Plans for 2027 state budgets in Poland and the Baltic states put defence spending near 5% of GDP. The four frontline states will be spending at or near the level Nato set as its 2035 goal, a decade ahead of schedule.

The rest of the alliance's eastern flank is only this year clearing the old 2% bar, which leaves Nato's border with Russia and Belarus split into two tiers: states budgeting as if a war could come within a few years, and states still catching up with commitments made in 2014.

Poland's government adopted its final 2027 budget draft on September 29 with defence spending of PLN198.1bn (€45.3bn), or 4.51% of GDP, inside a central government deficit capped at PLN281.2bn, as IntelliNews reported. The general government shortfall is projected at 7.1% of GDP for a second year, partly because EU accounting rules book record deliveries of military hardware when they arrive rather than when they are paid for.

Estonia's draft, approved a day earlier, allocates €2.2bn to defence, keeping military spending above 5% of GDP with a deficit of 4%. Of that, €632mn goes on new capabilities including air and missile defence, long-range strike and ammunition, with €100mn for drones, while the main line of Rail Baltica has been pushed back to 2034 to save money.

In Vilnius, Prime Minister Mindaugas Sinkevicius said Lithuania would probably run a 2027 deficit above 3% of GDP to hold defence at no less than 5% of GDP through 2030 while raising pensions and teachers' pay. Latvia, which votes in a parliamentary election on October 3, is already committed to 5% of GDP next year, or 6.4% once internal security is counted, according to Prime Minister Andris Kulbergs.

“According to European rules, we are allowed to have a 4.5 percent deficit, because defense spending is higher. In order to bring it to four percent and reduce the future debt burden and its growth, we had to leave another 250 million euros unspent,” Estonian Prime Minister Kristen Michal said on September 28.

The squeeze is political as well as fiscal. Poland's Finance and Economy Minister Andrzej Domanski told Bloomberg on September 29 he saw no room for “gifts” that would raise spending in an election year, and has warned that public debt could breach Poland's statutory 55% of GDP threshold in 2028. Moody's cut Poland to A3 from A2 on September 18, forecasting government debt rising to 68.9% of GDP in 2027 from 59.7% in 2025.

A decade early

Nato's own figures show how far the frontline has moved. In its defence investment report published on July 7, the alliance estimates Lithuania will spend 5.33% of GDP on core defence in 2026, up from 0.88% in 2014. Estonia is put at 5.10% (1.90% in 2014), Latvia at 4.92% (0.97%) and Poland at 4.68% (1.86%). All four were at 2.1-2.5% in 2022, the year Russia launched its full-scale invasion of Ukraine.

On those numbers each of them now spends a bigger share of its economy on defence than the US, whose core defence spending slips to an estimated 3.17% of GDP in 2026 from 3.71% in 2014. The average for European allies and Canada has risen from 1.40% to 2.53% over the same period, and five allies are expected to clear the 3.5% core-defence line agreed at the Hague summit in June 2025, under which members pledged 5% of GDP by 2035: 3.5% on core defence and 1.5% on wider security and resilience.

The Stockholm International Peace Research Institute (SIPRI), which uses a narrower definition of military spending, puts Poland's 2025 outlay at $46.8bn in its annual fact sheet, up 23% in real terms on 2024 and 207% over a decade. That makes Poland the world's 14th-largest military spender and gives it the highest military burden in Nato at 4.5% of GDP, with Latvia second at 3.6%. Spending across Central and Western Europe rose 16% in 2025, which SIPRI calls the sharpest annual increase in the region since the end of the cold war.

Poland's spending has been building since 2022, when it approved a plan to triple the army's size and become the largest conventional army in Europe, and Nato's annual report showed it topping the alliance on spending as a share of GDP again in 2025.

The second tier

Nato estimates Romania will spend 2.43% of GDP in 2026, up from 1.35% in 2014, and Bulgaria 2.22%. Hungary is put at 2.09%, Croatia at 2.03%, Slovakia at 2.02% and the Czech Republic at 2.01%, all just over the line. Slovenia, at 1.61%, is the only member below 2%. Finland, which joined in 2023, is estimated at 2.65%.

