NATO summit success in doubt after Spain rejects big hike in defense spending
by Naharnet Newsdesk 20 June 2025, 15:06
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
Nahar Net
3 hours ago
- Nahar Net
Canadian tariffs on US steel and aluminum could rise, Carney says
by Naharnet Newsdesk 20 June 2025, 15:09 Canada's Prime Minister Mark Carney said Thursday he will impose new tariffs on U.S. steel and aluminum imports on July 21 depending the progress of trade talks with U.S. President Donald Trump. Carney, who met with Trump at the Group of Seven meetings in Alberta this week, reiterated Thursday that Canada and the U.S. "agreed to pursue negotiations toward a deal within the coming 30 days." "We will review our response as the negotiations progress," Carney said. He added: "In parallel, we must reinforce our strength at home – and safeguard Canadian workers and businesses from the unjust U.S. tariffs. That's why today we are announcing Canada will be introducing a series of countermeasures to protect Canadian steel and aluminum workers and producers. "First, Canada will adjust its existing counter-tariffs on U.S. steel and aluminum products on July 21 to levels consistent with progress made in the broader trading agreement with the United States." Carney said Trump's trade war is running the risk of a global recession. "The world is in the middle of a trade war and several wars, actual wars, including wars that can have quite significant implications for commodity prices and global growth," said Carney, who led the central banks of both Canada and the United Kingdom. Trump has imposed 50% tariffs on steel and aluminum as well as 25% tariffs on autos. Trump is also charging a 10% tax on imports from most countries, though he could raise rates on July 9, after the 90-day negotiating period set by him would expire. Canada and Mexico face separate tariffs of as much as 25% that Trump put into place under the auspices of stopping fentanyl smuggling, through some products are still protected under the 2020 U.S.-Mexico-Canada Agreement signed during Trump's first term. Canada is the largest foreign supplier of steel, aluminum and uranium to the U.S. and has 34 critical minerals and metals that the Pentagon is eager for. Nearly $3.6 billion Canadian dollars ($2.6 billion) worth of goods and services cross the border each day. Canada is the top export destination for 36 U.S. states. "We need to stabilize the trading relationship with the United States. We need to have ready access to U.S. markets," Carney said. Trump announced with British Prime Minister Keir Starmer that they had signed a trade framework Monday that was previously announced in May. The trade framework included quotas to protect against some tariffs, but the 10% baseline would largely remain as the Trump administration is banking on tariff revenues to help cover the cost of its income tax cuts. Carney didn't say if he would sign a deal with the U.S. if any tariffs remain in place on Canada. "This a negotiation, and it is better for the Americans, and of course for Canada, to have true free trade between our countries, particularly in the steel, aluminum and auto sectors," he said.
Nahar Net
3 hours ago
- Nahar Net
Shares and oil prices gain as world waits to see if US will join Iran war
by Naharnet Newsdesk 20 June 2025, 15:10 World shares are mostly higher and crude oil prices have rebounded as investors wait to see if the U.S. will join Israel's war against Iran. Britain's FTSE 100 was 0.4% higher at 8,829.82 and the CAC-40 in Paris gained 0.6% to 7,595.06. Germany's DAX rose 0.9% at 23,256.98. U.S. futures edged lower after Wall Street was closed on Thursday for the Juneteenth holiday, with contracts for the S&P 500 and the Dow Jones Industrial Average down 0.2%. U.S. benchmark crude oil gained 52 cents to $75.66 per barrel, while Brent crude, the international standard added 31 cents to $77.01 per barrel. Oil prices have been gyrating as fears rise and ebb that the conflict between Israel and Iran could disrupt the global flow of crude. Iran is a major producer of oil and also sits on the narrow Strait of Hormuz, through which much of the world's crude passes. Investors remained wary after the White House said President Donald Trump could decide on whether to launch an attack on Israel within the next two weeks, but that he "still believes diplomacy is an option," said Anderson Alves, a trader at ActivTrades. "The stock market's risk premium isn't just rising — it's recalibrating for a world where every macro lever now doubles as a tripwire," Stephen Innes of SPI Asset Management said in a commentary, adding that traders are bracing for what comes next. "A delayed fuse is still a fuse," he said. Trump's tariffs agenda may have been eclipsed by the conflict in the Middle East, but it remains another major factor weighing on markets. Tokyo's Nikkei 225 index edged 0.2% lower to 38,403.23 after Japan reported that its core inflation rate, excluding volatile food prices, rose to 3.7% in May, adding to challenges for Prime Minister Shigeru Ishiba's government and the central bank. "Core Japanese inflation rose more than expected in May. Even so, the Bank of Japan is likely to prioritize the negative impact of U.S. tariffs, Min Joo Kang of ING Economics said in a commentary. "For now, it's more concerned about the risk that US trade policies could break the virtuous circle of wage growth and inflation." Hong Kong's Hang Seng index climbed to 1.3% to 23,530.48, while the Shanghai Composite fell 0.2% to 3,359.90. China's central bank kept its key 1-year and 5-year loan prime rates unchanged, as expected. Australia's S&P/ASX 200 shed 0.2% to 8,505.50, while South Korea's Kospi gained 1.5% to 3,021.84. On Thursday, the Bank of England kept its main interest rate at a two-year low of 4.25%, citing risks that the conflict between Israel and Iran will escalate. The U.S. dollar slipped to 145.37 Japanese yen from 145.46 yen. The euro rose to $1.1516 from $1.1498.
Nahar Net
5 hours ago
- Nahar Net
Barrack to reportedly visit Jumblat and apologize for Ortagus' behavior
by Naharnet Newsdesk 5 hours U.S. special envoy for Syria Tom Barrack will visit former PSP leader Walid Jumblat after the latter was insulted by former U.S. Deputy Special Envoy for the Middle East Morgan Ortagus. "Crack is whack, Walid," Ortagus wrote on the X platform after Jumblat described her conditions as "unrealistic." A report, published Friday on al-Jadeed, said that Barrack will apologize for Ortagus' behavior. Barrack visited Lebanon on Thursday and warned Hezbollah against getting involved in the war between Iran and Israel. Barrack is of Lebanese origins and is also the U.S. ambassador to Turkey. He has said that he will temporarily replace Morgan Ortagus as Washington's special envoy to Lebanon. During his first official visit to Lebanon on Thursday he met with President Joseph Aoun, Speaker Nabih Berri and Prime Minister Nawaf Salam.
