DECODING: 5% of GDP on Defense by 2035 — NATO Faces Its Historic Bill

DECODING: 5% of GDP on Defense by 2035 — NATO Faces Its Historic Bill

Introduction: The Number That Changes Everything in Western Defense Geopolitics

From The Hague to Ankara: from commitments to proof

In 2025, at the Hague summit, NATO leaders adopted an objective that had seemed unthinkable to many of them: dedicating 5% of GDP to defense by 2035. A bold figure, obtained under the combined pressure of Donald Trump and the raw reality of the war in Ukraine. But a promise without a credible trajectory is merely a wish. This is precisely what the Ankara summit, scheduled for July 7–8, 2026, must transform into concrete demonstration.

NATO Secretary General Mark Rutte presented figures before the Atlantic Council on June 25, 2026 that mark the difference between rhetoric and reality: between 2016 and 2026, European allies and Canada spent $1.2 trillion more on defense. In 2025 alone, the increase amounted to $139 billion additional — a rise of nearly 20% in a single year. This is no longer salon politics. It is a budgetary revolution.

The structure of the 5%: two distinct tranches

The 5% of GDP figure is not a homogeneous aggregate. Rutte explained this in his Washington address: the objective breaks down into 3.5% for core defensive needs — direct military capabilities, equipment, personnel — and 1.5% for resilience and critical infrastructure — cybersecurity, energy resilience, communications network protection, civil preparedness. This architecture is not arbitrary: it reflects operational lessons drawn from four years of war in Ukraine.

This breakdown anchors the objective in a concrete doctrine, developed under the leadership of Jens Stoltenberg before Rutte succeeded him. The figure was not chosen arbitrarily: it is the product of an in-depth analysis of what is needed to defend NATO's eastern flank against the Russian threat, while maintaining sufficient civil resilience to withstand hybrid attacks.

Germany: The Unlikely Champion of European Rearmament

Doubling military spending in less than a decade

Ten years ago, the idea that Germany would become the model of European rearmament would have seemed like a joke. The country of the Sonderweg, of post-1945 military moderation culture, of Ostpolitik — rearming? And yet. Rutte cited the German example in his address at the Atlantic Council: Berlin is on track to double its defense investments between 2021 and 2029, reaching more than €150 billion per year.

This change is structural, not cyclical. The Zeitenwende — the historic turning point — proclaimed by Chancellor Olaf Scholz after the 2022 invasion has produced lasting budgetary effects. The emergency special fund of €100 billion, the massive orders for tanks, aircraft, and air defense systems — all of this now translates into real capabilities that allies can count on.

Poland, the Baltics, the Nordics: the pioneers at 4 and 5%

But if Germany is the example of spectacular conversion, the real leaders are elsewhere. Poland already dedicates more than 4% of its GDP to defense — the highest level in NATO. The Baltic countries — Estonia, Latvia, Lithuania — have long understood that their geographic proximity to Russia imposes high military expenditure. The Nordic countries, newly joined or consolidating their anchor in the Alliance, follow the same path.

These countries do not spend out of obedience to Trump — they spend because they share a border with Russia or lie less than an hour's flight from Russian forces. Their geographic realism should be a model for those in Western Europe who continue to treat defense as a compressible budget line.

The Reluctant: Who Still Needs to Convince Trump and Their Own Citizens?

Belgium, Italy, Spain, Canada: laggards catching up

Rutte mentioned a notable fact in his address: all major allied economies — Belgium, Italy, Spain, Canada — have now reached the 2% of GDP threshold. This was not the case until recently. The combined pressure of Trump, the war in Ukraine, and the evolving perception of threats has moved governments that seemed structurally incapable of increasing their military spending.

The path from 2% to 5% remains considerable, however. For a country like Italy, reaching 5% of GDP in defense by 2035 would mean multiplying current spending by two and a half — a titanic budgetary effort requiring painful political choices: cuts in other areas, tax increases, or more borrowing. These trade-offs are politically explosive in democracies where social pressure on welfare budgets is intense.

The domestic political dimension: selling defense to pacifist electorates

Rutte implicitly acknowledged this challenge by insisting on the economic argument: the defense industrial revolution "will help our economies grow and support hundreds of thousands of jobs." This is the only rhetorical framing that allows selling massive increases in military budgets to European public opinions that still associate defense spending with unproductive expenditure rather than strategic investment.

In France, Germany, and Spain, governments that must justify before parliament defense budget increases on the order of tens of billions of euros need arguments that transcend pure security rhetoric. Industrial jobs, innovation, technological competitiveness — these are the arguments that make the difference in national budget debates.

