NATO allies are increasing defense spending to levels not seen since the Cold War, influenced by pressure from former President Donald Trump and the ongoing conflict in Ukraine. NATO leaders have set a goal to approach 5% of GDP by 2035. Countries near Russia, such as Poland and the Baltic states, have rapidly increased their military budgets, while Germany has initiated a significant rearmament effort with a dedicated fund for its military.
According to NATO's latest report, European allies and Canada raised defense spending by 20% in 2025 compared to the previous year, contributing to hundreds of billions of dollars in increased spending since 2014. However, experts warn that higher budgets do not automatically translate into military readiness. Jim Townsend, a former U.S. defense official, noted that while spending is up, the capability to deploy forces and sustain combat operations remains a concern.
The war in Ukraine has highlighted the limitations of defense budgets, as rapid military engagements can deplete resources and strain production capacities. NATO Secretary-General Mark Rutte emphasized the need for smarter investments in military capabilities to match increased spending. The defense industrial base in Europe and the U.S. has diminished, complicating efforts to meet the demand for military equipment.
European nations are facing challenges in rebuilding their military capabilities, particularly in air defense and long-range strike systems. Some countries, like Poland, are looking to alternative suppliers such as South Korea to expedite procurement. The long-term question remains whether NATO can effectively close the capability gap in a timely manner.