NATO countries agree historical upgrade: the way to the five percent goal

Konrad Wolfenstein

13 hours ago

NATO countries agree historical upgrade: the way to the five percent goal-Image: Xpert.digital

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Historical agreement in front of the summit in the Hague

The North Atlantic Alliance faces one of the most important changes since it was founded in 1949. Shortly before the NATO summit in the Haag, all 32 member states have agreed to increase their defense spending. This decision marks a fundamental change in the European security architecture and represents the largest upgrade initiative since the end of the Cold War.

The new target provides that each NATO member should spend at least five percent of its gross domestic product for defense-relevant expenses by 2035. This doubling compared to the previous two percent goal is a direct answer to the changed threat situation in Europe and the continuing demands of the United States for a more uniform load distribution within the alliance.

A few days before the official NATO summit in the Hague, which takes place on June 24th and 25th June, 2025, the NATO states agreed on a new target for defense spending. The agreement was achieved as part of a written decision -making process, which was completed on Sunday, June 22, 2025.

The decision was therefore not made during a major conference, but already in advance by a multilateral voting process in which all 32 member states approved. The formal acceptance of the new output goal is planned for the conclusion of the NATO summit in the Hague, where the heads of state and government will officially confirm the decisions.

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The structure of the new defense goal

The ambitious five percent goal is strategically divided into two components in order to take into account the different national conditions and priorities. At least 3.5 percent of GDP are to be used for classic military spending such as armaments, soldier salaries and military equipment. The remaining 1.5 percent can be used for defense -relevant infrastructure and extended security measures.

This flexible structure enables the member states, investments in tank-compatible bridges, militarily usable railway lines, extended ports, cyber defense systems and measures to combat terrorism. This expansion of the definition of defense spending reflects modern reality, in which security goes far beyond traditional military threats and includes hybrid warfare, cyber attacks and asymmetrical threats.

Historical context: From the two percent rule to the five percent goal

The development of NATO defense spending reflects the changing geopolitical realities. The original two percent goal was first established in 2002 at the NATO summit in Prague as a guideline for new member states. At that time, the Eastern European accession candidates in particular should strengthen their defense skills to meet the Alliance standards.

The formal fixture of the two percent goal took place in 2014 at the summit in Wales, immediately after the Russian annexation of the Crimea and the outbreak of the conflict in eastern Ukraine. Even then, these events made it clear that the European security regulations were under pressure and increased defense efforts were required.

It is interesting that the two percent goal was never formulated as a legally binding obligation, but as a guideline to which the member states should "move". This deliberately soft wording should take into account the different national circumstances and political realities, but also meant that many countries did not reach the goal for years.

Germany's turnaround in defense

For Germany, the new five percent goal is a particularly dramatic change. The country only reached the two percent goal for the first time in 2024 with estimated defense spending of 90.6 billion euros, which corresponds to a share of 2.12 percent of GDP. This increase was only possible through the 100-billion euro special assets, which was set up after the Russian attack on Ukraine.

Chancellor Friedrich Merz has made the dimensions of the new challenge clear: Each percentage point of German GDP currently corresponds to around 45 billion euros in additional defense spending. In the event of a five percent goal, Germany would have to spend around 225 billion euros annually for defense-almost half of the entire federal budget of 466 billion euros.

These enormous sums illustrate the scope of the planned militarization. Germany would have to double its defense spending more than, which would require fundamental changes in the budget structure and possibly also in tax policy.

European leaders and stragglers

The current distribution of defense spending within NATO already shows significant differences between the member states. Poland leads the list with 4.12 percent of GDP and is therefore already close to the new five percent goal. The country has deliberately decided to become the “strongest country power in Europe” and plans to expand its armed forces from the current 150,000 to 300,000 soldiers by 2035.

Estonia follows with 3.43 percent of GDP and even exceeds the USA, which is 3.38 percent. These high expenses of the eastern NATO members reflect their geographical proximity to Russia and the resulting threat perception.

At the other end of the scale there are countries like Spain that forms the bottom of the light with less than two percent of its GDP. The Spanish government under Pedro Sánchez described the five percent goal as "inappropriate" and "counterproductive" and called for an exception. This attitude delayed the agreement and made intensive negotiations necessary before finally found a semantic solution that slightly weakened the goal.

Trump's role and American interests

Donald Trump's demand for higher European defense spending is not new, but has received new urgency through his return to the White House. Already during his first term he criticized the contributions of the European allies inadequate in his view and even threatened to exit the NATO.

