by certain standards without having sufficient centralised power. A good example, in this regard, is the European Union’s (EU)Stability and Growth Pact (SGP), which imposes, in principle, a maximum public debt of 60% of GDP and a maximum public deficit of 3% of GDP on Eurozone countries. Such commitments have been met very unevenly, however, over the past 30 years, even though the SGP comprises both a preventive component, with each Eurozone country required to submit a report on its budgetary trajectory every year, as well as a corrective component, involving not only the opening of discussions on the corrections to be made in the event of non-compliance with these fiscal criteria, but also the possibility – never used to date – of imposing fines on the member states that would fail to remedy such a situation.

In the case of NATO’s new defence spending targets, only a preventive component is explicitly provided for. As stated in the declaration from The Hague Summit, this preventive mechanism consists of allies presenting ‘annual plans showing a credible, incremental path’ to reach the target of 3.5% of GDP devoted to core defence spending by 2035 (the additional 1.5% of GDP going to ‘defence- and security-related spending’ is apparently excluded from this reporting exercise, which reinforces the idea that this second target primarily served a diplomatic purpose, namely placating President Trump). Over the coming months, NATO officials will have the task of defining precisely the form and content of these new annual reports on core defence spending. However, it is already clear that allied countries will be able to claim some leeway in terms of the shape of their trajectory towards the 3.5% target by 2035.

First, while the annual reports will have to demonstrate ‘a credible, incremental path’ towards this final target, no explicit objective has been set, in the end, in terms of a required annual increase. According to press reports, allies such as Belgium, Canada, France, Italy, Spain and the United Kingdom opposed enshrining the objective of an annual growth of 0.2% of GDP during the negotiations leading up to The Hague Summit. As a result, it is far from certain, at least as things stand, that NATO will completely avoid a “hockey stick” curve in the allies’ progress towards the 3.5% target by 2035, as the allies are not required after The Hague Summit to make at least steady progress towards this target and may choose to concentrate a large part of their efforts to get there only in the final years.

This behaviour risks being further incentivised, moreover, by the fact that progress towards NATO’s new defence spending targets ‘will be reviewed in 2029, in light of the strategic environment and updated Capability Targets’. This review clause is logical, to the extent that the latest NATO Capability Targets were approved during a ministerial meeting on 5 June 2025 and that the cycle for redefining such targets is four years. But 2029 will also mark the end of the Trump administration. This coincidence may give an incentive to the allies that may be most reluctant to increase their defence spending to minimise their efforts until that date, to then see and proceed in function of geopolitical circumstances as well as the exigencies of the next administration in Washington.

A source of future tensions and frustrations?

There is little doubt that the current security situation in Europe requires NATO Allies to devote significantly more resources to their defence. Many countries, in fact, have already done so without waiting for new common targets to be explicitly defined at the NATO level. In reality, the adoption of higher benchmarks for defence spending at the latest NATO summit in The Hague is likely to be most impactful for those allies whose national interest in increasing their defence spending has been, thus far, relatively less evident. Nonetheless, there are good reasons to question the practical value of the new NATO defence spending targets adopted in The Hague. As argued above, these targets are indeed at the same time fuzzy, loose and soft.

Such an outcome, dictated by diplomatic expediency and, in particular, the need to placate the second Trump administration, risks generating frictions among allies further down the road. Tensions are likely to arise indeed over what constitutes ‘defence- and security-related spending’, the still uncertain binding nature of the new NATO defence spending targets and the flexibility that each country will have in setting their national trajectory to meet these goals. The absence of a corrective mechanism, in the event an ally fails to define a credible path towards the new common benchmarks, could also spark tensions in the long run. In brief, NATO’s new defence spending targets introduce a series of potential points of contention that are likely to provide new fuel to the evergreen disputes and frustrations among allies over burden-sharing.

But it is not only among allies that NATO’s new defence spending targets are likely to create divisions. Ripple effects will be felt at the domestic level as well. As defence budgets remain decided by sovereign national parliaments, it is not a given that parliamentarians in NATO countries will now fulfil the commitment entered into by their respective governments. This is especially true, of course, in countries where the fiscal situation is already not so rosy. A good example is France, where the current government is likely to face this autumn a tricky no-confidence vote on its proposed budget for 2026, which includes important budget cuts and efforts to bring France’s ballooning public debt back under control, while financing at the same time a considerable increase in its defence budget. The equation could also become very delicate in NATO countries governed by a coalition – as is the case, in fact, across most of Europe. Here again, the case of Spain comes to mind. The fact that Prime Minister Pedro Sánchez explicitly revendicates Spain’s “sovereign right” not to comply with NATO’s new spending targets can be explained not only by a genuine political disagreement but also by the need to hold his government together, with its coalition partners calling on the Spanish leader “not to bend” to President Trump. In a similar vein, but in a different way, the government of Slovenia has been engulfed in political crisis since The Hague Summit, with coalition partners disagreeing on whether Slovenian Prime Minister Robert Golob had the mandate, in going to The Hague Summit, to commit the country to NATO’s new spending targets. As a result, the parties in the ruling coalition in Ljubljana have backed competing proposals for a consultative referendum on increased military spending or on Slovenia’s NATO membership, severely testing the stability of the Slovenian government. Finally, as the new NATO commitments extend over a decade, until 2035, it is unclear to what extent future parliaments and governments will feel bound by the commitments made by their predecessors. This could lead to scenarios similar in their general structure, if not in their substance, to the 2015 episode in the Greek debt crisis, when domestic democratic processes clashed head-on with the respect of previous international commitments.

Ultimately, the main issue is therefore whether citizens in the various NATO countries will agree to the increase in defence spending required to achieve the Alliance’s new objectives. Policymakers across NATO are well aware of this, of course, and they have been quick to emphasise the need to engage with the public and explain the security situation and the investments it calls for. But while explanation is necessary, it is also important, at least in democracies, to listen. By agreeing in The Hague to a significant increase in spending targets, NATO leaders have cautiously sought to limit the impact on the Alliance of the populist wave that has recently swept through Washington. In doing so, they may have set the stage for another wave – only this time on this side of the Atlantic.

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