Critical Infrastructure: The Forgotten but Vital 1.5%

Cyberattacks, submarine cable sabotage, disinformation: the new frontiers of war

The 1.5% of GDP tranche dedicated to resilience and critical infrastructure is often the least spectacular in media terms — no tanks to order, no missiles to buy — but it may be the most urgent given Russian hybrid threats. Since 2022, submarine cables have been severed in the Baltic Sea, energy networks have been targeted by cyberattacks, and disinformation operations have been conducted at scale in nearly every European democracy.

These hybrid operations are less visible than cruise missiles, but they are permanent and their cost in terms of social and institutional cohesion is considerable. Civil preparedness — what Nordic countries call "total defense" — involves national resistance exercises, strategic stockpiles, government continuity plans, and public resilience education. This is what the 1.5% is meant to finance.

The EU and industrial resilience: rearmament as industrial policy

The European Commission's ReArm Europe program fits directly into this logic: transforming the rearmament challenge into an opportunity for European industry. Rather than purchasing American weapons systems off the shelf, European governments are encouraged to develop their own industrial base, finance defense research and development, and build resilient production capabilities.

This approach has an economic and strategic logic: every euro spent on defense in a European factory stays in the European economy, creates European jobs, and develops technological skills with civilian applications. This is the argument Rutte articulated with force, and it resonates particularly in countries that tend to treat defense spending as consumption rather than investment.

The Ankara Summit: Concrete Plans, Not Communiqués

Billions in contracts as irrefutable signal

Rutte's announcement that tens of billions of dollars in new contracts would be announced at Ankara's industry day represents a significant evolution in what NATO summits produce. Historically, these meetings produced political declarations and communiqués. Now they also produce signed contracts — with arms manufacturers, munitions suppliers, cybersecurity companies.

This change reflects a new understanding of what collective security requires: not only political commitments, but real financial flows toward the defense industry. NATO's credibility against Russia is measured not only by the number of its members or the grandiloquence of its declarations — it is measured by the material capabilities its members can deploy if necessary.

The credible trajectory: more demanding than the initial promise

Rutte stressed the concept of a "credible trajectory" rather than instant arrival at 5%. This distinction matters. The Ankara summit will not be the one where all allies declare they have reached the objective — several will not reach it before 2030, let alone 2035. But they will need to present detailed national plans, with intermediate milestones, contractual commitments, and accountability mechanisms.

The difference between 2016 and 2026 is precisely here: NATO has shifted from a culture of promises to a culture of delivery. The 20% increase in spending in 2025 is not the result of a wish — it is the product of a change in governance and peer pressure mechanisms between allies that actually work.

The Russian War Economy as Counterpoint: The Unsustainable

70% of tax revenues toward defense: the impossible equation

The contrast with Russia's situation is striking. While NATO is progressively increasing defense spending toward 5% of GDP — a considerable but planned effort — Russia dedicates 40 to 50% of its federal budget to defense, representing more than 70% of its tax revenues. This proportion is unsustainable over the long term in an economy not structured for permanent war economy.

The Russian National Wealth Fund is depleting. Inflation is eroding the purchasing power of the population. Refineries have seen production fall by one third according to data cited by Rutte. While the West invests in its defensive capacity with combined economies of $70 trillion, Russia is bleeding its reserves to finance a war whose economic costs it cannot sustain over the long term.

Time as the West's strategic ally

This fundamental economic asymmetry is the most solid argument for a long-term support strategy for Ukraine. Not because Russia will collapse tomorrow — it has reserves and a capacity to withstand economic pressure higher than its adversaries sometimes hope. But because a supported Ukraine and a strengthened NATO can exert sustained economic and military pressure that Russia will not be able to absorb indefinitely.

The objective is not to destroy Russia — it is to make continuing this war more costly for it than peace. And for that, NATO's rearmament, the move toward 5% of GDP, the Ankara contracts are strategic instruments consistent with a long-term vision of European security.

AI and New Technologies: A Force Multiplier

Spend less to strike more: the technological revolution

New technologies — artificial intelligence, drones, precision munitions, cyber defense systems — considerably increase the effectiveness of military forces without requiring proportional increases in personnel. An AI system like the British Asgard reduces the planning cycle from 72 hours to 60 minutes, enabling ten times more operations with the same staff. This is an exceptional budgetary force multiplier making the 5% objective more achievable.

Ukrainian drones have demonstrated that low-cost systems can neutralize equipment worth millions of dollars. This technological asymmetry is an opportunity for NATO members seeking to maximize the impact of every euro spent. Investing in military technological innovation can produce military effects equivalent to traditionally much higher spending levels, making the 5% objective not only necessary but potentially transformative.

