The ‘Lost’ Nations of the Current NATO Summit and the ‘Very Lost’

NATO Secretary General Jens Stoltenberg, in a revealing moment with President Trump, succinctly summarized the implications of the agreement for member nations to increase defense spending to 5% of GDP annually. In a personal message to Trump, later made public, Stoltenberg stated, “Europe will pay a heavy price, as it should…” This ‘heavy price’ refers to an estimated €14 trillion increase in defense budgets over the next decade, amounting to 5% of GDP each year. While some explain that 3.5% is for defense and 1.5% for infrastructure security, the total remains 5%. All countries have agreed except Spain, which caps its target at 2.1%. However, this financial burden comes on top of a temporary 10% tariff increase on EU exports to the US, which could escalate further if no trade agreements are reached by July 9. Additionally, the devaluation of the dollar against the euro by 10% has mitigated some costs but undermines European product competitiveness. European think tanks note that increased defense spending cannot significantly boost intra-EU arms purchases due to the lack of a developed European defense industry, forcing reliance on American systems. Consequently, smaller nations without local defense production capabilities will bear the brunt, channeling their entire 5% abroad. These dynamics create new threats to the most vulnerable economies, especially concerning public and private debt.