The success of a key NATO summit is in doubt after Spain rejects a big hike in defense spending
BRUSSELS (AP) — The success of a key NATO summit hung in the balance on Friday, after Spain announced that it cannot raise the billions of dollars needed to meet a new defense investment pledge demanded by U.S. President Donald Trump.
Trump and his NATO counterparts are meeting for two days in the Netherlands from next Tuesday. He insists that U.S. allies should commit to spending at least 5% of gross domestic product, but that requires investment at an unprecedented scale.
Trump has cast doubt over whether the U.S. would defend allies that spend too little.
Setting the spending goal would be a historic decision. It would see all 32 countries invest the same amount in defense for the first time. Only last week, NATO Secretary-General Mark Rutte expressed confidence that they would endorse it.
But in a letter to Rutte on Thursday, Prime Minister Pedro Sánchez wrote that 'committing to a 5% target would not only be unreasonable, but also counterproductive.'
'It would move Spain away from optimal spending and it would hinder the (European Union's) ongoing efforts to strengthen its security and defense ecosystem,' Sánchez wrote in the letter, seen by The Associated Press.
Spain is not entirely alone
Belgium, Canada, France and Italy would also struggle to hike security spending by billions of dollars, but Spain is the only country to officially announce its intentions, making it hard to row back from such a public decision.
Beyond his economic challenges, Sánchez has other problems. He relies on small parties to govern, and corruption scandals have ensnared his inner circle and family members. He's under growing pressure to call an early election.
In response to the letter, Rutte's office said only that 'discussions among allies on a new defense investment plan are ongoing.' NATO's top civilian official had been due to table a new proposal on Friday to try to break the deadlock.
The U.S. and French envoys had also been due to update reporters about the latest developments ahead of the summit but postponed their briefings.
Rutte and many European allies are desperate to resolve the problem by Tuesday so that Trump does not derail the summit, as he did during his first term at NATO headquarters in 2018.
Budget boosting
After Russia's full-scale invasion of Ukraine in 2022, NATO allies agreed that 2% of GDP should be the minimum they spend on their military budgets. But NATO's new plans for defending its own territory against outside attack require investment of at least 3%. Spain agreed to those plans in 2023.
The 5% goal is made up of two parts. The allies would agree to hike pure defense spending to 3.5% of GDP. A further 1.5% would go to upgrade roads, bridges, ports and airfields so that armies can better deploy, and to prepare societies for future attacks.
Mathematically, 3.5 plus 1.5 equals Trump's 5%. But a lot is hiding behind the figures and details of what kinds of things can be included remain cloudy.
Countries closest to Russia, Belarus and Ukraine have all agreed to the target, as well as nearby Germany, Norway, Sweden and the Netherlands, which is hosting the June 24-25 summit.
The Netherlands estimates that NATO's defense plans would force it to dedicate at least 3.5% to core defense spending. That means finding an additional 16 billion to 19 billion euros ($18 billion to $22 billion).
Supplying arms and ammunition to Ukraine, which Spain does, will also be included as core defense spending.
NATO estimates that the U.S. spent around 3.2% of GDP on defense last year.
Dual use, making warfighting possible
The additional 1.5% spending basket is murkier. Rutte and many members argue that infrastructure used to deploy armies to the front must be included, as well as building up defense industries and preparing citizens for possible attacks.
'If a tank is not able to cross a bridge. If our societies are not prepared in case war breaks out for a whole of society approach. If we are not able to really develop the defense industrial base, then the 3.5% is great but you cannot really defend yourselves,' Rutte said this month.
Spain wanted climate change spending included, but that proposal was rejected. Cyber-security and counter-hybrid warfare investment should also make the cut. Yet with all the conjecture about what might be included, it's difficult to see how Rutte arrived at this 1.5% figure.
The when, the how, and a cunning plan
It's not enough to agree to spend more money. Many allies haven't yet hit the 2% target, although most will this year, and they had a decade to get there. So an incentive is required.
The date of 2032 has been floated as a deadline. That's far shorter than previous NATO targets, but military planners estimate that Russian forces could be capable of launching an attack on an ally within 5-10 years.
The U.S. insists that it cannot be an open-ended pledge, and that a decade is too long. Still, Italy says it wants 10 years to hit the 5% target.
Another issue is how fast spending should be ramped up. 'I have a cunning plan for that,' Rutte said. He wants the allies to submit annual plans that lay out how much they intend to increase spending by.
The reasons for the spending hike
For Europe, Russia's war on Ukraine poses an existential threat. A major rise in sabotage, cyberattacks and GPS jamming incidents is blamed on Moscow. European leaders are girding their citizens for the possibility of more.
The United States also insists that China poses a threat. But for European people to back a hike in national defense spending, their governments require acknowledgement that the Kremlin remains NATO's biggest security challenge.
The billions required for security will be raised by taxes, going into debt, or shuffling money from other budgets. But it won't be easy for many, as Spain has shown.
