NATO member states agreed at the alliance’s annual summit in Ankara, Turkey, on July 7 and 8 to raise the alliance’s defence spending benchmark from 2% of gross domestic product — a target that most members had for years failed to meet — to 3.5%, in what officials and analysts described as the most significant change to NATO’s financial architecture since the alliance was founded in 1949.
The agreement, reached after months of sustained pressure from the Trump administration and in the context of an ongoing war in Ukraine and the Iran conflict that demonstrated the cost of military under-investment at scale, commits the alliance’s 32 member states to a spending increase that will require major budget reallocation across European governments.
What Was Agreed and Why
The new NATO defence spending target of 3.5% of GDP was agreed at the Ankara summit on July 7-8, 2026. The commitment replaces the 2% benchmark that NATO members formally adopted at the 2014 Wales Summit in response to Russia’s annexation of Crimea — a target that, even after years of political pressure and genuine increases in defence budgets, a significant majority of alliance members still failed to meet heading into 2026.
The Ankara agreement reflects a convergence of pressures that made the old benchmark politically unsustainable. The Iran war — which exposed the degree to which allied nations had failed to stockpile ammunition, maintain equipment readiness and invest in air defence systems — reinforced arguments that European militaries had been systematically under-resourced.
The Russia-Ukraine war, now in its fifth year, had demonstrated the same point with greater geographic immediacy for European members. And the Trump administration’s sustained public pressure — including threats to question the US commitment to Article 5 collective defence for members who did not meet spending targets — had made failure to agree to a higher target politically costly for European governments.
The agreement was also shaped by Britain. New Prime Minister Andy Burnham — expected to formally take office around July 18 — has pledged to commit the UK to higher defence spending. The outgoing government under Starmer had already published a defence investment plan committing the UK to reaching 2.5% of GDP by 2027. Under the Ankara framework, Burnham’s incoming government will need to go further.
What 3.5% Actually Requires
At current GDP levels, the 3.5% target represents an enormous increase in aggregate allied defence spending. As of the most recent NATO data, only three member states were spending at or above 3.5%: Poland, which has dramatically increased defence spending in response to its proximity to the Russia-Ukraine conflict; Estonia; and the United States itself.
Germany — NATO’s largest European economy — was spending approximately 2.1% of GDP on defence heading into 2026. To reach 3.5%, it would need to increase annual defence spending by approximately 50 billion euros. Italy was spending below 2%. Spain, which had committed to reaching 2% by 2029 under the previous framework, would face even greater adjustment. France was at approximately 2.1%.
For the UK, which is entering a period of significant budget constraint under a new government inheriting strained public finances, the commitment to 3.5% represents a particularly difficult fiscal challenge. Burnham has pledged fiscal discipline and committed to the government’s current borrowing limits. Reaching 3.5% of GDP on defence while simultaneously protecting NHS spending, welfare budgets and public services will require either significant tax increases or cuts elsewhere — choices that no major UK political party campaigned on explicitly in 2024.
The US-European Bargain Behind the Number
The 3.5% commitment is, in part, a transactional response to sustained American pressure. The Trump administration had made European defence spending a central public complaint since returning to office in January 2025, questioning the US commitment to defending allies who were not, in Washington’s view, pulling their weight.
The Ankara agreement represents a formal European concession on that point — acknowledging that the 2% target was insufficient and committing to a significantly higher standard. In return, the US has reaffirmed its commitment to the alliance and its Article 5 obligations.
But the agreement also reflects a genuine European strategic recalculation driven by events rather than American pressure alone. The Iran conflict demonstrated that energy security and maritime security — previously treated as concerns to be managed diplomatically — can become acute military vulnerabilities with little warning. Russia’s Ukraine campaign has provided five years of evidence that the conventional military threat to European territory is real and not hypothetical. And the shifting US political landscape — in which American commitment to European security has become more conditional than at any point since NATO was founded — has accelerated European interest in greater defence self-sufficiency.
What the Increase Will Be Spent On
The investment required to reach 3.5% of GDP across NATO’s European membership is not simply a matter of increasing defence budgets — it requires strategic decisions about what capabilities to prioritise, at what speed.
European defence ministers have identified several priority areas: air defence systems, particularly given the demonstrated effectiveness of Russian missile and drone campaigns against Ukraine and Iranian attacks in the Gulf; artillery and ammunition stockpiles, where shortfalls became acute after European nations provided significant quantities to Ukraine; cyber and electronic warfare capabilities; and strategic airlift and logistics, where European nations have historically relied heavily on US assets.
The European defence industrial base — which had contracted significantly after the Cold War — is also under pressure to scale. Orders for equipment that were placed in the months following Russia’s February 2022 invasion are only beginning to be delivered, and the new 3.5% commitment will generate demand that current European defence manufacturers will struggle to meet without significant capacity investment.
What It Means for the Broader Security Picture
The Ankara agreement has been welcomed broadly by NATO officials and European security analysts, who note that the political signal — a unified commitment to higher spending — matters as much as the timelines for implementation. But several analysts have cautioned that a commitment agreed at a summit is not the same as money in defence budgets, and that implementation will depend on domestic political and fiscal conditions that are beyond NATO’s control.
The agreement also does not resolve the deeper question of European strategic autonomy — whether Europe can or should develop a meaningful independent defence capability outside the NATO framework. France has long pressed for greater European strategic independence. Germany has historically been more cautious. The Ankara agreement reinforces the NATO framework without settling the autonomy question, which is likely to remain a persistent source of intra-European debate.
