Remember 2014, when NATO members considered 2% of GDP for defense ambitious? Now European leaders are seriously discussing doubling that figure to 5% — an unprecedented peacetime commitment.
Over the past weeks, European leaders began discussing ways to increase defense budgets rapidly and ramp up support for Ukraine in anticipation of significantly diminished US backing, according to their statements at the recent 2025 Munich Security Conference. Their goals include unprecedented defense spending pledges, new bilateral security arrangements, and emphasis on industrial capacity expansion—but how much of it will actually be achievable remains an open question.
“It’s not a question whether it is possible or achievable. It has to be,” German Defense Minister Boris Pistorius stated regarding the widely-discussed but ambitious 5% defense spending goal. “We have to make it happen.”
The gap between promises and reality
In 2014, in response to Russia’s illegal annexation of Crimea, European members of NATO agreed to the Defence Investment Pledge in which they committed to meeting a minimum 2% defense spending investment by 2024.
In January 2025, incoming US President Donald Trump called on NATO members to increase defense spending to 5% GDP, echoing statements he had made in 2018 during his first presidency. A number of European leaders at MSC agreed with this target and declared it to be essential for NATO’s survival.
Yet the numbers reveal a stark reality. Despite that decade-old pledge, the average spending across NATO countries today sits at just 1.9% — still below the 2% target.
“There was a promise to invest 2% of our GDP 11 years ago,” pointed out Lithuanian President Gitanas Nausėda. “Now we are talking… about 3% spending. But the situation is totally different. Average spending of NATO countries is 1.9% of GDP. Despite long discussions, despite nice plans, we are still below the threshold of 2%.”
Similarly, US Special Envoy to Ukraine and Russia Keith Kellog pointed out that “The NATO alliance made a clear declaration in 2014 in Wales that by 2024 they would have 2% of their GDP in defense, of which 20% was modernization. We still have eight members of NATO who are not there.”
Poland leads the way
Among those countries who met and exceeded the 2% goal, Poland rightfully claimed its place as the exemplar. As Polish parliamentarian Aleksandra Uznańska-Wiśniewska pointed out, Poland’s “military spending is 4.7% of GDP. This is the highest amongst all NATO allies… Poland actually puts our money where our mouth is when it comes to the defense spending and defense budgets.”
Context matters here: Following Russia’s annexation of Crimea in 2014, Poland embarked on an ambitious modernization program, purchasing American F-35 fighter jets, Patriot missile systems, and HIMARS rocket launchers. Poland signed a $4.6 billion deal for F-35s in 2020, acquired Patriot systems, and ordered HIMARS in 2019. Picking up from Ukraine’s experience in fighting Russia, Poland has announced it will create a drone army. This substantial investment reflects Poland’s historical experience with Russian aggression.
The Baltic response
The leaders from Lithuania also expressed their aspiration to rise to meet the 5% goal. Lithuania, which borders Russia, has been among the most vocal advocates for strengthening NATO’s eastern flank. The country reintroduced conscription in 2015 as a response to security concerns and completed construction of a fence along its border with Belarus in 2023 following the migrant crisis.
Lithuanian President Nausėda said that, “I think we have to be honest to ourselves and to do much more. I’m talking not only about defense spending, but I am talking about support to Ukraine and other issues. My country is ready to do what is needed and recently we have announced that defense spending in 2026-2030 should reach the level of 5 to 6% of GDP.”
Lithuania invests € 20 million with more to come in joint weapons production with Ukraine
Germany’s watershed moment
“24 February 2022 marked a watershed moment, the day on which Russia, in breach of international law, invaded Ukraine,” stated German President Frank-Walter Steinmeier, who had announced a new era of Russian relations following its full-scale invasion of Ukraine:
“I can say Europe has heard the wake-up call, and so has my country. Germany has significantly increased its expenditure on security… We understand it was necessary but we also know that this is no cause for complacency… The 2% target which we formerly agreed [to] in 2014 belongs to another era that was confronted with different threats. A decade on, we will need to spend considerably more than was agreed back then.”
Germany’s Steinmeier announces new era of Russia relations in historic speech
This statement reflects Germany’s dramatic shift in defense policy. Chancellor Olaf Scholz announced what he called a “Zeitenwende” or turning point in February 2022 following Russia’s invasion of Ukraine, marking a fundamental change in German security policy after decades of military restraint.
Even as German Defense Minister Pistorius emphasized the urgent need to rise to meet the 5% GDP target, questions remained about how it could be done or even whether it is possible.
“We have to make it possible. We have to make it happen,” Minister Pistorius explained at the Munich Security Forum.
He outlined the financial challenge: when Germany’s special defense fund runs out in 2028, spending would fall back to about 1.3% of GDP without intervention. .
The new government will need to find at least 85-90 billion euros annually to meet the 2% target, or 120-130 billion euros for 3% – an increase of more than 70 billion euros from the current defense budget.
Pistorius warned against cutting other essential services to fund defense.
“I don’t believe it is possible to cut that from social welfare, health systems, or infrastructure,” he said. Such cuts would divide society and benefit far-right and populist parties, ultimately damaging democracy. This, he stressed, is why Germany must find sustainable ways to increase defense spending quickly.
Despite this recognition that the details of the sources for defense spending will have to be dealt with by the new government, he did indicate that he sees only one viable solution. “We need substantial financial means that cannot simply be cut out of the current budget. Excluding defense spending from our national debt limit is therefore inevitable.”
German Chancellor Olaf Scholz reinforced this position the following day, stating it is “beyond doubt that we have to increase our defense expenditure significantly.”
He emphasized that the 100 billion euro special fund created after the “watershed moment” was only the beginning. Maintaining the 2% target beyond 2028 will require an additional 30 billion euros annually, with each percentage point above that adding another 43 billion euros per year.
“These are enormous amounts of money,” Scholz noted. “By the end of the decade, we will be talking 3-digit billions range.” He dismissed suggestions that such funding could be found through minor budget adjustments, calling anyone who claimed otherwise dishonest.
His solution mirrored Pistorius’s: reforming Germany’s constitutional debt limits to exempt defense spending.
When pressed further, Scholz was unequivocal that changing debt regulations was the only viable path forward, as neither tax increases nor cuts to domestic infrastructure would be sufficient or acceptable.
The proposal would exempt defense spending from Germany’s constitutional “debt brake” mechanism, which currently limits federal budget deficits to 0.35% of GDP. This change would allow Germany to borrow specifically for military expenditures without counting those funds against its strict deficit limits, similar to how the country temporarily suspended these rules during the COVID-19 pandemic.
The clock is ticking
European leaders now face their most consequential defense decisions since the Cold War, with implications not just for military security but for the survival of the Western world order itself.
As Europe contemplates unprecedented levels of defense spending, the questions about how to pay for it — and how quickly these investments can translate into actual military capabilities — will define the fate of the continent itself.
The fundamental question remains: Can Europe build a viable defense without American leadership? The answer may determine whether a post-American NATO could survive at all.
