Europe Is Pouring Money Into Defense. Is It Enough?

Source: NATO

Circles are sized by absolute military spending.
The current NATO target is 2 percent of G.D.P.

After the end of the Cold War, European military spending told a story of stability and optimism. Money flowed away from tanks and submarines and went instead to hospitals and pensions.

But that era is over. With a full-blown land war raging in Ukraine and an isolationist American president back in the White House, European leaders have come to a stark conclusion: They must spend more on their militaries.

Decades of cuts have left Europe’s militaries unprepared for what might lie ahead. With equipment outdated and forces undersized, their ability to operate without U.S. backing has been diminished.

NATO countries formally committed to spending 2 percent of G.D.P. on their militaries in 2014, following Russia’s annexation of Crimea, though the benchmark had been discussed for over a decade. But eight countries still do not reach that benchmark, and many analysts say even that is not enough. Now, President Donald J. Trump has said he believes they should spend 5 percent.

Sources: NATO (2024); Stockholm International Peace Research Institute (1991 to 2023)

Note: All current NATO members are shown, though some joined after 1991. Circles are sized by absolute military spending.

As their military budgets shrank over the decades, European countries relied heavily on the United States for security, trusting in the NATO pledge that an attack on one member will be treated as an attack on all. Today, the U.S. accounts for up two-thirds of NATO’s total military spending.

But as Mr. Trump prepared to return to the White House, he sounded even more hostile to some NATO allies than he did during his first term in office. He said would encourage Russia to “do whatever they hell they want” to members that do not contribute enough money to the alliance.

European NATO contributions have long been a frustration for Mr. Trump. Even after countries began hitting the 2 percent target, he demanded that they do more.

At a news conference earlier this month, he made his assertion that European countries should be spending 5 percent of their G.D.P. on defense. That is more than twice the current target — and far higher than America’s own military spending, which is near a post-Cold War low.

“Before Trump came to office, 2 percent was seen as the ceiling. Now it’s seen as the baseline,” said Daniel Fiott, the Head of the Defense and Statecraft Program at the Brussels School of Governance.

But some European leaders, too, are calling for higher targets.

Robert Habeck, the German economic minister, proposed raising military spending to 3.5 percent in a recent interview with Der Spiegel. “We need to spend almost twice as much on defense so that Putin does not dare to attack us,” Mr. Habeck said.

While countries in Western Europe are debating spending more on their militaries, those closer to Moscow have already acted. Poland’s spending reached 4 percent of its G.D.P. in 2024, the highest in NATO.

Source: NATO

Note: Circles are sized by military spending

But even with the increase in spending, many experts say Europe should be spending more.

Much of the money that has been spent to date has been for “making up ground” lost since the end of the Cold War, and for backfilling weapons stocks depleted by transfers to Ukraine, said Sean Monaghan, a fellow at the Center for Strategic and International Studies.

“It’s not substantially increasing Europe’s defense capabilities in a way that would enable it to succeed in a war against Russia,” he said.

It wasn’t just that European leaders thought wars were unlikely after the collapse of the Soviet Union. They also believed that any future warfare would look very different.

Anticipating very short-term missions that relied on precision weapons and localized fighting, according to Mr. Fiott, leaders did not invest in the equipment and supply chains needed for a protracted ground war.

“You don’t have to think about investing in tanks, massive naval fleets, long-range missiles — all of the gaps that we see prevalent today,” Mr. Fiott said.

Going beyond the 2 percent military spending target may pose a dilemma for some leaders.

Over the past three decades, expenditures on health care and social protections, among them pensions, unemployment benefits and housing allowances, have risen sharply. Raising military spending even to 3.5 percent of the G.D.P. might mean dramatic shifts in spending.

Spending on health care and social programs has increased significantly since the 90s

Change in spending as a share of G.D.P. for European NATO members

Spain and Italy are two of the most notable NATO underspenders, with both devoting less than 1.5 percent on their militaries. Since the mid-90s, spending in the two countries on health and social protection has ballooned, in large part fueled by rapidly aging populations.

But now European leaders are faced with a newly aggressive Russia that has increased military spending to 6.3 percent, and an unpredictable American president who has spoken of using “economic or military force” to acquire Greenland, a territory controlled by a NATO ally.

If they do decide to spend still more on their militaries, they have few appealing options for financing it.

Among Europe’s five largest economies, which account for the majority of NATO’s non-U.S. defense spending, taxes have already risen significantly since 1991.

Taxes have increased in the largest European economies since 1990

Source: Organisation for Economic Co-operation and Development

Europe also has another disadvantage when it comes to military spending compared with larger nations like the United States, or the country waging war on its eastern edge, Russia: It is made up of dozens of countries, each building its own military and pushing for its own defense industries to win government contracts.

“The U.S. has massive economies of scale,” Mr. Monaghan said. “European nations by themselves don’t have that.”

Even with the war in Ukraine still raging, some European politicians are already talking about plans for peacetime. Germany’s economy minister said that a 3.5 percent spending goal would be temporary, and could be reduced once Germany’s security reached a “reasonable state.”

That might prove unwise, said Mr. Monaghan, the Center for Strategic and International Studies fellow.

“The constant threat from Russia is the new normal, and we need to prepare for that and invest in our defense for that,” he said. “I think there’s still a lot of wishful thinking around.”