NATO Defense Spending Surge in 2024: Scenarios, Implications for Greece, and ReArm Europe Challenges

All 32 NATO members collectively spent $1.303 trillion last year, surpassing forecasts, with 22 members achieving the 2% GDP target as the U.S.’s intention to ‘withdraw’ from the eastern borders of the European Union (EU) drives several member states to increase spending significantly. NATO data shows record defense spending levels totaling $468 billion or €412 billion in Europe and Canada, with 38% allocated for major equipment purchases. Meanwhile, the U.S. spent $818 billion or €720 billion. According to NATO documents, last year in 2023, members spent $200 billion or €176 billion less on defense, indicating a 19% increase. Overall, 22 countries met the goal of spending 2% of their GDP on defense. Initial estimates suggested 23 would achieve this, but Montenegro fell short, while Belgium (1.29%), Italy (1.5%), and Spain (1.24%) are now committed to reaching the 2% target. Canada also missed the mark at 1.45%. Top performers include the UK (2.33%), Germany (2.1%), and France (2.03%), with Greece remaining a traditionally high spender at approximately 3% of its GDP. The U.S. is pushing NATO toward doubling defense spending from 2% to 5% of GDP, though diplomatic discussions hint at a compromise around 3-3.5%. If the target reaches 5%, Greece would need to drastically increase spending by an additional 2% of its GDP. Prime Minister Kyriakos Mitsotakis announced a €25-28 billion armament program over 12 years. However, EU financial rules remain unresolved regarding defense spending limits and activation of the escape clause. Under current White Paper guidelines, activating the escape clause allows deviation from agreed spending limits by up to 1.5% annually for four years relative to 2021 defense spending increases. Greece’s defense expenditures were €5.5 billion in 2021 and are expected to rise to €6.6 billion this year. The path to the massive spending increase planned by the EU faces obstacles. In a secret vote on Wednesday (April 23, 2025), the Legal Affairs Committee of the European Parliament endorsed a legal opinion rejecting the Commission’s attempt to bypass Parliament concerning a €150 billion rearmament loan fund. While the Commission has full autonomy in choosing legal bases for proposals, the non-binding vote could spark broader institutional conflict. The March proposal includes €150 billion in loans for joint procurement of European-made defense equipment funded under the Security Action for Europe (SAFE). To expedite approval, the Commission invokes Article 122 of the EU Treaty, allowing it to bypass parliamentary negotiations and proceed directly to the Council for discussion and approval, reducing the European Parliament’s role to decorative, only allowing submission of proposals and requests for debate. However, according to the Parliament’s legal service, Article 122 is inappropriate for this purpose. The proposal lacks sufficient justification for emergency powers and a solid legal basis, as noted in the legal opinion. This vote could trigger a wider process, leaving it to European Parliament President Roberta Metsola to decide the next steps, potentially escalating the issue by convening a plenary session, writing an official letter to Ursula von der Leyen, or even appealing to the European Court. Von der Leyen defends the fast-track process, calling it urgent and the ‘only viable solution’.