Ukraine as a future pillar of European defense

If Ukraine joins NATO or remains a close strategic partner, its defense industry represents a considerable potential contribution. The Vyrivnyuvach guided bomb, developed in 17 months at one third the American cost, the drone systems among the world's most advanced represent an industrial base that naturally fits into Europe's defense architecture. Supporting Ukraine purchases not only Ukrainian resistance, but also valuable operational data and a competitive defense industrial base.

The European Commission announced that the next financing framework for Ukraine for 2028–2034, estimated at €100 billion, will be conditioned on strict reforms in rule of law and governance. This conditionality is healthy: it creates incentives for Ukraine to reform its institutions while receiving considerable financial support — a model of conditional aid that has proven itself.

The Pedagogy of Threat: Convincing European Voters

The jobs argument as a democratic lever

Rutte stressed a crucial aspect: military spending creates industrial jobs, stimulates innovation, and grows economies. For a Spanish prime minister or a German chancellor who must explain to voters why they are massively increasing military spending, this economic argument is essential. Arms factories in Poland, Czechia, and Sweden employ tens of thousands of people — skilled, well-paid jobs that constitute a tangible political argument.

But beyond jobs, there is a more fundamental truth: the cost of military weakness is war. Russia did not invade Ukraine because it thought it would be free — it did so because it calculated the cost would be bearable. Reversing this calculation is the objective of Western rearmament. And this objective is worth far more than any argument about industrial jobs or economic growth.

Explaining the geographic proximity of the threat

Many Western Europeans have never shared a border with Russia and do not viscerally perceive the threat the way a Pole, an Estonian, or a Finn does. The pedagogy of threat — concretely explaining what geographic proximity to Russian military power means — is a responsibility of political leaders. NATO, through its secretary general, has taken this responsibility with a new clarity since 2022.

This pedagogy also involves military exercises, visible troop deployments on the Alliance's eastern flank, and reporting on destruction in Ukraine. Every image of a destroyed Ukrainian city is, paradoxically, an argument for defense budgets in Western Europe. The reality of war speaks louder than any budget chart.

Conclusion: The Investment That Buys Peace or Prepares for It

Five percent to avoid paying one hundred percent

The objective of 5% of GDP on defense is not an end in itself — it is the price of deterrence. The reasoning is simple: if NATO members do not devote the necessary resources to credible defense, they invite aggressors to calculate that they can succeed at lower cost. Recent history demonstrates this: a Europe that had reduced its military capabilities after the Cold War did not prevent Russia from acting in Ukraine.

Dedicating 5% of GDP to defense by 2035 represents a massive investment. But the cost of not having done so could prove infinitely higher — in human lives, economic destruction, and loss of freedom. The $1.2 trillion already invested since 2016 is a signal that the West has begun to understand this equation. Ankara must confirm that this signal is durable and irreversible.

The generation that chooses to be strong

There is something historically significant in this moment: for the first time since the end of the Cold War, a European generation of political leaders is deliberately choosing to strengthen their countries' military capabilities, not because enemies are at the gates, but because they have understood — finally — that prevention is cheaper than reaction. This realization, however painful, is the most important legacy of the war in Ukraine for European security.

By Maxime Marquette, columnist

Columnist's transparency note

Positions and biases

I believe Western rearmament is necessary and that the 5% of GDP objective is justified by the reality of the Russian threat. This conviction shapes my analysis. I do not have access to classified budget data from NATO members — all cited figures come from public statements by Mark Rutte and open sources.

Sources used

This decoding relies primarily on the public statements of Mark Rutte at the Atlantic Council on June 25, 2026, supplemented by verified international press secondary sources. Any projections on national economies are based on documented trends, not insider data.

Sources

Primary sources

NATO.int — Atlantic Council Front Page Conversation with NATO Secretary General Mark Rutte — 2026-06-25

UNN — Rutte sent a message to Putin ahead of the NATO summit and announced billion-dollar defense deals — 2026-06-26

Secondary sources

Straits Times — NATO's Rutte says billions in new defense contracts will be announced at summit — 2026-06-26

Kuran Ansiklopedisi — 2026 Ankara NATO Summit — 2026-06-25

Ukrinform — NATO considering new €70B military aid package for Ukraine — 2026-06-06

The Guardian — NATO leaders fear they can no longer rely on US help if Russia attacks — 2026-06-27

BNP Paribas Economic Research — Rearm Europe: turning the challenge of rearmament into an opportunity — 2025-06-25