Trump Win: NATO Allies Agree to 5% Defense Spending Target

NATO allies on Wednesday agreed to more than double their defense spending target from 2% of gross domestic product to 5% by 2035, in the most decisive move from the alliance in over a decade.

In a joint declaration, the Western military bloc said it was “united in the face of profound security threats and challenges,” in particular the long-term threat posed by Russia to Euro-Atlantic security and the “persistent threat” of terrorism.

“Allies commit to invest 5% of GDP annually on core defence requirements as well as defence-and security-related spending by 2035 to ensure our individual and collective obligations.,” it continued.

The 5% figure is made up of “at least” 3.5% of GDP that should be spent on “pure” defense, with the remainder going to security and defense-related “critical infrastructure” to ensure, the statement said, “our civil preparedness and resilience, unleash innovation, and strengthen our defence industrial base.”

Allies will be required to submit annual plans “showing a credible, incremental path to reach this goal,” NATO said, following pushback from some member states, particularly Spain.

Some member states have yet to meet the 2014 target to spend 2% of GDP on defense.

The historic move comes against a backdrop of tensions in the Middle East and ongoing war between Ukraine and Russia. Members have also been pushed to the new target after years of pressure across both terms of U.S. President Donald Trump for Washington’s Canadian and European allies to share more of the burden of collective defense.

The alliance on Wednesday also reaffirmed its “ironclad commitment to collective defence” as enshrined in Article 5 that an attack on one is an attack on all, following question marks over the U.S.′ reliability when it came to that central pillar of NATO.

“We remain united and steadfast in our resolve to protect our one billion citizens, defend the Alliance, and safeguard our freedom and democracy,” the statement read.

‘Quantum leap’
Addressing the summit, NATO Secretary General Mark Rutte said the agreement would fuel a “quantum leap” in the alliance’s collective defense.

The deal would “not only increase our security but also create jobs,” Rutte continued, saying allies had made “significant commitments to meet significant threats.”

Allies recognised the severity of the threats facing the alliance, he said, and were “united in understanding that we need to step up to stay safe.”

He said President Trump had emphasized that America is committed to NATO but expects European allies and Canada to contribute more, “and that is exactly what we see them doing,” Rutte said.

Rutte acknowledged that this was “Day One” of the effort needed to increase the alliance’s defense capabilities and said “we need to innovate and we need to act fast.”

“The decisions made today will make NATO much stronger, they also make nato a fairer alliance. The resolve of allies is clear: we are in this together, committed to Article 5, and we are determined to stand firm,” he said.

As he took questions from the press on his relationship with Trump, Rutte said, “I think he deserves all the praise.”

As he jetted into the summit late on Tuesday, Trump had appeared to question NATO’s central tenet of collective defense (Article 5) that states that an attack on one member is an attack on all.

“There’s numerous definitions of Article 5. You know that, right?” Trump told reporters on Air Force One. “But I’m committed to being their friends, you know, I’ve become friends with many of those leaders, and I’m committed to helping them.”

Rutte on Wednesday said that he trusted the president and that the U.S. was “totally committed” to the pact, stating: “You know, Article 5 is absolutely clear, and at the same time we have always said that we will never go into details on when Article 5 will be triggered.”

Rutte also said he believed Spain was “serious” and committed to the 3.5% target, despite Madrid voicing misgivings over the hike ahead of the summit.

‘Cool, calm and collected’

Likening the 2025 meeting to a “rebalancing of a new NATO where we have more balance and more Europe in it,” the president of Finland told CNBC after the release of the joint statement that the atmosphere at the summit had been “cool, calm and collected.”

“There was a lot of self-congratulation which I think was deserved because in many ways this was a historic meeting of NATO going back to its roots of collective self-defense as a deterrent to Russia,” Alexander Stubb told CNBC’s Steve Sedgwick.

Stubb said Trump and Rutte were “very happy” with the outcome and “there were a lot of smiles around the table, regardless of the difficult situation that we’re in.”

“I think the Americans are happy and ... the Europeans have woken up and smelled the coffee,” he added.

Commenting on Spain’s apparent pivot, German Foreign Minister Johann Wadephul told CNBC that “at the end of the day, they knew one against 31 [member states] makes no sense.”

That NATO would “stick together completely” was the “ironclad” message from the summit, he told CNBC’s Steve Sedgwick. He noted that Berlin, which had committed to a 5% spending target ahead of this week’s gathering, took some time to get to this point but was now ready to show more leadership when it comes to European defense.

“The U.S. has recognized that Europe is back again,” he said.