Trump's argument follows a simple logic: the USA protect Europe, but Europe does not protect the United States. This view reflects a fundamental change in American foreign policy, which strives for a more uniform load distribution within the transatlantic alliance.

The demand for five percent of GDP for defense expenditure is remarkable, since the United States itself does not reach this value. However, Trump wiped this objection aside and emphasized that the United States has greater responsibility for global security than its allies.

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Russia as a driving force of the upgrade

The Russian attack war against Ukraine since February 2022 has fundamentally changed the European security landscape. NATO is faced with the greatest military threat since the end of the Cold War and has reacted accordingly. Secret service assessments assume that, despite the ongoing war, Russia could be ready for a conflict with a NATO state in a few years.

This threat analysis has led to NATO's largest upgrade program for decades. The alliance has decided on new targets for military skills that precisely specify every member state, which must contribute to the shared deterrent and defense.

For Germany, this means specifically that the Bundeswehr has to increase its staff by 50,000 to 60,000 additional soldiers. This massive staffing is just an example of the far -reaching consequences of the new defense plans.

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New forms of threats and hybrid warfare

The modern security landscape is characterized by new forms of threats that go beyond traditional military attacks. Hybrid warfare combines military, economic, political and technological means to undermine the stability of democratic societies.

Cyber attacks on critical infrastructures, disinformation campaigns to influence political processes and economic pressure have become central elements of modern conflict management. These developments require an expansion of the traditional understanding of defense and justify the inclusion of cyber security and information defense into defense spending.

NATO has adjusted its strategy accordingly and clarified that hybrid attacks that exceed a critical threshold can also trigger the alliance case according to Article 5. This expansion of the defense concept is also reflected in the new structure of defense spending, which explicitly includes investments in cyber defense and related areas.

European defense integration as a parallel development

European defense integration is also developing in parallel to NATO upgrade. The constant structured cooperation (PESCO) was established in 2017 as a milestone on the way to a European defense union and now comprises over 60 joint projects.

PESCO enables the EU member states to enter into binding obligations in the areas of defense spending, planning and harmonization. This European dimension of Defense Cooperation complements NATO structures and could lead to a “European army” in the long term, which is called “military Schengen”.

The development of European defense skills is also an answer to American demands for more European personal responsibility. While NATO strengthens the transatlantic connection, Pesco Europe is intended to remain able to remain capable of acting regardless of American support.

Ukraine and the limits of solidarity

Despite the massive upgrade, support for Ukraine remains a controversial topic within NATO. Allianz has opened up an accession perspective for Ukraine, but linked it to strict conditions. Specific reforms in the field of democracy and the security sector are required before a formal invitation can be given.

This reserved attitude reflects the concerns about an unpredictable Russian reaction. A NATO joining Ukraine would automatically extend the alliance case to the war-leading country and could lead to a direct confrontation between NATO and Russia.

The cautious support for Ukraine in the final declaration of the summit illustrates the limits of NATO solidarity and the complexity of the geopolitical situation. While the alliance is willing to spend billions for your own defense, the specific help for the attacked neighbor is limited.

Economic and social challenges

The implementation of the five percent goal will result in massive economic and social changes. Germany would have to increase its defense spending from currently around 90 billion euros to 225 billion euros - an increase of 135 billion euros annually.

These enormous sums raise questions about the affiliation and social priorities. Critics warn of a militarization of society and fear that social expenditure must be shortened in order to finance defense expenditure. The Spanish government argued that high military spending was “incompatible with our welfare state and our worldview”.

On the other hand, supporters argue that investments in defense are necessary to protect the foundations of democratic society. The defense costs are ultimately less than the costs of a war or the submission of an authoritarian power.

A new era of security policy

The agreement on the five percent goal marks the beginning of a new era in European security policy. NATO is changing from a defense alliance of the Cold War to a comprehensive security organization that is geared towards the challenges of the 21st century.

The massive upgrade will change the geopolitical balance of power and could lead to a new arms race. Russia is expected to react to western armament, which could lead to a further escalation of the tensions.

At the same time, the increased willingness to defend also offers opportunities for stronger European independence and more uniform transatlantic load division. Europe could emancipate itself from the American security guarantee and become an equal partner in global security architecture.

The implementation of the five percent goal by 2035 will be one of the greatest political and economic challenges of the coming years. The success or failure of this initiative will be decisive for the future of European security and the stability of transatlantic relationships.

The historical decision of the NATO countries for massive upgrade shows that the era of the “peace dividend” is finally over after the end of the Cold War. Europe returns to a security policy that is characterized by military strength and willingness to defend it. This development will fundamentally shape the political and social landscape of the continent in the coming years.

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