NATO Secretary General Mark Rutte has announced a proposal to raise the defence spending baseline to 5% of GDP, a significant jump from the 2% target set in 2014.
Speaking during an event in The Hague on June 23, 2025, Rutte said the proposal to increase the defence spending is driven by global tensions, including recent attacks on Iran’s nuclear facilities, which damaged but did not destroy Iran’s nuclear program, potentially pushing NATO to bolster its defences.
NATO Plans
The proposal includes allocating 3.5% to core military needs and 1.5% to broader security investments, such as infrastructure and industrial capacity.
However, not all NATO members are on board. For instance, Spain has indicated it will not meet the 5% target, citing concerns about economic strain and differing national priorities, which could complicate consensus at the summit.
With an estimated defence spending of 1.28% of GDP in 2024, Spain had the lowest proportion in the alliance last year and rejected the hike, terming it “counterproductive”.
NATO has recently held discussions on ways of enhancing collective defence capabilities.
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The commitment is described as a “credible path,” not a sudden increase, with ongoing discussions about a timeline to achieve this target, avoiding issues with absorption capacity.
All NATO allies are expected to reach the initial 2% GDP target this year, as pledged in 2014, with some, like the UK, moving towards 2.3% or higher, though debates persist on what counts.
In 2014, NATO Heads of State and Government agreed to aim for 2% of GDP on defence spending, a decision prompted by Russia’s annexation of Crimea and Middle Eastern instability.
The United States spends approximately 3.5% of GDP (2024 estimate), while countries like Poland and the Baltic states have approached or exceeded 2% due to proximity to Russia.
NATO’s definition excludes war damage payments and civil defence but includes contributions to common infrastructure based on net contributions.
With the U.S. covering about 70% of NATO’s defence budget, figures like Donald Trump have pushed for higher contributions from European allies.
The EU’s collective defence spending was Ksh40.1 trillion in 2024, and a 5% target could push this to over Ksh89.1 trillion annually based on 2024 GDP estimates.
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Tomorrow’s Meeting
With 32 members, a 5% GDP target could collectively add hundreds of billions to NATO’s defence capabilities, enhancing deterrence against Russia, Iran, and China.
However, increased NATO spending may escalate tensions, potentially pushing Iran towards nuclearization while countries like the UK and Germany may lead the adoption of the new proposal.
The proposal is under discussion, and with the NATO Summit being held tomorrow, it is likely a formal timeline or compromise will be agreed.
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