Latest news with #defenseSpending
Bloomberg
4 hours ago
- Business
- Bloomberg
Spain to Challenge NATO Spending Target Increase
Welcome to the Brussels Edition, Bloomberg's daily briefing on what matters most in the heart of the European Union. Spain is pushing back against NATO's proposal to raise the defense spending target to 5% of a country's gross domestic product, setting up a potential confrontation with US President Donald Trump, who wants Europe to pay more for its security. In a letter to NATO chief Mark Rutte, Spanish Prime Minister Pedro Sanchez opposed the proposed increase, which the alliance aims to formalize at next week's summit. The meeting of NATO members comes amid growing concerns over Russia's war in Ukraine and Trump's threats to scale back US security commitments in Europe unless allies significantly boost military expenditure. — Gian Volpicelli
Japan Times
6 hours ago
- Business
- Japan Times
Spain risks derailing NATO summit by resisting 5% defense spending goal
Spain has asked to opt out of NATO's plan to increase members' defense spending to 5% of their gross domestic product, a move that could derail a summit at which the military alliance plans to ask them to commit to the target. In a letter sent to NATO chief Mark Rutte on Thursday and seen by Reuters, Prime Minister Pedro Sanchez requested a "more flexible formula" that either makes the spending target optional or excludes Spain from its application. He said it was not Spain's intention to obstruct the outcome of next week's NATO summit. But any agreement to raise defense spending — a response to a request by U.S. President Donald Trump — would require unanimous approval by the 32 member states. "Committing to a 5% target would not only be unreasonable, but also counterproductive, as it would move Spain further away from optimal spending and would hinder the EU's ongoing efforts to strengthen its security and defense ecosystem," Sanchez wrote in the letter. "It is the legitimate right of every government to decide whether or not they are willing to make those sacrifices. As a sovereign Ally, we choose not to," he added. At an estimated 1.28% of GDP, Spain had the lowest proportion of expenditure on defense in the alliance last year, according to NATO estimates. Sanchez agreed in April to accelerate efforts to meet NATO's current target of 2%. Rutte has proposed that member states agree to boost defense spending to 3.5% of GDP and commit a further 1.5% to broader security-related spending. Leaders across NATO say its current spending goal is no longer sufficient, with Russia posing a greater threat since its 2022 invasion of Ukraine. Asked for comment on Spain's request, a NATO official said: "Discussions among Allies on a new defense investment plan are ongoing." The U.S., which has been Kyiv's primary military backer since Russia's invasion, spent an estimated 3.38% of GDP on defense in 2024, the third-most among NATO nations, according to the alliance. Trump has said NATO members are not spending their fair share on defense and has threatened not to come to the aid of those falling short. Sanchez, however, said that rushing to a 5% target would harm European Union efforts to become self-reliant in defense production, pushing governments to procure equipment outside the bloc and that it was "incompatible with our welfare state and our world vision." Junior coalition partners, the far-left Sumar platform, oppose any increase, as does the Podemos party, which is not part of the coalition but has supported the government in key votes. Now, a corruption scandal engulfing the prime minister's Socialist party has generated fury among coalition partners and allies, even raising the specter of an early election. "If the government needs parliamentary support to approve spending, it will have a very difficult time in the current situation," Jose Miguel Calvillo, a professor of international relations at the Complutense University of Madrid. Some other NATO members have also questioned the timeline, saying it is too rapid, but are generally willing to sign up, diplomatic sources say. Italy, for example, wants the deadline moved to 2035 from 2032 and the removal of a requirement to increase spending by 0.2% per year, a source with knowledge of the matter said. "It doesn't look good, indeed, but we are not over yet," said one senior European official in relation to Sanchez's letter. "We will have in-depth discussions tomorrow, and perhaps we find a way out. Spain has demonstrated to be a steadfast ally so far."
Bloomberg
12 hours ago
- Business
- Bloomberg
Can the UK Afford to Defend Itself Anymore?
