Key messages
- The issue of burden sharing in defence remains an open and complex debate; GDP percentages as investment are politically useful but insufficient to reflect fairness among allies and the adequacy of the costs of necessary capabilities.
- The increase in spending targets (3.5% and 5% of GDP) generates tensions and requires a rethinking of technical criteria, transparency and flexibility to avoid inequalities and ensure the legitimacy of collective decisions.
- Challenges of complementarity between NATO and the EU persist. It is necessary to consolidate a single EU voice in the field of industry and capabilities and to make it present within the NDPP framework.
Analysis
1. Introduction
Is the US political dictate for NATO to invest 5% of GDP in defence arbitrary or not? Is the EU’s political formulation to increase defence investment by €800 billion over the next four years arbitrary or not?
The debate surrounding equitable burden sharing in defence remains unresolved. There is no straightforward formula for determining what is just and fair. While setting a percentage of GDP for defence expenditure offers a simple solution, it ought not to be arbitrary; rather, it should be informed –at least in part– by sound economic and military criteria. Nonetheless, such percentages serve as a valuable political benchmark.
Ultimately, decisions regarding defence spending are, above all, political, even when they draw upon technical advice. Clausewitz cautioned that expenditure should remain moderate, even in times of war. Accordingly, in peacetime, the objective of defence should be to ensure adequate deterrence without escalating to a full-scale war effort, thereby safeguarding societal well-being and economic development.
Expenditure exceeding 10% of GDP, and particularly within the range of 20% to 40% or more, is typically regarded as indicative of a total war economy, in which the mobilisation of resources is virtually absolute and the civilian economy becomes subordinate to the war effort. For instance, Ukraine has allocated approximately 34% of its GDP to its war effort since 2022. In the case of Russia, it is estimated that its investment will exceed 6% in 2025.
During the Cold War, the principal European members of NATO maintained levels of defence expenditure that were markedly higher than those observed today. In the 1950s the UK devoted as much as 7% of its GDP to defence. In the two decades preceding the collapse of the Soviet Union, both the UK and France allocated between 4% and 5% of GDP, Germany’s expenditure typically ranged from 3% to 4%, and Italy’s from 2% to 3%. Spain, having joined NATO in 1982, reached a level of approximately 2% by the late 1980s, within a context defined by the perception of the Soviet threat.
Historically, levels of expenditure have shifted in response to perceived threats and the strategic context. The pressure to adopt new commitments, such as 3.5% or 5% of GDP within NATO, has reopened the debate concerning the sufficiency and proportionality of efforts among allies.
2. Limitations to the fair burden sharing in defence
Iustus, in Latin, means just or equitable, and solidarity in defence implies that those with greater resources should contribute more, while all allies undertake a similar effort. A straightforward means of approximating equity is the percentage of GDP allocated to defence. However, although security is considered a ‘pure public good’ at the national level, applying this concept to collective security within NATO or the EU is complex: not all states benefit equally, nor is it easy to determine what proportion of national expenditure serves the common interest. GDP percentages provide a useful political benchmark, but they do not capture the inequalities or the true complexity of burden sharing.
Defining equitable criteria is vital for the Alliance’s solidarity and cohesion, and, in due time, for any prospective common defence within the EU. An arrangement perceived as unfair breeds tension between net ‘providers’ and ‘consumers’ of security, or between those who reap greater strategic or industrial benefits and those who bear greater operational risks. Thus, the debate extends beyond the scale of investment to include the capabilities and outcomes delivered, alongside the need for transparency and flexibility to adjust national commitments as circumstances evolve. Clear and accepted rules for burden sharing are fundamental to collective effectiveness and the legitimacy of defence decisions.