Several of these governments have signed up to the 5% target on paper. Bulgaria's cabinet approved a plan in June to reach 5% by 2035, Croatian Prime Minister Andrej Plenkovic has promised 3.5% plus 1.5% on the same timetable, and Hungarian Prime Minister Peter Magyar used his first Nato summit, in Ankara in July, to reaffirm the pledge, while suggesting some of the money could go on roads and hospitals.

Czech Prime Minister Andrej Babis said in June his government would not meet 2% this year because public finances had to be fixed first. His cabinet's 2027 budget lifts defence ministry spending to CZK191bn (€7.81bn), meant to reach 2% of GDP for the first time, within a state deficit of CZK386bn, the second-deepest in the country's history.

SIPRI puts Romania's 2025 spending at $9.7bn, or 2.3% of GDP, up 5.9% in real terms, and Czechia's at $7.1bn, down 0.4%.

Borrowing from Brussels

Brussels is filling part of the gap. The EU's €150bn Security Action for Europe (SAFE) programme lends money for 45 years with a 10-year grace period, and the eastern flank has taken the largest share. Poland can draw up to €43.7bn, Romania signed for €16.7bn in May and Lithuania has €6.375bn, about half of what it needs to field a fully equipped division by 2030. Bulgaria received a first €489mn tranche of its €3.3bn allocation in August, the same day Latvia got €524.7mn, and Croatia is spending €1.7bn on Leopard 2 tanks, CAESAR artillery and Czech trucks.

However, Polish President Karol Nawrocki vetoed the law setting out how Warsaw would spend its SAFE money in March. The frontline states want grants instead. Kulbergs has asked for €7bn from the EU's next seven-year budget to reinforce Latvia's borders with Russia and Belarus, and the three Baltic defence ministers wrote to European Commission President Ursula von der Leyen on September 21 asking for an urgent €500mn for counter-drone systems. Whether the poorer members of the region can afford to rearm at all on their own balance sheets was in question long before the 5% target was set.

Drones over the border

In September 2025 Poland invoked Nato's Article 4 after 19 Russian drones crossed its airspace, and Warsaw has since been building a drone wall along its eastern border. Prime Minister Donald Tusk told parliament on September 17 that allied intelligence pointed to Russian drones and missiles landing on eastern-flank territory and being passed off as accidents, with the aim of convincing members that “Article 5 is more theoretical than practical”.

Nato jets shot down a drone over Lithuania on September 15 after it had flown for about 30 minutes from the direction of Belarus. Romania brought down its fourth Russian drone on August 16, and a stray drone exploded inside Bulgaria near General Toshevo on August 8, exposing gaps in its air defences. Poland is changing its rules so pilots can shoot first without visual identification, and von der Leyen told the European Parliament on September 16 that the EU was dealing with “an openly hostile world”, part of her argument that Europe must rearm.

The other pressure comes from Washington, where the administration of US President Donald Trump is reviewing its military footprint in Europe. US military spending fell 7.5% in 2025 to $954bn as no new money was approved for Ukraine, SIPRI found, and the Pentagon is weighing the removal of about 25,000 troops from Europe. It has already halved its presence at Romania's Mihail Kogalniceanu base, and in August allies received a Pentagon questionnaire asking about their defence spending, US arms purchases and support for Trump's foreign policy.

“In 2025 military spending by European NATO members rose faster than at any time since 1953, reflecting the ongoing pursuit of European self-reliance alongside increasing pressure from the United States to strengthen burden sharing within the alliance,” Jade Guiberteau Ricard, a researcher at SIPRI, said in the institute's April release.

Frontline governments are paying for US attention directly. Poland is offering $15,000 a year for every US soldier stationed on its soil, plus infrastructure costs, to secure a permanent base, and Trump reported major progress towards one on September 17, crediting Nawrocki. In May he promised 5,000 more troops for Poland days after the Pentagon cancelled a 4,000-strong rotation. Lithuanian President Gitanas Nauseda thanked Trump this month when a new US rotation arrived, alongside Germany's permanent brigade. Babis has argued that Trump views his government favourably even though it missed the 2% target.

Behind the courtship sits a hedge: the debate over a Euro Nato that could function without the US, and SAFE's preference for European suppliers. Kulbergs noted at the Riga Conference Business Forum that much of Latvia's spending ends up with manufacturers in France, Germany, Sweden and Finland. “We spend the most, we invest the most, and at the same time we suffer the most,” he said.