On top of that, Trump has made things economically tougher by launching a global tariff war — ostensibly for U.S. national security reasons — something America's allies find hard to fathom.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
26 minutes ago
- Yahoo
Why It Might Not Make Sense To Buy Cancom SE (ETR:COK) For Its Upcoming Dividend
Cancom SE (ETR:COK) is about to trade ex-dividend in the next three days. The ex-dividend date generally occurs two days before the record date, which is the day on which shareholders need to be on the company's books in order to receive a dividend. The ex-dividend date is important as the process of settlement involves at least two full business days. So if you miss that date, you would not show up on the company's books on the record date. Accordingly, Cancom investors that purchase the stock on or after the 25th of June will not receive the dividend, which will be paid on the 27th of June. The company's next dividend payment will be €1.00 per share, on the back of last year when the company paid a total of €1.00 to shareholders. Calculating the last year's worth of payments shows that Cancom has a trailing yield of 3.6% on the current share price of €27.90. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. As a result, readers should always check whether Cancom has been able to grow its dividends, or if the dividend might be cut. AI is about to change healthcare. These 20 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10bn in marketcap - there is still time to get in early. Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Cancom distributed an unsustainably high 124% of its profit as dividends to shareholders last year. Without extenuating circumstances, we'd consider the dividend at risk of a cut. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. Thankfully its dividend payments took up just 29% of the free cash flow it generated, which is a comfortable payout ratio. It's disappointing to see that the dividend was not covered by profits, but cash is more important from a dividend sustainability perspective, and Cancom fortunately did generate enough cash to fund its dividend. If executives were to continue paying more in dividends than the company reported in profits, we'd view this as a warning sign. Extraordinarily few companies are capable of persistently paying a dividend that is greater than their profits. See our latest analysis for Cancom Click here to see the company's payout ratio, plus analyst estimates of its future dividends. Businesses with shrinking earnings are tricky from a dividend perspective. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. That's why it's not ideal to see Cancom's earnings per share have been shrinking at 3.2% a year over the previous five years. Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Cancom has delivered 15% dividend growth per year on average over the past 10 years. That's intriguing, but the combination of growing dividends despite declining earnings can typically only be achieved by paying out a larger percentage of profits. Cancom is already paying out 124% of its profits, and with shrinking earnings we think it's unlikely that this dividend will grow quickly in the future. From a dividend perspective, should investors buy or avoid Cancom? It's not a great combination to see a company with earnings in decline and paying out 124% of its profits, which could imply the dividend may be at risk of being cut in the future. Yet cashflow was much stronger, which makes us wonder if there are some large timing issues in Cancom's cash flows, or perhaps the company has written down some assets aggressively, reducing its income. Overall it doesn't look like the most suitable dividend stock for a long-term buy and hold investor. Having said that, if you're looking at this stock without much concern for the dividend, you should still be familiar of the risks involved with Cancom. In terms of investment risks, we've identified 2 warning signs with Cancom and understanding them should be part of your investment process. If you're in the market for strong dividend payers, we recommend checking our selection of top dividend stocks. — Investing narratives with Fair Values Vita Life Sciences Set for a 12.72% Revenue Growth While Tackling Operational Challenges By Robbo – Community Contributor Fair Value Estimated: A$2.42 · 0.1% Overvalued Vossloh rides a €500 billion wave to boost growth and earnings in the next decade By Chris1 – Community Contributor Fair Value Estimated: €78.41 · 0.1% Overvalued Intuitive Surgical Will Transform Healthcare with 12% Revenue Growth By Unike – Community Contributor Fair Value Estimated: $325.55 · 0.6% Undervalued View more featured narratives — Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Yahoo
31 minutes ago
- Yahoo
TACO Trump Punts Decision on Bombing Iran in Wild New Twist
President Donald Trump will decide whether to attack Iran within the next two weeks, and has issued a plea to stave off the backlash in his MAGA base: Trust in Trump. As a MAGA civil war over military intervention threatens to tear his party apart, the president has left the door open to a diplomatic off-ramp. 'Based on the fact that there's a substantial chance of negotiations that may or may not take place with Iran in the near future, I will make my decision whether or not to go within the next two weeks,' he said, in a direct message issued through his White House spokeswoman Karoline Leavitt. The unexpected twist is reminiscent of the two week window Trump regularly gives Russia to start negotiating a genuine ceasefire with Ukraine. It comes after the president left the nation on edge for days about the possibility that he would help Israel destroy a deeply buried nuclear enrichment facility at Fordow, in northeast Iran, using a 30,000 pound bomb known as a 'bunker buster'. Trump gave numerous mixed messages, insisting the strikes could be imminent and saying it was 'too late' to talk while also insisting that there was scope for negotiations. On Wednesday, he even boasted that 'nobody knows what I'm doing' when it comes to Iran. Tensions escalated this week when he abruptly departed the G7—despite having meetings locked with global allies including Australia and India—to rush to Washington to deal with the issue. For the next three days, he then huddled with his national security advisers to decide whether the U.S. military helps Israel's bombing campaign. But such a move would risk any remaining chance of the nuclear disarmament deal Trump has been pursuing and threatened to tear apart the very base that got him elected. The MAGA civil war over the Iran put conservatives such as pro-Israel war hawks Laura Loomer and Mark Levin on one side, and America First firebrands such as Charlie Kirk, Steve Bannon and Jack Posobiec on the other. 'We can't have another Iraq,' Bannon warned at a breakfast with reporters hosted Wednesday by The Christian Science Monitor. Earlier today, he was spotted at the White House but Leavitt declined to say what he was doing there. The issue also spilled out onto screens this week, with conservative pundit Tucker Carlson—who accused the president of being 'complicit' in the Middle East conflict—skewering Texas Senator Ted Cruz over his support for regime change. Asked what the president would say to those who voted for his 'America First' doctrine and didn't want the nation involved in another foreign war, Leavitt replied: 'Trust in President Trump.' 'President Trump kept America and the world safe in his first term as president, implementing a 'peace through strength' foreign policy agenda,' she said. 'With respect to Iran, nobody should be surprised by the President's position that Iran absolutely cannot obtain a nuclear weapon. He's been absolutely unequivocal about this.' Trump's announcement was immediately mocked online. One critic on social media described it as 'beyond parody' while another joked: 'He's going to announce it during Infrastructure Week when the healthcare plan comes out.' Leavitt was also quizzed about the issue in the briefing room, with one reporter noting that Trump had regularly given Russia two week deadlines on Ukraine, with no outcome. However, she blamed the Biden administration, saying both were complicated global conflicts that the president had inherited.