The debate over fair burden sharing fluctuates between political and technical considerations. The political view prioritises commitments such as setting GDP benchmarks (2%, 3.5% or 5%) to demonstrate solidarity and equity, while the politico-technical approach is embodied in the NATO Defence Planning Process (NDPP), which assesses capabilities and risks with military advice and incorporates political judgement. In practice, these perspectives are intertwined, creating ambiguity: decisions such as allocating 5% of GDP often overlap with technical assessments of needs and shortfalls, yet lack a clear formula linking political ambition to actual cost.
A comprehensive assessment of burden sharing must consider both GDP investment (input) and capabilities or operational deployments (outputs), as set out in the Defence Investment Pledge of the Wales Summit (2014). Benjamin Zyla, in the Oxford Handbook on NATO (2025), suggests including ‘outcomes’ and ‘long-term impact’, though these are difficult to measure; for instance, the deterrent effect in Eastern Europe remains intangible and hard to quantify.
The measurement of equity faces at least three challenges. First, the lack of universal metrics: there is no formula that links the percentage of GDP (input) with the cost of capabilities (output), due to national differences in efficiency. Secondly, the issue of unequal benefits: some allies obtain greater industrial or security returns, and factors such as nuclear capabilities (excluded from the NDPP) distort equity. Furthermore, since 2022, NATO has prioritised deterrence in Eastern Europe, while activities continue in Iraq and attention to the African southern flank or the Sahel front is relegated, generating geographical asymmetries. Thirdly, it is impossible to quantify expenditure by distinguishing what part of national spending serves exclusive versus collective interests (for instance, the US in the Indo-Pacific vs NATO –assuming the Indo-Pacific is not of direct interest to the Alliance–; France in its overseas territories south of the Tropic of Cancer; and Spain in Ceuta and Melilla).
This complexity keeps the debate open, with simplistic solutions (such as GDP percentages) that are politically useful but technically insufficient.
3. The politico-economic perspective at the NATO Summit in The Hague
In 2022, prior to the NATO Summit in Madrid, some already regarded the 2% of GDP target as a poor objective for NATO –operationally insufficient and strategically counterproductive–. Today, others emphasise that it is more important to focus on which capabilities to invest in (the ‘what’) rather than on GDP percentages (the ‘how much’), which are described as simplistic or arbitrary. Both questions remain relevant: how much to invest, and in what.
Before the Summit, Rutte noted that ‘the US is about delivering 44% of all the capabilities of NATO, that will come down by 2032 to 30%. That means that the non-US Allies are stepping up from 56% to 70%’. For now, it appears that progress is being made towards ‘a more European NATO’, gradually realising the concept of burden shifting.
The decisions taken in The Hague were a response to pressure from the US and the perception of a growing threat from Russia. The agreement included the obligation to submit annual plans to meet the investment target, which was set at a reference point of 5% of GDP. Of this, 3.5% is to be allocated to military capabilities and 1.5% to infrastructure, cybersecurity and other expenditures indirectly related to defence.
The ‘credible’ annual plans now required by the Alliance’s senior leaders will assist the Secretary General in preparing his annual reports. The Secretary General’s April 2025 report, which covers events up to and including 2024, recalled the agreements reached at the 2024 Washington Summit (still under President Biden’s Administration): NATO leaders reaffirmed their ‘enduring commitment to fully implement the Defence Investment Pledge as agreed in Vilnius, and recognise that more is needed urgently to sustainably meet our commitments as NATO Allies. We reaffirm that, in many cases, expenditure beyond 2% of GDP will be needed in order to remedy existing shortfalls and meet the requirements across all domains.’
Following The Hague summit, President Donald Trump advocated the 5% target and criticised countries such as Spain for their lower level of commitment. The NATO Secretary General, Mark Rutte, acknowledged the need for flexibility but maintained that 3.5% was essential. After the summit, the Spanish Prime Minister, Pedro Sánchez, continued to insist on a firm limit of 2.1% of GDP for Spain, arguing that this was sufficient to develop the required capabilities and that higher defence investment percentages would pose risks to social welfare, despite having signed the summit declaration.
