Jan 25, 2025
U.S. President Donald Trump expects Washington's NATO allies to spend more on bombs and bullets.
Trump's proposal for members to devote 5 percent of GDP to defense was widely rejected, but the demand for bigger budgets is real and is not expected to go away.
NATO Secretary-General Mark Rutte has said spending might need to rise to as much as 3.7 percent of GDP. Only Poland is above that right now.
The current target for defense spending is 2 percent of GDP, which most members met or exceeded in 2024.
A new target for spending is likely to be agreed at a NATO summit in The Hague in June. That would require agreement from all 32 member states.
European countries have ramped up defense budgets since Russia's all-out invasion of Ukraine in 2022. And many leaders have said the increased spending must continue to counter the growing military threat from Moscow.
But putting this into practice is the hard part.
Many governments already face strained public finances, debt-ridden pension systems, creaking public services, and disgruntled voters with different priorities. Political instability adds to the mix.
A look at the three largest European military powers underlines the scale of the obstacles to major investments in their armed forces.
Germany
In nominal terms, Germany is the top European spender, laying out nearly $98 billion in 2024, according to NATO figures.
This accounts for 2.12 percent of GDP, less than many other NATO members. Efforts to increase it have run into a brick wall and led to the collapse of the German government in December.
The wall in question is a constitutional rule known as the debt brake. It limits the size of Germany's overall debt and annual borrowing.
A proposal was made to suspend the debt brake given the exceptional pressures on spending -- not just for defense -- caused by the war in Ukraine, but Germany's governing coalition was unable to reach
consensus.
The Defense Ministry had published plans for massive investments to make the German military "ready for war" but Defense Minister Boris Pistorius was left fuming at the lack of funds.
Germans will now go to the polls in early parliamentary elections in February, but defense is barely registering as a campaign issue.
The opposition Christian Democrats look set to emerge as winners, and their promise to maintain spending at "at least" 2 percent of GDP will not set hearts racing in Washington. The party's election manifesto has pledged to maintain the debt brake mechanism, which is popular with voters.
Nicu Popescu at the European Council for Foreign Relations said the German situation illustrates a Europe-wide problem.
"Politicians have not had a serious conversation with their publics for 30 years about the need for defense spending," he said. "Many are afraid to have this conversation. There is a political straitjacket preventing it."
France
France is an example of this. Political instability has derailed plans to increase defense spending in the short term.
President Emmanuel Macron lost his parliamentary majority in early elections in the summer, making it impossible so far to get a budget for 2025 approved. This has meant France's defense spending is stuck at
2024 levels for now, leaving a planned $3 billion increase in limbo.
Key blocs in parliament have completely different budget priorities. Both the left and the far-right want more social spending while the center-right wants tax cuts, and nobody looks willing to compromise. The government could lose a confidence motion at any time.
"Defense is never in the discussion," said Olivier Costa of Sciences Po in Paris. "The whole story is political leaders aiming to win the next presidential election."
Meanwhile, France's budget situation is already stretched to breaking point. National debt stands at 120 percent of GDP, double the European Union's debt ceiling.
"France is worse than Germany in all economic indicators," said Prime Minister Francois Bayrou on January 14.
Costa said it "would be very difficult in the current context to explain to citizens that more spending is needed on defense."
Britain
Britain has one of Europe's largest defense budgets. At around $82 billion, it accounts for 2.33 percent of GDP. The country's political scene is more stable, as the new government has a large majority in parliament.
But Prime Minister Keir Starmer won last year's election promising not to raise taxes and to reduce borrowing.
He has also pledged to maintain spending in priority areas. This includes defense but also health, education, and transport infrastructure.
Britain's national debt is currently at its highest level since the 1960s.
This all means there is very limited scope for boosting defense dollars.
In November, Starmer told Rutte that in the spring the government would "set a path" to lift spending to 2.5 percent of GDP.
The lack of a timetable for this spending commitment has been criticized -- as has its ambition, which falls well short of the numbers Rutte has mentioned.
oilprice.com
- NATO countries are facing pressure to increase defense spending to counter the Russian threat, but political and economic obstacles are hindering progress.
- Germany's constitutional debt brake and the collapse of its governing coalition have stalled defense spending increases.