Yahoo
31 minutes ago
- Yahoo
Trump Boasts ‘Nobody Knows What I'm Doing' as MAGA Civil War Rages
President Donald Trump has boasted that 'nobody knows what I'm doing' when it comes to Iran as a MAGA civil war rages over the prospect of a U.S. military attack. Speaking with reporters for the first time since meeting with his national security council on Tuesday, the president refused to say whether the U.S. is moving closer to helping Israel strike Iranian nuclear facilities. 'You don't seriously think I'm going to answer that question,' Trump said, mockingly. 'Will you strike the Iranian nuclear component, and what time exactly? Sir, sir, would you strike it? Will you please inform us so we can be there and watch? 'I mean, you don't know that I'm going to even do it. You don't know. I may do it; I may not do it. I mean, nobody knows what I'm going to do.' Trump's comments come as a MAGA civil war has been brewing for days between pro-Israel war hawks such as Laura Loomer and Mark Levin on one side, and America First firebrands such as Charlie Kirk and Jack Posobiec on the other. Former Fox News host Tucker Carlson also entered the fray last week, calling Trump complicit and suggesting that the administration 'drop Israel [and] let them fight their own wars.' Carlson also clashed with Texas Senator Ted Cruz this week, lashing out over Cruz's support for military intervention in Iran despite his apparent lack of knowledge about the country. While a U.S. attack on Iran could have serious consequences for the region, Trump's rhetoric has shifted considerably in recent days, with the president admitting that his patience is wearing thin on finding a diplomatic solution to stop Iran from building its nuclear arsenal. On Wednesday, Iran Supreme Leader Ayatollah Ali Khamenei hit back at the president for his 'absurd rhetoric' after Trump demanded Iran's 'complete surrender' and issued an ominous warning on X: 'The US entering this matter (war) is 100% to its own detriment. The damage will be far greater than any harm that Iran may encounter.' But Trump doubled down on his push for Iran to surrender, telling reporters that Tehran should have negotiated weeks ago. Only now were they rethinking their strategy, he said. 'They even suggested coming to the White House,' he claimed. A U.S. defense official told the Daily Beast it was moving the Nimitz Carrier Strike Group to the Middle East to protect U.S. forces in the region. Vice President JD Vance also posted on X that after showing 'remarkable restraint,' Trump 'may decide he needs to take further action to end Iranian enrichment.' As the president weighed options, some Democrats on Capitol Hill called for Congress to act. Senator Tim Kaine introduced a resolution to prevent the U.S. from using military force against Iran without congressional approval while several others backed Vermont Senator Bernie Sanders' bill to prevent the use of funds for military force against Iran without congressional authorization. But Democrats were deeply divided over the response to Iran. Senator John Fetterman, who has often bucked his party to fiercely defend Israel, said he would vote against Kaine's resolution. He told reporters he was a 'hell yes' on the U.S. making preemptive strikes against Iranian nuclear facilities. Senate Majority Leader John Thune rejected that the president would need authorization from Congress to strike Iran. 'I think right now the president's within his authorities,' Thune told reporters on Capitol Hill on Tuesday. 'He obviously has a lot of authorities as Commander in Chief to respond to incidents that happen around the world.' Thune said if it goes on for a period of time, there would be discussions on what the role of Congress should be and whether it needed to take action. 'I think right now, let's hope and pray for the best outcome,' he said. Senate Foreign Committee Chair Jim Risch emphasized on Tuesday 'this is not our war' and praised the president for threading the needle when it came to Iran. While the House is not in session this week, in a rare moment of bipartisanship, Republican Rep. Thomas Massie was joined by Democratic Rep. Ro Khanna to introduce a resolution to prohibit the U.S. from getting involved in the conflict. 'This is not our war,' Massie wrote in a post. 'Even if it were, Congress must decide such matters according to our Constitution.'
