Key Points and Summary – As NATO leaders meet in The Hague, a new 5% of GDP defense spending target, pushed by US President Donald Trump, is a central but contentious issue.
-While most allies are moving toward this goal, dissent and “creative accounting” are watering down the commitment.
-The proposed plan splits the target, with 3.5% for core military spending and 1.5% for broader “defense-related investment” like infrastructure.
-Critics, including those at the Atlantic Council, warn this “slippery slope” could allow nations to meet the target by funding civilian projects, undermining the goal of genuine military readiness and failing to placate US demands.
NATO’s 5 Percent Spending Plan: Is It Real?
“They’re delinquent, as far as I’m concerned,” US President Donald Trump fumed in front of US allies like Germany’s Angela Merkel and United Kingdom PM Theresa May. The setting was the obligatory “class picture”-type photo op that was part of the lead-up to the 2018 NATO summit.
“Massive amounts of money is owed,” said the US president, lamenting the fact that several of the NATO member states were not even meeting the 2 percent GDP that was the alliance “requirement.” In his view, not even that level of outlays for national defense was adequate, and some of the other NATO members—particularly Germany—were spending on everything but their own armed forces.
Merkel’s government, in his estimation, was the “worst in class” for perennially underfunding the Bundeswehr. At the same time, Berlin was pouring billions into the state coffers of Russian President Vladimir Putin in the form of purchases of low-cost natural gas.
In the first two months after Russia invaded Ukraine in February 2022, Germany spent €9.1 billion on fossil fuel purchases from Russia—primarily for natural gas.
“So, we are protecting you against Russia, but you’re paying billions of dollars to Russia?” Trump asked pointedly.
Seven years later and back in the Oval Office again, Trump’s disdain for and cynicism about NATO members‘ defense spending habits has not changed dramatically.
Refusing The New Targets
This partly explains why the US President is today demanding that European nations commit to spending 5 percent of their GDP on defense when the US itself has not met that mark.
Despite the new NATO spending target being 5 percent instead of 2 percent, Trump is still not going to commit the US to the higher number. There are reasons behind this, some of which will be coming out in the course of today’s NATO summit in The Hague.
One such reason is that this pledge to increase defense spending to 5 percent of GDP may not be exactly what it seems.
One of the leading dissenters to the 5 percent pledge is Spain, which has refused to commit to the higher spending level. Instead, the southern European nation is arguing that the overall objective is to meet NATO’s new capability targets.
Reaching those objectives, says Madrid, is not about just spending more money but about spending “smarter” and achieving more defense capacity with the same budget outlays.
Is It REALLY 5 Percent?
In order to placate the White House and to create what some might call a “fig leaf” approach to meeting the 5 percent mark, some nations are engaging in what some might cynically refer to as “creative accounting.”
The language is being changed, said one military affairs writer in London, so that “we are going to start to hear more talk about ‘defense investment’ rather than ‘defense spending.’”
What that means in practice is to divide up the 5 percent in expenditures into different categories of spending.
One of the scenarios proposed by the UK and others would allocate the first 3.5 percent of this spending to procuring “core defense items,” such as main battle tanks, fighter aircraft, long-range missiles, and air defense systems, as well as to paying and caring for the troops themselves. Then, the remaining 1.5 percent would be allocated to government budgets for “defense and security-related investment, including in infrastructure and resilience.”
Critics of this approach say that expanding the definition to include “resilience, etc.” means that spending on defense becomes a “catch-all” exercise in which outlays for rural broadband—a necessity for communications during and after an attack—or runway expansions qualify.
These and other non-hardware items can now be counted towards the 1.5 percent goal.
As a recent piece by the Atlantic Council points out, there can be pitfalls associated with allowing the fulfillment of the 5 percent defense spending goal to be achieved by too loosely categorizing what can be considered “defense” by the Alliance.
“There is some justification for broadening the definition to include spending on cybersecurity, resilience measures, and critical infrastructure, especially given Russia’s increasing use of hybrid warfare across the Euro-Atlantic,” reads the article.
“However, the Alliance risks a slippery slope in broadening the definition too much. To guard against this risk, NATO should take steps to identify and define what might be considered truly defense-related and what might be considered mostly civilian-related. Otherwise, the new defense spending goal will not assuage US concerns, reassure allied citizens, or strengthen deterrence against Russian aggression.”
This is the essence of why Trump, who has always been a “show me” type of politician, is not ready to commit the US to the 5 percent mark, particularly if the European definition of that target and that of the US end up as being so different that they are the proverbial “apples to oranges” comparison.
About the Author:
Reuben F. Johnson is a survivor of the February 2022 Russian invasion of Ukraine and is an Expert on Foreign Military Affairs with the Fundacja im. Kazimierza Pułaskiego in Warsaw. He has been a consultant to the Pentagon, several NATO governments, and the Australian government in the fields of defense technology and weapon systems design. Over the past 30 years he has resided in and reported from Russia, Ukraine, Poland, Brazil, the People’s Republic of China and Australia.
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