Nato leaders agreed to raise defence spending to 5% of GDP by 2035 and renewed their commitment to collective defence at the Nato summit held in the Hague on June 26.

The recommended spending level has been increased from 2% of GDP that was agreed at the Nato summit in Wales in 2014. Member countries are now supposed to submit “realistic” action plans to Nato and their spending will be reviewed in 2029 to see if they are hitting their targets.

As bne IntelliNews reported, this Nato summit was all about the money. While Ukrainian President Volodymyr Zelenskiy attended the meeting, a planned meeting of the Ukraine-Nato Council, an advisory body, was cancelled.

Zelenskiy also met briefly with US President Donald Trump, although conflicting reports emerged from the substance of their conversation. Zelenskiy claimed that he held a “substantial” conversation with the US president. However, Trump said in comments to the press that he did not mention the proposed ceasefire negotiations and only wanted to know “how he was doing.”

Later at a press conference when asked whether the US would send Ukraine desperately needed Patriot missiles for its air defence, Trump said he would “see what we can do.” He added that “we need them too” and explained that the US was sending more Patriot missiles to Israel, which has been under bombardment by Iran until recently.

The increase in spending to 5% represents an escalation in tensions in Europe. Leaders such as European Commission President Ursula von der Leyen and Nato General Secretary Mark Rutte have warned that Russia is rearming and could attack Nato members in Europe. The frontline states Poland and Estonia with borders close to Russia lead the way in spending on defence and are already at, or close to, spending 5%. However, member states far from Russia are more reluctant. Both Spain and Slovakia have said they don’t want to spend 5%. Slovak Prime Minister Robert Fico said on the eve of the summit that Slovakia has “better things to spend our money on.”

While all 32 members nominally committed to spending 5% of GDP on defence, there is no formal enforcement mechanism in the Nato treaty. Previously, following the Welsh declaration of a commitment to 2% of GDP spending, six years later only six members had complied. The US has explicitly exempted itself from the need to spend 5% of GDP on defence, although its spending is already more than the next six members combined in nominal terms.

Indeed, even today eleven out of the 32 members still have not reached the 2% of GDP benchmark, with Canada, Spain, Italy, Slovakia, Czechia and Turkey all spending under the requirement. Many of the other members have only hit 2% in the last few years, following the Russian invasion of Ukraine in 2022.

The spending agreement, endorsed by all 32 Nato member states on June 25, comes after the Trump administration exerted tremendous pressure to hike spending. Moreover, conscious of the lax compliance to spending pledges in the past, the US Ambassador to Nato said during the meeting: “We don’t want another Wales.”

The new target includes 3.5% for “core” defence spending and 1.5% for related investments such as infrastructure and cybersecurity. Under the rules contributions to Ukraine’s defence can be counted towards the 5% total, which will allow nations like Luxembourg and Canada that have very low security needs to make up the tally. Nato said the decision reflects “profound security threats and challenges, in particular the long-term threat posed by Russia to Euro-Atlantic security and the persistent threat of terrorism.”

However, the White House's own commitment to forcing Russia into peace talks or supporting European Nato allies remains confused. The Trump administration has imposed no sanctions on Russia and Trump was vague about the US commitment to the Article 5 collective security clause in the treaty.

The US President had doubts about absolute guarantees on the way to The Hague, but changed his mind at the summit. "I'm leaving it in a different mood," he said at the final press conference. "This is not robbery, and we will be here to help them defend their countries."

Secretary of State Marco Rubio also made conflicting comments on the US commitment to increasing the pressure on the Kremlin with more sanctions, talking tough with allies during the formal dinner on June 24, but then toning down the aggressive stance in an interview with Politico.

“If we did what everybody here wants us to do, and that is come in and crush them with more sanctions, we probably lose our ability to talk to them about the ceasefire, and then who’s talking to them?” Rubio told Politico, adding that Trump will know the “time and place” for changing tack.

Nato Secretary Rutte warned that Russia could be capable of launching an attack on Nato territory “within five years,” lending urgency to the alliance’s pledge. The increase, he added, followed months of negotiations and would trigger defence spending in the trillions of dollars through 2035.

Rutte got into trouble by calling Trump “Daddy” in a joint session in relation to the US attack on Iranian nuclear facilities. "It was so shameful," Politico quotes one European official saying. "Yes, the summit can be considered a success overall. But groveling like this is too much."

But the fracas was overblown as Rutte was making a joke at Trump’s expense after the US president used the word “fuck” in comments live to camera after Israel broke the ceasefire Trump declared on June 24.

After a ceasefire deal, Trump had raised eyebrows by saying Israel and Iran had been fighting "so long and so hard that they don't know what the fuck they're doing".

During the panel with Trump, Rutte laughed and said: "And then daddy has to sometimes use strong language to get (them to) stop."

The joint declaration reaffirmed Nato’s support for Ukraine, though it notably omitted last year’s language of Ukraine’s “irreversible” path to Nato membership. It also downgraded comments on Russia from “aggressor” to merely a “threat” under US pressure for more restrained language.

The summit, dominated by questions about the United States’ future role in the alliance, follows remarks from Trump suggesting ambivalence towards Article 5 – the cornerstone clause requiring members to defend one another in case of attack.

German Chancellor Friedrich Merz, addressing the closed-door session, said the summit was about “putting our money where our mouth is.” The message to the Kremlin, he added, was clear: “Don’t pick a fight with Nato.”