Nato leaders are poised to endorse a landmark agreement to raise the alliance's collective defence investment target to 5% of GDP, as the Alliance faces mounting global security threats.

The endorsement, expected at the Nato summit in The Hague on June 24-25, follows an agreement in principle reached on June 22. Under the plan, core defence spending would rise from 2% to 3.5% of GDP, with an additional 1.5% allocated to investments in areas such as cybersecurity and military infrastructure.

The initiative is widely seen as a response to pressure from US President Donald Trump. The US president has often called European Nato member states "freeloaders" for their falling short of an earlier spending target of 2% of GDP.

The summit is intended to showcase allied unity amid intensifying geopolitical uncertainty. It takes place against more than three years since Russia’s invasion of Ukraine upended the global order, and shortly after war broke out between Israel and Iran that threatens to embroil other countries in a broader Middle East conflict. 

"We meet at a truly historic moment, with significant and growing challenges to our security," Nato Secretary General Mark Rutte told a press conference on June 23. "As the world becomes more dangerous, Allied leaders will take bold decisions to strengthen our collective defence, making Nato a stronger, a fairer and a more lethal Alliance."

While the new 5% benchmark is set to be adopted across the alliance, not all Nato members are on board. Spanish Prime Minister Pedro Sanchez announced over the weekend that Madrid would not match the new goal.

"We fully respect the legitimate desire of other countries to increase their defence investment, but we are not going to do so," Sanchez said in a televised address, as quoted by Reuters. He pointed out that Spain would only need to spend 2.1% of GDP to meet Nato's core requirements.

Spain allocated just 1.24% of its GDP to defence in 2024, around €17.2bn, the lowest proportion among Nato members, according to alliance data. Trump has slammed Spain as "notorious" for low defence spending and insisted Madrid "has to pay what everybody else has to pay”.

Speaking on June 23, Rutte defended the spending hike as vital to bolstering Nato's deterrence and industrial capacity, a press release from Nato said. He said the plan would necessitate a five-fold increase in air defences, the procurement of thousands of tanks and armoured vehicles, and the production of millions of artillery shells.

"There is not nearly enough supply to meet our increased demand on either side of the Atlantic," Rutte warned. The proposed surge in defence manufacturing, he added, would also create jobs and stimulate economic growth within member states.

Hawks and doves 

In Central and Southeast Europe, the response to the proposed increase has been mixed. Some countries in the region, notably Poland and the Baltic States have long been Russia hawks and this position has hardened dramatically after Moscow’s readiness to invade Ukraine raised fears that Russia poses an existential threat to other states in its near neighbourhood. 

Along with Greece and the US, they are among the highest spenders on defence, with Poland the only country to spend over 4% of its GDP as of 2024. By contrast, the lowest spending as a share of GDP was found among countries from Western and Southern Europe, including Spain and Slovenia. 

Elsewhere in the region, poorer countries such as Albania have voiced willingness to increase defence spending but face budgetary constraints. Government officials in both Czechia and Slovenia — two of the richest countries in the region — have also warned they may struggle to meet the target. 

In Slovakia, meanwhile, the proposed increase in spending has become the subject of heated debate. Within Prime Minister Robert Fico’s left-right ruling coalition, the pro-Kremlin ultranationalist Slovak National Party (SNS) fiercely opposes the spending increase — and Slovakia’s membership of Nato. 

Poland nears 5% target 

Polish Deputy Prime Minister and Defence Minister Władysław Kosiniak-Kamysz backed the 5% target on June 24, pointing out that Warsaw contributed to shaping the initiative.

A long-standing US ally, Poland has strived to bridge divisions within Nato after Trump returned to office in January.

“Poland is a strong advocate for increasing member state commitments to 5%,” Kosiniak-Kamysz told a news conference in Warsaw, noting that Poland already sets an example, with a national defence budget amounting to 4.7% of GDP in 2025.

Kosiniak-Kamysz said such a division could make the proposal more acceptable to a broader group of Nato countries. He added that 2030 would be a reasonable target year to implement the new spending structure across the alliance.

The Polish delegation is also expected to raise concerns over the understanding between Rutte and Sánchez on lowering Spain’s military spending targets. 