- Political instability in France and the UK's commitment to fiscal restraint also limit their ability to significantly boost military budgets.
U.S. President Donald Trump expects Washington's NATO allies to spend more on bombs and bullets.
Trump's proposal for members to devote 5 percent of GDP to defense was widely rejected, but the demand for bigger budgets is real and is not expected to go away.
NATO Secretary-General Mark Rutte has said spending might need to rise to as much as 3.7 percent of GDP. Only Poland is above that right now.
The current target for defense spending is 2 percent of GDP, which most members met or exceeded in 2024.
A new target for spending is likely to be agreed at a NATO summit in The Hague in June. That would require agreement from all 32 member states.
European countries have ramped up defense budgets since Russia's all-out invasion of Ukraine in 2022. And many leaders have said the increased spending must continue to counter the growing military threat from Moscow.
But putting this into practice is the hard part.
Many governments already face strained public finances, debt-ridden pension systems, creaking public services, and disgruntled voters with different priorities. Political instability adds to the mix.
A look at the three largest European military powers underlines the scale of the obstacles to major investments in their armed forces.
Germany
In nominal terms, Germany is the top European spender, laying out nearly $98 billion in 2024, according to NATO figures.
This accounts for 2.12 percent of GDP, less than many other NATO members. Efforts to increase it have run into a brick wall and led to the collapse of the German government in December.
The wall in question is a constitutional rule known as the debt brake. It limits the size of Germany's overall debt and annual borrowing.
A proposal was made to suspend the debt brake given the exceptional pressures on spending -- not just for defense -- caused by the war in Ukraine, but Germany's governing coalition was unable to reach
consensus.
The Defense Ministry had published plans for massive investments to make the German military "ready for war" but Defense Minister Boris Pistorius was left fuming at the lack of funds.
Germans will now go to the polls in early parliamentary elections in February, but defense is barely registering as a campaign issue.
The opposition Christian Democrats look set to emerge as winners, and their promise to maintain spending at "at least" 2 percent of GDP will not set hearts racing in Washington. The party's election manifesto has pledged to maintain the debt brake mechanism, which is popular with voters.
Nicu Popescu at the European Council for Foreign Relations said the German situation illustrates a Europe-wide problem.
"Politicians have not had a serious conversation with their publics for 30 years about the need for defense spending," he said. "Many are afraid to have this conversation. There is a political straitjacket preventing it."
France
France is an example of this. Political instability has derailed plans to increase defense spending in the short term.
President Emmanuel Macron lost his parliamentary majority in early elections in the summer, making it impossible so far to get a budget for 2025 approved. This has meant France's defense spending is stuck at
2024 levels for now, leaving a planned $3 billion increase in limbo.
Key blocs in parliament have completely different budget priorities. Both the left and the far-right want more social spending while the center-right wants tax cuts, and nobody looks willing to compromise. The government could lose a confidence motion at any time.
"Defense is never in the discussion," said Olivier Costa of Sciences Po in Paris. "The whole story is political leaders aiming to win the next presidential election."
Meanwhile, France's budget situation is already stretched to breaking point. National debt stands at 120 percent of GDP, double the European Union's debt ceiling.
"France is worse than Germany in all economic indicators," said Prime Minister Francois Bayrou on January 14.
Costa said it "would be very difficult in the current context to explain to citizens that more spending is needed on defense."
Britain
Britain has one of Europe's largest defense budgets. At around $82 billion, it accounts for 2.33 percent of GDP. The country's political scene is more stable, as the new government has a large majority in parliament.
But Prime Minister Keir Starmer won last year's election promising not to raise taxes and to reduce borrowing.
He has also pledged to maintain spending in priority areas. This includes defense but also health, education, and transport infrastructure.
Britain's national debt is currently at its highest level since the 1960s.
This all means there is very limited scope for boosting defense dollars.
In November, Starmer told Rutte that in the spring the government would "set a path" to lift spending to 2.5 percent of GDP.
The lack of a timetable for this spending commitment has been criticized -- as has its ambition, which falls well short of the numbers Rutte has mentioned.
NATO's Defense Dilemma: Rising Costs, Reluctant Nations | OilPrice.com
Trump expects Washington's NATO allies to spend more on bombs and bullets, but nations are reluctant to boost spending.
oilprice.com
