enr - Brussels

18 January 2025

Addressing EU lawmakers on Monday, NATO chief Mark Rutte insisted that Europe needs to massively ramp up its defence spending. “We are safe now, we might not be safe in five years,” he said.

The former Dutch prime minister warned the alliance’s threshold of two percent of gross domestic product (GDP) was “not nearly enough” to face the growing risk from Russia and said NATO countries may need to spend 3.6 to 3.7 percent of their GDP on defence to counter the threats.

Rutte has been leading the North Atlantic Treaty Organization (NATO), a 32-nation strong military alliance, since October after serving as the Netherlands’ prime minister for 14 years.

Moscow’s full-scale invasion of Ukraine in February 2022 was seen as a wake-up call for Europe and its underfunded defence industry after years of neglect following the end of the Cold War. But despite countries ramping up military budgets since then and a raft of EU efforts to increase production, Europe’s output of arms still lags far behind that of Russia.

Rutte specifically called on the European Union to avoid creating barriers that could prevent companies in non-EU NATO countries from participating in its push for a stronger defence industry.

At a conference organised by the Carnegie Europe think tank in Brussels in December, Rutte had already urged allies to speed up military spending and change to a “wartime mindset” in order to avoid another conflict on their territory.

“What is happening in Ukraine could happen here, too. And regardless of the outcome of this war, we will not be safe in the future unless we are prepared to deal with danger,” Rutte told the conference.  

Europe’s “big bang” in defence 

Rutte was driving home a point made by the first ever European Commissioner for Defence, Andrius Kubilius, who on Saturday called again for a “big bang” in defence in a social media post. 

The push for a stronger European defence is animated by US President-elect Donald Trump’s demand to NATO members to boost their defense spending to five percent of GDP, underlining his long-standing claims that they are underpaying for US protection.

Trump has long been sceptical of NATO, the cornerstone of security in Europe since World War II, and last month reiterated a familiar threat to leave the alliance if its members did not step up spending.

Trump takes power nearly three years after Russia’s invasion as Ukraine’s fatigued forces are being pushed back on the front line. The EU’s foreign policy chief Kaja Kallas reiterated last week that she hopes the United States will maintain its support for Kyiv – but that if not, Europe was ready to take the lead.

In his post on Saturday, EU defence commissioner Kubilius presented a graph published by the weekly magazine The Economist showing the position of the 27 EU member states based on their distance in kilometres from Russia and the proportion of their GDP they spent on defence in 2023. 

According to the graph, countries like Ireland, Portugal and Spain were near the bottom of the scale while those close to Russia like Estonia and Poland were at the top.

In 2023 NATO set a minimum level for defence spending of two percent of GDP, because Russia’s war in Ukraine had jolted the military alliance to strengthen its eastern flank and ramp up spending.

Most of its 32 members are set to reach the two-percent-target in 2024 figures, but some are still struggling, according to NATO estimates.

NATO defence spending estimates reveal gaps 

Poland and Estonia lead the ranking with estimations of a staggering 4.12 and 3.43 percent of GDP respectively, according to NATO estimates on defence spending as a share of GDP dated mid-June 2024. The two EU members are closely followed by the United States (3.38 percent).

Danish Prime Minister Mette Frederiksen shared NATO chief Rutte’s assessment that NATO countries may need to spend more than the current target. While Denmark already exceeds the target with an estimated 2.37 percent of GDP for 2024, Frederiksen said that Denmark “will rearm more, and it will be expensive”.

Germany, the largest economy in the European Union, allocated 2.12 percent of its GDP to defence, according to the NATO data. In November, German defence giant Rheinmetall and Lithuania signed deals to begin construction of a 180-million-Euro ammunition plant to make artillery shells in the EU and NATO member state Lithuania, which shares a border with Russia.

With an estimated 2.18 percent for 2024, Bulgaria also exceeds the alliance’s target. Back in October, Defence Minister Atanas Zapryanov stated that there is growing consensus in Bulgaria on the need to increase defence spending to reach 2.5 percent of GDP. 

Similarly, neighbouring North Macedonia allocated 2.22 percent of its GDP to defence, according to the 2024 NATO estimates.

The Czech Ministry of Defence said that the Czech Republic has also met the two-percent commitment last year. According to the 2024 NATO estimates, the country spent 2.10 percent of its GDP on defence. 

Czech President Petr Pavel last week said it was realistic to expect spending to rise to 3 percent of GDP by 2030. Speaking to Czech Radio, he however stressed that defence spending should be driven by justified needs based on security threats rather than arguing about percentages, which he said were misleading.

Countries falling behind the two-percent target include Spain (1.28 percent), Slovenia and Luxembourg (1.29 percent), Belgium (1.30 percent), Canada (1.37 percent), Italy (1.49 percent), Portugal (1.55 percent) and Croatia (1.81 percent). 

Portugal’s Defence Minister Nuno Melo insisted last week that it aims to reach the target by 2029, which “doesn’t mean that these targets can’t be changed along the way, depending on the circumstances”. In December, Prime Minister Luís Montenegro said that the government will “try to allocate resources to all areas, including defence”.

Slovenia, while behind on the target, significantly increased its planned defence budget. The 2025 budget allocates over 1.2 billion Euro – an increase of one fifth compared to the previous year –  and more than 1.3 billion Euro is planned for 2026.

Among proposals to boost defence spending are calls from EU countries including France and Estonia for the bloc to use joint borrowing to fund defence spending similar to the approach Europe took to fund its recovery from the Covid-19 pandemic. But others such as Germany and the Netherlands have so far rebuffed moves in that direction.

Greece, which allocated a remarkable 3.08 percent of GDP according to the 2024 NATO estimates, is in favour of establishing a fund in the EU to finance common defence spending. In December, Prime Minister Kyriakos Mitsotakis – who championed calls for Eurobonds for defence – said it required “the mobilisation of European resources” and the creation of a European defence fund”.

EU defence retreat

EU leaders will meet for an informal retreat at the Château de Limont, in the Belgian countryside an hour out from Brussels, on February 3 to talk about how to give impetus to European defence.

“Europe needs to assume greater responsibility for its own defence,” the President of the European Council, António Costa, wrote in a letter on Monday inviting EU heads of state and government to the retreat. 

“I believe we share a similar assessment of the threats Europe is facing,” he said, adding that Russia’s aggression against Ukraine spelled the return of a “high-intensity war” to the continent along with a surging threat from hybrid and cyber-attacks against EU member states.

For the occasion, Costa has also invited NATO chief Mark Rutte and British Prime Minister Keir Starmer to join. 

The talks come at a crucial juncture, with key Ukraine backers Britain and the EU warily eyeing US President-elect Trump’s promises to put a swift end to the conflict after taking power on January 20.

The February meeting will feed into a planned white paper on the future of European defence, with the topic to be tackled again at an EU leaders’ summit in June.

Photo: enr / dpa