“I am not in favour of making exceptions for Spain. The cost of unity is always high, but making any exceptions, especially under current conditions, is dangerous,” Kosiniak-Kamysz said.

Citing recent power outages on the Iberian Peninsula, Kosiniak-Kamysz argued that cyberattacks, sabotage, terrorism and blackouts threaten the Alliance across all domains. 

“Russia is present everywhere. The presence of our adversaries, of those who seek to harm Nato, is widespread. That is why Spain should be particularly alert to what is happening within its borders,” he said.

Poland is among the Nato member states that are most exposed to threats posed by Russia and Belarus, as it borders both. Poland and Lithuania are vulnerable to a potential attack along the so-called Suwałki Gap, a stretch of land between Belarus and Russia’s European exclave, the Kaliningrad Region. Nato has long been wary of the vulnerability, which could leave the Baltic States cut off in case of a successful attack. Poland and Lithuania have been investing in infrastructure upgrades in the Suwałki Gap to boost mobility and cut response times.

Baltic States on the frontline 

Lithuania, Latvia and Estonia have also backed the increased spending threshold, building on years of above-average defence allocations. 

Lithuania and Latvia have been exceeding Nato’s guideline of spending at least 2% of GDP on defence since 2018, and Estonia as early as 2015.

Russia’s war in Ukraine has made the stakes even clearer. The Baltic countries have been strong backers of Ukraine and have used the conflict as a wake-up call to accelerate their own military preparedness. Civil defence, energy security and resistance to hybrid threats are now major priorities.

However, the potential withdrawal of the United States from the Europe safety architecture of is a big concern for the Baltics, which host three of the four Nato north-eastern battlegroups. 

Currently Poland hosts one of Nato's eight Forward Land Forces (FLF) multinational battlegroups, led by the US. It also supports similar battlegroups in Latvia and Romania.

The four north-eastern battlegroups — in Estonia, Latvia, Lithuania and Poland — are under Nato command through the Multinational Corps Northeast Headquarters in the Polish city of Szczecin.

Croatia commits to ramping up spending 

Croatia’s defence spending has lagged behind the Nato average, but the government is committed to ramping up spending. 

Croatia is preparing to raise its defence spending to 3% of GDP, Defence Minister Ivan Anušić said in May, signalling strong support for growing Nato commitments and aligning with calls for greater European military investment.

“Croatia reached the 2% target this year, as agreed among Nato members – a milestone not all allies have achieved,” Anušić said, according to a government statement. “Croatia is ready to reach 3%. We have a plan, a strategy, goals, and a way to reach that figure.”

Anušić said Croatia could meet the demands for increased spending “without any problems” thanks to coordinated strategies between the government, the Ministry of Defence, and the Armed Forces.

Commenting on past criticisms from Trump that European nations were not pulling their weight in Nato, Anušić said he agreed with the sentiment.

Speaking ahead of the Nato summit, Croatian Parliament Speaker Gordan Jandroković said Zagreb supports increasing defence expenditure to 5% of GDP by 2032. 

"Nothing is more important than the security of our citizens," Jandroković said. Croatia has already expanded its defence budget nearly 200% since 2016.

Fierce debate in Slovakia 

By contrast, in Slovakia, the 5% spending hike has turned into a much debated topic on the domestic scene, with liberal opposition backing the increased spending target.

Fico’s left-right ruling coalition is dependent for its narrow parliamentary majority on the SNS, which opposes the spending hikes and even called into question Slovakia’s Nato membership over the new defence spending rules.

On the other hand, more moderate, centre-left Hlas, does not oppose the defence spending Nato policies, leaving Fico’s Smer to balance between appealing to its anti-establishment electorate, while avoiding slipping into further isolation in the EU and Nato.   

In the latest development, Fico issued a statement saying that “at a time of curing the public finances and catching up with the average living standard in the EU, the Slovak Republic has different priorities in the upcoming years than rearmament.”

He added that Slovakia “must ascertain sovereign right to decide at what pace and in what structure” the hike will occur, citing the Spanish example, and that Slovakia “won’t support any increase of investments to purchase weapon systems above the 2025 level,” adding that hikes in 2026 will concern dual use spending only.    