At the end of March, Josep Borrell, the former High Representative of the Union for Foreign Affairs and Security Policy, delivered a lecture on the necessity for the EU to take charge of its own security. Is allocating 3.5% purely to defence sufficient for the 23 allies and other Europeans to assume responsibility for deterrence and conventional defence in Europe? To answer this properly, one would first need to know which capabilities the US would or would not continue to provide; indeed, it would even be necessary to imagine a scenario in which the US severs ties with Europe, as Simon & Boswinkel have recently considered.
4. The politico-technical perspective, the NATO Defence Planning Process (NDPP)
The NDPP is NATO’s politico-technical mechanism for defining the required conventional capabilities, excluding nuclear ones. Nevertheless, nuclear capabilities also absorb part of the defence budgets of certain states and also benefit those 23 EU allies. Nuclear deterrence, being more cost-effective per unit of expenditure than conventional deterrence, introduces asymmetries in the measurement of equity, as there are clear providers (the US and the UK) and consumers of this deterrence, as well as those who contribute conventional capabilities suitable for carrying nuclear weapons, such as the fighter aircraft of Germany, Italy, Belgium, the Netherlands and Turkey.
The NDPP operates on a basic four-year cycle. It begins with issuing a Political Guidance, which sets the level of military ambition and other objectives (step 1). From there, the minimum required capabilities are identified (step 2), which are then assigned to each ally as Capability Targets (step 3), establishing a timeframe for their development. Progress on these capabilities is reviewed every two years (step 5). Continuously, NATO supports countries in implementation (step 4), promoting interoperability. Each country decides how to develop the assigned capabilities, for example, by cooperating and aggregating demand within the EU framework. The biennial review includes both a technical-military assessment and a political evaluation (step 5) conducted by Alliance staff.
The latest four-year updates of the Political Guidance (step 1) increased the military requirements (step 2) in 2015 and 2019, but the political reference of 2% of GDP for defence remained unchanged, reflecting the primacy of political criteria over technical needs. In 2019 a new Military Strategy was approved and in 2022 so was the Madrid Strategic Concept, which preceded the 2023 Guidance, while 2% remained the official reference. This discrepancy persisted until the Hague Summit.
According to the NDPP (as specified in 2016 and 2022), countries retain sovereignty over how they develop the required capabilities. In 2024 a 30% increase in necessary capabilities (step 2) was approved, along with a significant improvement in force readiness, in line with the new force model adopted in Madrid in 2022, to respond to emerging threats. In June 2025 Defence Ministers individually assigned these objectives to each ally (step 3), which would entail an additional financial effort to address previously identified shortfalls.
The precise scale of the investment increase required for step 3 remains a matter of estimation. The percentages put forward are indicative, derived from projections that are inherently imprecise. Nonetheless, setting a political benchmark for defence investment as a proportion of GDP serves as a valuable instrument for Defence Ministers, enabling them to resist reductions imposed by their counterparts in the Treasury.
Reviews under the NDPP (step 5) combine technical assessments and political evaluations: military experts analyse the adequacy of capabilities and the risks of shortfalls (Military Committee Suitability and Risk Assessment), while the Capability Report evaluates how countries integrate the assigned capability targets into their national plans, including resources and funding. These evaluations, which are classified but may be shared internally by countries, were distributed at the end of 2024 and will be repeated in 2026, 2028 and 2030.
The communiqué from the Hague Summit requires Allies to submit annual plans to achieve the agreed investment targets and provides for regular reviews to ensure the course remains on track. These required plans, which are initially distinct from the NDPP, pertain exclusively to the political level.
On 19 June the Spanish Prime Minister sent a letter to the NATO Secretary General. In his reply (SG(2025)0124), Mark Rutte stated that the Summit would grant Spain flexibility to chart its own sovereign course towards the Capability Targets, while also noting the obligation to present annual plans and confirming that expenditure would be reviewed in 2029 in light of the prevailing strategic environment and updated objectives. Both letters contained political and technical arguments.
