(Bloomberg) -- Only one more NATO ally met the military alliance’s goal to spend at least 2% of GDP on defense last year, with a total of seven countries reaching the commitment despite new pledges following Russia’s invasion of Ukraine.
The US, UK and Poland are in line with NATO’s target to spend 2% of countries’ wealth, along with Estonia, Greece and Latvia. The new entry is Lithuania, according to spending estimates in NATO’s 2022 annual report published Tuesday. The total is up from three allies when the pledge was agreed in 2014.
The figures come as the 30 members of the North Atlantic Treaty Organization have started discussing how to revise the new target, which is likely to be agreed at a leaders’ summit in Vilnius in July.
“While I welcome all the progress that has been made, it’s obvious we need to do more and need to do it faster,” NATO Secretary General Jens Stoltenberg told reporters in Brussels on Tuesday.
Stoltenberg has repeatedly said that allies increasingly view 2% of GDP as “a floor, not a ceiling,” particularly given new spending promises prompted by Russia’s invasion. But dozens of allies are still struggling to meet the goal as it takes time to spend the new cash.
Even though Germany has created a special fund worth €100 billion ($108 billion) on top of the regular annual defense budget of around €50 billion, officials have said it may again fail to hit the target this year and instead will reach the goal “on average in the next five years.”
The officials blame longstanding procurement issues, entrenched bureaucratic hurdles and backlogs at defense companies for the difficulties. Last year, Germany spent an estimated 1.49% of gross domestic product, compared to 1.46% the year before.
Increased spending will be critical for the alliance in coming years as it plans a broader overhaul of its defenses prompted by the Russian invasion. NATO leaders agreed at a summit in Madrid last June to establish a new force model that would put about 300,000 troops on high alert and to also form rotational brigades to defend the eastern flank, all of which will require additional investments.
Total military spending by the alliance last year was estimated to exceed $1 trillion, according to the report, with the US accounting for about 70% of combined defense expenditure.
--With assistance from Iain Rogers and Zoe Schneeweiss.
©2023 Bloomberg L.P.
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