The European Defense Turn 2026: From the Two Percent Milestone to the Five Percent Vision

The security policy architecture of Europe is currently undergoing the most profound transformation since the end of the Cold War. What was considered politically unthinkable just a decade ago is now a lived reality: For the first time in the 77-year history of NATO, all 32 member states achieved or exceeded the two percent target for defense spending in 2025. This historic milestone, officially confirmed by NATO Secretary General Mark Rutte during the presentation of his annual report on March 26, 2026, in Brussels, does not mark the end but rather the beginning of an unprecedented arms buildup dynamic on the European continent.

The figures from the Stockholm International Peace Research Institute (SIPRI), published on April 27, 2026, paint a detailed picture of this transformation. Global military spending rose to $2.887 trillion in 2025—a 2.9 percent increase in real terms compared to the previous year. The driving force was primarily Europe, whose military spending grew by 14 percent to $864 billion. The 29 European NATO members collectively spent $559 billion, with 22 of them meeting or exceeding at least 2.0 percent of their gross domestic product (GDP) according to SIPRI methodology. Germany recorded the strongest increase among the major European economies, rising by 24 percent to $114 billion, and for the first time since 1990 exceeded the two percent threshold again at 2.3 percent of GDP. Spain even increased its spending by 50 percent to $40.2 billion, also reaching the two percent mark for the first time since 1994.

Poland solidified its position as a relative leader of the alliance in 2025 with 4.48 percent of GDP, followed by Lithuania with 4.00 percent and Latvia with 3.73 percent. Particularly noteworthy: For the first time in NATO history, a European ally, Norway, surpassed the United States in per capita defense spending. European partners and Canada invested a total of $574 billion in their defense in 2025—a real increase of 20 percent compared to the previous year. The U.S. contributed $838 billion; however, its share of total NATO spending fell to about 60 percent, compared to around 70 percent in 2021. This shift in burden-sharing is not a statistical coincidence but the result of a fundamental political shift in European capitals.

The fact that the two percent target from 2014 is already outdated was demonstrated at the NATO summit in The Hague on June 24 and 25, 2025. There, all 32 member states—except for Spain, which temporarily caps its spending at 2.1 percent of GDP—committed to the so-called Hague Investment Plan. This plan stipulates that by 2035, five percent of GDP must be spent annually on defense and security-related expenditures. The plan distinguishes between two categories: At least 3.5 percent of GDP must flow into the core area of NATO defense spending—personnel, equipment, operations, maintenance, as well as research and development. An additional up to 1.5 percent of GDP can be used for expanded security expenditures, including cybersecurity, protection of critical infrastructure, and civil defense preparedness. Rutte described the decision as a "transformational leap," while U.S. President Donald Trump called it a "historic achievement." In the joint declaration from The Hague, Russia is classified as "the most significant and immediate threat" to Euro-Atlantic security.

In parallel to NATO, the European Union is developing its own defense policy capabilities. The "Readiness Roadmap 2030," presented by the EU Commission under Ursula von der Leyen in October 2025, defines four priority major projects: the "Eastern Flank Watch" for monitoring the eastern flank, the "European Drone Wall" as a network-based drone defense system, the "European Air Shield" as an integrated multi-layered air and missile defense system, and the "European Defence Space Shield" for the protection of space-based resources. The first phase of the drone defense wall is expected to be operational by the end of 2026, with full integration into a connected system by the end of 2027. The Eastern Flank Watch is to be operational by the end of 2028. All priority projects are to be launched in the first half of 2026, with member states expected to come together as leading nations starting in early 2026. An ambitious goal: At least 40 percent of all defense procurements are to be jointly made by EU states by the end of 2027—faster than the originally targeted goal of 2030 set by the European Defence Industry Strategy of 2023.

Financially, Brussels is relying on the SAFE instrument (Security Action for Europe), which provides loans of up to €150 billion for defense investments by member states. An additional fund of €1 billion, in collaboration with the European Investment Bank and the European Investment Fund, is intended to promote defense-related scale-ups. New budgetary resources from the EU budget are not currently planned; substantial own defense funds are expected to flow only with the next multiannual financial framework starting in 2028. The Commission is also counting on a "Red Carpet" strategy for Ukraine, which aims to enable joint armament projects and industrial settlements in the EU internal market by mid-2026.

The greatest structural weakness of European defense efforts remains air defense. EU Defense Commissioner Andrius Kubilius, whose office was specifically created under von der Leyen in 2024, openly identified the problem at the first international arms fair BEDEX in Brussels: Ukraine needs about 2,000 interceptor missiles annually. In the first five days of the Iran conflict in March 2026, around 800 Patriot missiles were used. However, the annual U.S. production is only about 750 units. NATO Secretary General Rutte therefore called for a 400 percent increase in European air defense capabilities. This massive capability gap illustrates that financial commitments alone will not be sufficient—without a corresponding industrial base, even the most ambitious percentage targets remain political declarations of intent.

At the same time, the debate over the operational design of the European defense clause under Article 42.7 of the EU Treaty is gaining momentum. Triggered by a drone attack on the British air force base RAF Akrotiri in Cyprus in March 2026—where an Iranian drone struck without Cyprus activating the EU assistance clause—EU heads of state and government are planning a simulation for June 2026 to operationalize the article. The incident revealed the weaknesses of a clause that has only been used once—after the Paris attacks in 2015 by France: Unlike NATO's Article 5, Article 42.7 lacks an integrated military command structure and a legally binding obligation for military assistance. The Chairman of the EU Military Committee, General Seán Clancy, advocated for using the clause for threats "below the threshold of Article 5"—a concept that leads to a division of labor between NATO and the EU: existential threats addressed by NATO, hybrid and limited attacks addressed by the EU.

The strategic realignment of Europe is taking place against a global backdrop that is becoming increasingly complex. Russia increased its military spending by 5.9 percent to $190 billion in 2025, corresponding to a military burden of 7.5 percent of GDP. Ukraine, now the seventh-largest military spender in the world, invested $84.1 billion—40 percent of its GDP. U.S. President Trump has proposed spending of up to $1.5 trillion for the fiscal year 2027. In this environment, the European defense turnaround becomes imperative. The path from two to five percent of GDP by 2035 is long, and the political resistance in many capitals is considerable. However, the security policy pressure created by the war in Ukraine, the return of imperial power politics, and the American demand for fair burden-sharing leaves European governments with little alternative. The crucial question is no longer whether Europe will invest more in its security—but whether it will act quickly enough and in a coordinated manner to actually build credible deterrence.