The European Union’s $700 billion plan to ramp up defense spending: This is “Readiness 2030”

Donald Trump believes that the United States, as NATO’s main net contributors, have been carrying the burden of safeguarding peace in Europe for too long. While all 32 member states of the North Atlantic Treaty Organization (NATO) have to contribute financially, some put more into the pot more than others, the US president argues and that needs to be addressed.

Back at the end of last year, Trump called for the US’ NATO allies to drastically increase their defense spending. He cited the figure of 5 percent of GDP - more than double the alliance’s guideline of 2 percent.

How much money are NATO members currently spending on defense?

According to 2024 estimates, eight NATO members spent less than 2 percent of GDP on defense, while one, Slovak Republic, was right on the limit. All members increased spending over the 10-year period from 2014 - Poland doubled theirs from 1.8 percent to 4.12 percent.

Poland is the country that currently dedicates the largest chunk of it budget towards defense, followed by Estonia (3.43%) and the United States (3.38%)

“Europe is in for a tiny fraction of the money that we’re in for,” Trump argued. “We have a thing called the ocean in between us, right? Why are we in for billions and billions of dollars more money than Europe?”

Trump has even threatened to pull the United States out of NATO if other members don’t start paying their fair share. “NATO was busted until I came along. I said: ‘Everybody’s gotta pay’. They said: ‘Well, if we don’t pay, are you still going to protect us?’ I said: ‘Absolutely not’. They couldn’t believe the answer,” the president told supporters at a rally last year.

NATO members respond by increasing defense spending

Allies have responded with promises to up their expenditure. Spain, who surprisingly bring up the rear, funneling just 1.28% of GDP to defense last year, say they will reach 2 percent “well before” 2029. Spanish Defense Minister Margarita Robles told a forum in Lisbon this week: “Everyone will see that we act with rigor and seriousness, always upholding the interests of Spain, which are the interests of security, defense, and peace."

Meanwhile the European Commission’s white paper, originally labelled “ReArm Europe” and now known as “Readiness 2030” was published last week. It sets out a vision to rearm Europe by “ensuring the European defense industry can produce at the requested speed and volume” and “facilitating rapid deployment of military troops and assets across the Union”.

To meet the €800 billion ($700 billion) required to finance a massive ramp-up of defense spending, it is calculated that each member state must spend 1.5% of its GDP on defense. That would bring the combined amount to €650 billion - the remaining €150 billion would be provided by loans.

The question on everyone’s lips is whether many of Europe’s debt-burdened nations can actually afford to hike their defense expenditure. Rising taxes to pay for it would be deeply unpopular and increasing borrowing isn’t a sound long-term strategy so we will see where governments cut back to balance the books.

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