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Lithuania and Estonia have responded to “good and constructive pressure” from US President Donald Trump to become the first Nato countries to promise to spend more than 5 per cent of their GDP on defence in a drive to sharply increase military capabilities.
Kęstutis Budrys, Lithuania’s foreign minister, told the Financial Times that Europe was facing a “new era” after the Baltic state, which is next to Russia, said it would spend between 5 per cent and 6 per cent of its GDP on defence from next year until at least 2030. That is about double the current level.
“Of course, there’s pressure, and it’s good and constructive pressure from our strategic and biggest ally in Nato,” he said. “We cannot ignore those messages. But it’s not the sole reason . . . It is existential for us to have real war-fighting capabilities here.”
Estonian Prime Minister Kristen Michal responded to Lithuania’s pledge by saying his country would also target 5 per cent of GDP for defence spending, up from its current 3.7 per cent, which is itself ahead of US expenditure as a share of its economic output.
He said: “Our key security partner, under its new president, has sent a clear message: Nato defence spending must increase. We know our opponent, and I fully agree — our goal should be 5 per cent.”
Nato is set to increase its informal target for defence spending at its June summit from its current 2 per cent to 3 or 3.5 per cent as it responds to Russia’s full-scale invasion of Ukraine, according to European officials. But Trump told allies he wanted 5 per cent, a figure now endorsed by several frontline Nato countries including Poland, which leads the alliance in spending at more than 4 per cent.
Out of Nato’s 32 members, 23 met the 2 per cent target last year as defence spending in Europe has gradually increased over the past decade since Russia’s annexation of Crimea. But there are notable stragglers such as Spain, Italy and Belgium, which all spent less than 1.5 per cent in 2024.
Worries exist across Europe about how to pay for the increased defence spending and whether people would accept it, particularly if it came at the expense of other public services.
Budrys said Lithuania would fund the sharp increase — up from 2.9 per cent — through government borrowing and what he hoped would be common European financial instruments for defence. Michal spoke of undefined “public sector cuts”.
But there is scepticism locally about how achievable that is. “They have no credible plan to get to 6 per cent,” said one opposition politician in Vilnius. “Borrowing that amount would mean rewriting the social contract.”
Lithuania is establishing a division of land forces — which typically consists of between 10,000 and 15,000 troops — as well as being the host nation for a German brigade of about 5,000 people.
“We lack many, many things from armour and fighting vehicles to ammunition, infrastructure, and [rebuilding our] stockpiles,” said Budrys, adding that the new minimum for all of Nato should be more like 3 per cent even if his own country was going to spend 5 per cent to 6 per cent.
Other frontline Nato countries are also considering increasing their defence spending, albeit not to the level Trump demanded.
Romania, which shares the EU’s longest border with Ukraine, has been a bulwark of Nato’s eastern frontier with plans to create the alliance’s largest base at an airfield near the Black Sea. It has committed to paying about €6bn for a fleet of 32 new F-35 fighter jets, and various other weapons including three additional Patriot air defence systems costing €1bn.
Barna Tánczos, Romania’s new finance minister, said the government would maintain defence spending a minimum of 2 per cent of GDP this year despite budgetary pressures. “I think there is a possibility to increase those expenditures further, especially as regards investments. Romania has always been a reliable Nato partner and plans to remain one.”
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Data visualisation by Steven Bernard and Keith Fray