The NATO Summit, which ended last week, June 25, in The Hague, marked a significant turning point in the Alliance’s commitment to collective defence and increased investment.

The most impactful decision was the agreement among the 32 allies to raise the defence spending target to 5% of GDP by 2035. This new level, which is more than double the previous target of 2%, demonstrates a clear response to growing geopolitical threats, notably the situation in Ukraine and rising tensions in the Middle East.

The Alliance recognised the changing nature of threats in the 21st century, with European Commission President Mark Rutte stressing that “the line between peace and war is blurring”. Greater cooperation in the sharing of intelligence information between EU and NATO partners was also proposed, recognising the need for new forms of collaboration in the face of hybrid and technological threats.

• NATO countries agree to invest 5% in Defence by 2035. Trump pledges to “help” and “protect” allies // Diário de Notícias, 25/06/2025
• NATO summit: 32 countries agree to invest 5% of GDP in Defence by 2035 // SIC NOTÍCIAS, 25/06/2025

According to the document released in the early afternoon, the heads of state and government of the nations that make up the North Atlantic Treaty Organisation signed a commitment to strengthen military forces, capabilities, resources, infrastructure and military readiness.

Spain’s position:

Although the majority of allies agreed to the new defence spending target of 5% of GDP, Spain expressed its disagreement with the inclusion of this financial target in the summit’s final declaration. The Spanish position, led by Prime Minister Pedro Sánchez, expressed reservations about setting such a high figure and such a tight deadline, arguing that countries should have the flexibility to adapt their spending to their economic capacities and specific needs. However, despite this caveat, Spain reaffirmed its commitment to the Alliance and collective defence, participating actively in the Summit’s other discussions and decisions.

• NATO opened “a pandora’s box” at The Hague summit but Portugal “can benefit from it” // CNN Portugal, 24/06/2025

The Portuguese Government’s Perspectives and Timings for Achieving the Objectives

Prime Minister Luís Montenegro explicitly stated for the first time at the entrance to the NATO Summit in The Hague that Portugal aims to spend 3.5% of its gross domestic product (GDP) on defence over the next 10 years. “We have a prospect of being able to make an investment over the next 10 years that we believe can generate consensus now at the summit. I don’t want to anticipate the conclusions on whether we can reach 3.5% of GDP, but the important thing to safeguard is that we will do this in a balanced and progressive manner, reconciling all our responsibilities, namely financial stability and, through it, responsibility as well.”

The Portuguese Prime Minister thus takes a different position from his Spanish neighbour, who did not want to move from 2.1% of GDP, leaving allies uncertain about the degree of commitment of all Member States. Montenegro guarantees this expenditure, repeating that he assures ‘the Portuguese people all social responses’ without ‘undermining any of our public policy axes with the reinforcement of this investment.’

A rise in purely military investment to 3.5% of GDP means a defence budget of around €10 billion every year. This is more than double the amount currently accounted for by NATO and more than three times the current budget of the Ministry of Defence (which is €3 billion). Montenegro did not mention the 5% target, but it is implied that he accepts the overall objective: the additional 1.5% of GDP is investment in the resilience of security and cybersecurity-related infrastructure.

For Portugal, this will represent a huge financial effort. To reach 3.5% of GDP (considering the Bank of Portugal’s projections for 2025), the country would have to add an additional €4.44 billion to what NATO recorded in 2024 (€4.481 billion, 1.58% of GDP). This means an increase of €445 million per year, on average, over the next 10 years. This amount corresponds, roughly speaking, to the purchase of a new submarine every year (one in the first year, two in the second, and so on).

The Prime Minister reiterated that Portugal will reach 2% of GDP in military spending this year, according to NATO accounting, but he still did not explain how he would achieve this goal – to be in line with all allies at the minimum level – since it is an amount in the range of €1.3 billion to €1.5 billion (equivalent to purchasing three submarines by the end of the year).

In August, the government will have to submit to the European Commission the projects to be financed under the ReArm Europe programmes for the purchase of armaments, preferably in cooperative projects involving several countries to boost European industry.

To justify the exponential spending on defence, the government continues to present arguments based on the economic effect of the investment. ‘We don’t just want to spend more money, we want to invest more in our industry, boost our economy, take advantage of our human resources, which are at the forefront of technology, create new job opportunities, and see a return on this investment,’ Montenegro said in the Netherlands at the start of the summit.

The path to achieving these goals has been negotiated between the 32 NATO countries over the last few months, and the government’s justification for not including the 2% of GDP target for 2025 in the AD’s Electoral Programme was precisely because talks with allies were ongoing, as a government source told Expresso in its latest edition.

Portugal contributed ‘informally’ to the consensus on the targets with its allies, explained a source who followed the process. First of all, it helped to extend the time target: initially, the eastern flank countries wanted a deadline as short as 2030, then the calendar moved to 2032 and finally settled on 2035 (which was also pressured by Italian Prime Minister Giorgia Meloni). This sets a horizon equal to that of the 2014 Wales Summit, where Member States were given 10 years to reach 2% of GDP in military spending.

Another of Portugal’s negotiating contributions, according to the same source, was to prevent a commitment to increase the defence budget every year at a certain rate, which was also advocated by countries that feel most threatened by Russia.

The review of military spending targets in 2029 also came up in the NATO committee, with Portuguese support, to make the implementation of the spending schedule subject to the strategic environment at the time. But the real reason has to do with the political environment within NATO itself. As there are presidential elections in the US in 2028, the allies want to gauge the temperature on the other side of the Atlantic and decide based on who will be the next occupant of the White House and the state of transatlantic relations.

• Prime Minister sets target of 3.5% of GDP for Defence: budget must grow by €450 million per year over the next decade // Expresso, 25/06/2025
• Defence spending. Prime Minister assures that Portugal “will accompany this effort // RTP Notícias, 25/06/2025
• Luís Montenegro makes a commitment: Portugal will spend 3.5% of GDP on Defence by 2035 // SIC Notícias, 25/06/2025

Portuguese Government investment amounts and areas for the current year

1 billion euros. This is the amount Portugal will have to pay to reach a defence investment of 2% of GDP this year. The figure was revealed early Wednesday afternoon by Prime Minister Luís Montenegro on the sidelines of the NATO summit.

“Direct investment that we have already made in equipment purchases, investment that we have already made and that is in the process of enhancing our human resources. This financial effort is only possible because we have balanced public finances and we do not need additional measures,” he said at a press conference in The Hague, Netherlands, which led him to interrupt the meeting with the other NATO heads of state and government, including Donald Trump.

Luís Montenegro said that the three essential axes will involve valuing human resources, purchasing equipment and modernising military infrastructure, stressing that ‘this is not the time to fail to comply, to postpone essential commitments, but rather the time to show that we are up to the task of assuming our responsibilities’.

Expectations for the European Council (26-27 June 2025)

With a busy agenda, the European Council meets between today and tomorrow, 27 June, in Brussels, to discuss several crucial points, especially in light of the NATO summit conclusions.

One of the central topics will be European Defence and Security, where, following the ambitious increase in the Alliance’s spending target, EU leaders are expected to debate the coordination of defence efforts within the Union, the role of the European defence industrial base and how member states can contribute to the new targets. Also in the spotlight will be the situation in Ukraine and the rapid developments in the Middle East, with Europe seeking a unified and effective position in the face of these crises. The agenda will be rounded off by tackling the EU’s economic and competitiveness issues, as well as the persistent challenges of migration.