Pragmatic tone from Prague and Ljubljana

Czechia will be represented at the Nato summit by liberal President Petr Pavel, a former Nato general, who has said a defence spending hike to 3.5% of GDP before 2030 is realistic.  

“When all the needs of defence forces and all the requirements, which appear in the defence planning cycle for years 2025 to 2029, are added up, and when these are translated to numbers, then these are somewhere between 3.5% and 3.7% of GDP. Similarly, as in other states,” Pavel told Czech Radio and other media during his recent visit to the Nato headquarters in Brussels.

Pavel's views are largely shared by the centre-right cabinet of Petr Fiala, which, however, is not expected to return to office after the October elections, and is expected to be replaced by a cabinet led by the largest opposition party, populist ANO led by billionaire former PM Andrej Babiš. 

Similarly, Slovenian PM Robert Golob warned in May that spending 5% of GDP on defence would not be sustainable for Slovenia's competitiveness unless defence investment could be meaningfully linked with other sectors.

On June 23, Golob announced that the country will allocate 2% of its GDP to core defence capabilities. In addition, 1.5% of GDP is earmarked for broader defence-related areas, including healthcare, infrastructure, cybersecurity, and artificial intelligence. A further 1.5% could be directed towards enhancing national resilience—covering civil protection, shelters, research and development, and other supporting capacities.

These allocations are part of a long-term and gradual strategy set to be implemented by 2035.

The prime minister also pointed out that Nato currently lacks a unified standard for what qualifies as security expenditure. He said that Slovenia would back a proposal to include investments in the EU’s defence industry within that definition.

For 2025, Slovenia is already spending 2% of GDP on defence, with plans to increase this to 2.2% in 2026 and by an additional 0.2% each year thereafter. A mid-term review in 2029 will assess whether continued increases remain justified.

Golob emphasised that Slovenia will remain a responsible Nato member, investing wisely and prioritising the real needs of its citizens. “We see strength as wisdom, and security as a path to peace,” he stated.

Boosting spending in the Western Balkans 

The Western Balkans region is home to some of the poorest countries in the Alliance, newish members Albania and North Macedonia. 

Despite budget limitations, North Macedonia already spends more than the Nato average on defence, and Skopje plans to increase this amount further. 

North Macedonia’s Minister of Foreign Affairs and Foreign Trade, Timčo Mucunski, said in May that there is no uncertainty regarding the country’s commitment, noting that by meeting the minimum 2% threshold, North Macedonia has demonstrated its readiness to face future challenges.

Prime Minister Hristijan Mickoski added that North Macedonia has consistently maintained a defence budget above 2%, and with ongoing projects to modernise the military and infrastructure, these expenditures are expected to continue rising.

Albania has also demonstrated strong political commitment to the alliance, and has boosted the defence budget past the 2% mark, although it faces economic limitations. 

According to the government website, the defence budget has increased from 1.35% to 2% of GDP over the last decade. The site says: "Albania has given priority to the increase of the defense budget, supporting the necessity and fairer distribution of the financial burden among the allies”. 

Defence Minister Niko Peleshi announced in the autumn that the 2025 defence budget is ALL52.7bn (€530mn), a 4.6% increase over 2024. He called the increase a “major step in strengthening the country's defence and national security capabilities”. 

"For the second year in a row, the defence budget remains above the 2% of GDP target," Peleshi said, according to a ministry statement. Capital spending is also on the rise, with major funding from foreign sources.

In parallel to stepping up defence spending, Tirana is working to develop a domestic defence industry. The country opened Nato’s first tactical airbase in the Western Balkans at Kuçova in March 2024.

As Nato leaders gather in The Hague, the 5% spending target will be central to discussions shaping the alliance’s future direction. While the agreement is expected to pass, the divergence in national approaches lays bare the challenges in forging a truly unified defence policy across the transatlantic alliance at a time when a show of unity is a priority.

Contributions from Valentina Dimitrievska in Skopje, Wojciech Kosc in Warsaw, Linas Jegelevicius, Clare Nuttall in Glasgow and Albin Sybera in Prague.