As early as 2018 the NATO Parliamentary Assembly, by means of Resolution 447, had called upon countries to formulate credible national plans to achieve the requisite levels of investment, in accordance with the Defence Investment Pledge. Each year, the Secretary General has published reports detailing the evolution of resources committed by each ally. The credibility of these plans is contingent upon political endorsement: the higher the institutional standing of the signatory, the greater the confidence in the undertaking. The resolution in question also recognised the value of NATO-EU cooperation, highlighting initiatives such as Permanent Structured Cooperation (PESCO) and the European Defence Fund.
5. The debate in the EU: calculation and politico-technical complementarity with NATO
The identification of EU capability development priorities is undertaken through the Capability Development Plan (CDP), led by the European Defence Agency (EDA). This process encompasses requirements for both EU missions and NATO operations, reflecting the fact that 23 EU Member States are also NATO Allies. The most recent set of priorities was established in 2023.
According to the Draghi report, additional defence investments of €500 billion over 10 years were deemed necessary, drawing on European Commission estimates published in June 2024. In March 2025, the White Paper raised this figure substantially, indicating a need for between €650 billion and €800 billion in just four years. Depending on the usage of the SAFE instrument, such an increase would represent an aggregate defence investment of approximately 3.5% of the EU’s GDP by 2028-29.
Figure 1. National defence expenditure without or with SAFE use, 2024-28 (billions of euros, 2023 prices)
| Year | National defence expenditure | Increase compared with 2024 | % EU GDP | EU GDP (1) | Year | National defence expenditure with SAFE (2) | Increase compared with 2024 | % EU GDP | EU GDP (1) |
|---|---|---|---|---|---|---|---|---|---|
| 2024 | 326.00 | 1.90 | 17.157.89 | 2024 | 326.00 | – | 1.90 | 17.157.89 | |
| 2025 | 390.34 | 64.34 | 2.28 | 2025 | 427.84 | 101.84 | 2.49 | ||
| 2026 | 454.68 | 128.68 | 2.65 | 2026 | 492.18 | 166.18 | 2.87 | ||
| 2027 | 519.03 | 193.03 | 3.03 | 2027 | 556.53 | 230.53 | 3.24 | ||
| 2028 | 583.37 | 257.37 | 3.40 | 2028 | 620.87 | 294.87 | 3.62 | ||
| Approximately €650 bn | 643.42 | – | Approximately €800 bn |
Given that capability shortfalls could not have changed substantially between June 2024 and March 2025, it is difficult to justify objectively the increase in required investment (as the CDP priorities remained unchanged). This circumstance points either to a possible error in the June 2024 estimate or to arbitrariness in March 2025, or, more plausibly, to alignment with the Alliance’s political agenda.
Following the Hague Summit, the European Council meeting of 27 June did not address the issue of iustus burden sharing in defence. Nevertheless, it discussed urgent and medium-term defence requirements and reviewed progress on initiatives such as the Capability Development Plan (CDP), the European Defence Industry Strategy and the European Defence Implementation Plan (EDIP). The Council resolved to accelerate defence spending and strengthen military capabilities in line with NATO commitments. Special emphasis was placed on the immediate need to consolidate the European defence industry, expedite the deployment of SAFE loans and relax fiscal constraints to facilitate military investment. Proposals were also advanced to redirect EU funds –including those for cohesion and research– towards dual-use technologies and defence infrastructure. This approach could contribute to enabling Member States to reach the 1.5% of GDP target for investments indirectly related to defence, as advocated within the Alliance.
The coordination of political agendas between NATO and the EU regarding increased defence investment appears self-evident, even if the precise mathematical calculations concerning how much to raise defence expenditure, and within what timeframe, do not exactly align. Nevertheless, within the Union, Member States have not, to date, undertaken individual commitments in terms of specific GDP percentages under PESCO.