At the North Atlantic Treaty Organization summit scheduled for later this month, alliance members are expected to adopt a new defense spending target totaling as much as 5% of each nation's gross domestic product, an historic acknowledgement that a new Cold War has arrived, and that a recalcitrant Donald Trump could one day leave Europe to the mercies of a revanchist Vladimir Putin. Indeed, NATO's sprint toward re-militarization comes after more than three years of Russian war that's claimed tens of thousands of Ukrainian lives. Unable to rely on America given Trump's expressions of warmth for Putin and coolness to allies, many European governments see shifting to a war-footing as arguably a matter of long-term survival. The short-term question, however, is how to pay for it. On this Bloomberg Originals mini-documentary, we explore this brutal conundrum as it is currently faced by one of NATO's key powers: the UK. In 2010, the UK had a relatively small military of about 100,000 personnel. In the 15 years since, that number has fallen by tens of thousands. The Labour government is now struggling to make up for decades of underinvestment. Prime Minister Keir Starmer has pledged to spend 2.6% of GDP on defense by 2027, which falls short of the 3.5% goal proposed by NATO Secretary General Mark Rutte and the soon-to-be 5% target. The British military is currently at its smallest size since the Napoleonic era, and reversing course would require sustained investment and major sacrifices. Given the delicate nature of the UK's finances and the bond markets, it may not even be possible.
Yahoo
17 hours ago
- Business
- Yahoo
Russia ‘on brink of recession', says economy minister
Russia's economy is 'on the brink of going into a recession', the country's economy minister has said, according to reports. Economy minister Maxim Reshetnikov delivered the warning at the St Petersburg International Economic Forum, the annual event in Russia's second largest city designed to highlight the country's economic prowess and court foreign investors. Russian business news outlet RBC quoted the official as saying 'the numbers indicate cooling, but all our numbers are (like) a rear-view mirror. Judging by the way businesses currently feel and the indicators, we are already, it seems to me, on the brink of going into a recession.' Russia's economy, hit with a slew of sanctions after the Kremlin sent troops into Ukraine in February 2022, has so far outperformed predictions. High defence spending has propelled growth and kept unemployment low despite fuelling inflation. At the same time, wages have gone up to keep pace with inflation, leaving many workers better off. Large recruiting bonuses for military enlistees and death benefits for those killed in Ukraine have also put more income into the country's poorer regions. But over the long-term, inflation and a lack of foreign investments remain threats to the economy, leaving a question mark over how long the militarised economy can keep going. Economists have warned of mounting pressure on the economy and the likelihood it would stagnate due to lack of investment in sectors other than the military. Speaking at one of the sessions of the forum in St Petersburg, Mr Reshetnikov said Russia was 'on the brink', and whether the country would slide into a recession or not depends on the government's actions. 'Going forward, it all depends on our decisions,' Mr Reshetnikov said, according to RBC. RBC reported that Russia's finance minister Anton Siluanov and Central Bank governor Elvira Nabiullina gave more optimistic assessments. Mr Siluanov spoke about the economy 'cooling' but noted that after any cooling 'the summer always comes', RBC reported. Ms Nabiullina said Russia's economy was merely 'coming out of overheating', according to RBC.
Reuters
20 hours ago
- Business
- Reuters
Spain wants to opt out from NATO's 5% defence spending target
MADRID, June 19 (Reuters) - Spanish Prime Minister Pedro Sanchez has asked NATO to exclude Spain from raising its defence spending target to 5% of gross domestic product, according to a letter sent to NATO chief Mark Rutte seen by Reuters on Thursday. Sanchez requested a "more flexible formula" that either makes the spending target optional or excludes Spain from its application. "Committing to a 5% target would not only be unreasonable, but also counterproductive, as it would move Spain further away from optimal spending and would hinder the EU's ongoing efforts to strengthen its security and and defence ecosystem," Sanchez wrote in the letter. He added that the new target proposed by the United States was "incompatible with our welfare state and our world vision". Instead, Madrid estimates it will need to spend 2.1% of GDP to meet the Spanish military's estimated investment requirements, Sanchez said.