It is important to note that the Commission holds no competence in defence, but does exercise authority over the internal market, industry and other policy areas. On this basis, a variety of initiatives indirectly related to defence have been promoted. However, it is not the Commission but the EDA, acting on the mandate of the Member States, that determines which capabilities merit investment. Since 2022, and as reflected in the 2024 EDIP proposal, a single EU voice has been taking shape through the Defence Industrial Preparedness Board –comprising the Commission (DG DEFIS) and the EDA– to engage with Member States and the defence industries, for instance by promoting demand aggregation.
Within NATO, the NDPP will continue to run its course, and it is now appropriate to deepen the complementarity between this process and those of the EU. Beyond the political statements of organisational leaders regarding the positive NATO-EU relationship, there is a pressing need to enhance inter-institutional cooperation at the executive level.
A suitable approach would be to strengthen the Union’s voice within the ‘NATO-EU Capability Group’ established in 2003; this would represent a step towards building the European pillar of the Alliance. Broadly speaking, there is agreement with Sven Biscop’s advocacy of the establishment of an operational link between a revised NDPP and the European Commission. However, it is contended that now is not the time to dismantle ongoing EU initiatives and instruments, such as the CDP and others, in favour of relying solely on the biennial reviews of the Coordinated Annual Review on Defence (CARD). For the present, the priority should be to reinforce the single European voice through the Defence Industrial Preparedness Board, ensuring its presence and cooperation during step 4 of the NDPP, in order to advance towards greater coordination and a more prominent Union role in capability development dynamics within the Alliance.
The Defence Industrial Preparedness Board should –officially– coordinate with NATO staff to enable the 23 EU allies to achieve their capability objectives collaboratively, should they so choose, and within the requisite timeframe. Such coordination would lay the foundations for a genuine European pillar within the Alliance, affording the EU its own distinct voice –exercising agency with pragmatism and institutional respect, but without undue deference–.
It is essential to give the European defence market an opportunity to develop, a prospect that may, in the medium term, also prove advantageous to the US. Furthermore, in the forthcoming review of PESCO, participating Member States might consider establishing a commitment to a specific percentage of GDP for defence, at least for those ones that are also NATO Allies, which would be consistent with current objectives and commitments within the Alliance.
Conclusions
The debate surrounding the equitable sharing of the defence burden remains intricate and far from settled, fluctuating between simplified political benchmarks –such as GDP percentages– and the imperative for more technically grounded criteria that better reflect the actual capabilities and requirements of the Alliance.
Recent experience, both within NATO and the EU, shows that the establishment of minimum spending thresholds is driven more by political pressure and the pursuit of cohesion than by any precise assessment of risks and strategic objectives. Nonetheless, the value of these percentages as a political reference point is undeniable, as they facilitate accountability and coordination among allies, even if they do not, in themselves, resolve the asymmetries and inherent challenges of burden sharing.
Ultimately, equitable burden sharing must adapt to the evolving strategic environment to ensure that the commitments undertaken remain both relevant and sustainable over time.
The future of fair burden sharing in defence will hinge on progress towards greater transparency and flexibility, as well as on enhanced coordination between NATO and the EU, with a strengthened European voice in allied defence planning. Only through clear rules, credible commitments and effective inter-institutional cooperation –not merely through the declarations of leaders– can collective effectiveness and the legitimacy of decisions be assured.
Political formulations that set a percentage of GDP as a criterion for burden sharing are intended to provide a straightforward reference point, justifying solidarity and equity in defence, understood as a collective good. In this critical juncture, the debate on burden sharing and GDP benchmarks must also be brought into the EU sphere, whether through PESCO –via intergovernmental means– or through initiatives driven from the supranational level. As Robert Schuman observed in 1950: ‘Europe will not be made all at once, or according to a single plan. It will be built through concrete achievements which first create a de facto solidarity’.
