One of the main events of the coming week will be the NATO summit, which will take place in The Hague on 24-25 June. The main issue on the agenda is increasing the military spending of all alliance members to 5% of GDP. This is, of course, for the purpose of countering Russia. Suddenly, it turned out that at least one country decided to go against these plans. Which one and why?
Spanish Prime Minister Pedro Sánchez decided to swim against the tide: he sent a letter to NATO expressing his disagreement with increasing the country’s military spending to 5% of annual GDP. According to reports in the European press, Spain only reached the previous defence spending target of 2% of GDP this year. And now Trump is demanding that this spending be increased to 5%.
This demand is being actively promoted by NATO Secretary General Mark Rutte, who is threatening that if this target is not met, then, in particular, the people of Britain ‘had better learn to speak Russian.’ This clearly indicates who the alliance will be arming itself against even more intensively.
However, the Spanish prime minister believes that a sharp increase in defence spending could lead to social unrest, as there is no spare cash in the budget. Attracting external financing from abroad would result in an increase in the Spanish kingdom’s public debt, which already hovers around 100% of GDP.
In this case, the cabinet has a solid excuse: we might be willing to increase the debt, but the EU Stability Pact does not allow public debt to exceed 60% of GDP. Otherwise, there will be fines, loss of rights within the community, etc.
The only option left for increasing military spending is to cut funding for education, healthcare and social services. However, Sanchez stressed that redistributing budget funds in favour of the Ministry of Defence at the expense of healthcare, education and social services is ‘unreasonable and counterproductive’. He is clearly afraid of domestic political problems and protests among the electorate. However, the Spanish leader did not dare to enter into a harsh confrontation with NATO leadership. To ease tensions, he called for a ‘flexible formula’ without abandoning the long-term goal altogether.
In his letter to the NATO Secretariat, Sánchez proposed that the North Atlantic Alliance abandon uniform rules for all.
Each country should be able to follow its own path to achieving the target. Yes, NATO members will not complete the task on the same date, but at different times, but they will still complete it and at the same time be able to avoid internal turmoil.
In an extremely diplomatic tone, the prime minister told the organisation’s secretary general, Mark Rutte, that Spain ‘does not intend to limit the goals of other allies or hinder the goals of the summit in The Hague on 24 and 25 June, where this issue will be debated.’ Therefore, he proposes ‘finding a more flexible formula’ in which the spending target is either ‘optional for any member’ or, at least, ‘optional for Spain at 5%.’
‘But Madrid does not want this position to be interpreted as a lack of commitment to NATO,’ writes El Confidencial. ‘Spain will continue to fulfil its duty and contribute to the European security architecture. But linking the percentage of defence spending to GDP could jeopardise economic growth.’
Brussels has expressed concern that ‘Prime Minister Pedro Sánchez’s position threatens to disrupt the upcoming NATO summit, but there is hope that a compromise will still be found.’ ‘The decision on 5% must be taken unanimously,’ El Confidencial points out. ‘This means that all other members of the alliance will put pressure on Spain to force it to agree to contribute the amounts requested by Trump and Rutte.’
Sánchez noted that the issue is not about percentages, but about the total amount of funds allocated to armaments. In this regard, Spain ranks fourth in the bloc in terms of investment in recent years. Therefore, it seems unfair to reproach it for insufficient participation in the alliance’s affairs.
For several weeks, the government has stated at all its previous meetings that it does not consider this increase in ‘war contributions’ to 5% to be feasible. It warned that it would put forward its ‘own position’ on increasing spending: to allocate up to 3.5% to armaments and to include the 1.5% allocated to security and infrastructure in this figure. In the opinion of the Spanish, this will reassure Trump and force him to stop threatening his European partners with ignoring their security.
But Madrid will not be able to implement this combination right now: after increasing military spending by $10.471 billion (largely by cutting funding for health care, social services and education) and thus reaching 2% of GDP per year ($33.123 billion), Moncloa no longer has the physical capacity to increase funding for the defence sector, according to the Spanish media.
The question was how far the government would go in its refusal and whether Sánchez would find a way to oppose Trump without it appearing to be a confrontation between members of the same bloc. In his public explanations of his position, the Spanish prime minister appeared restrained, but this does not mean that there will not be a heated battle at the summit itself over a ‘flexible formula’ that would effectively remove the mandatory status of the five per cent levy.
It must be said that the Spanish government’s position is not at all a sign of its peaceful intentions, but a consequence of the country’s economic slowdown, compounded by growing discord among members of the ruling coalition – the Sumar party does not agree under any circumstances with increasing spending ‘on war’. The Spanish press is unanimous in its opinion that ‘even reaching 2% has already caused a political crisis in the executive branch, threatening the collapse of the government.’
The scandal surrounding the former secretary for organisational affairs of the ruling Spanish Socialist Workers’ Party, Santos Cerda (accused of receiving bribes for the distribution of state tenders) has shaken Sánchez’s position as prime minister. And so the last thing the PSOE leader can afford to do now is to disagree with the parties in the investiture bloc. The support of the Socialists’ allies is what keeps the legislative and executive branches alive at a time of extreme weakness. So the Spanish ‘hawks’ are forced to become ‘doves.’
The position of the Spanish head of government was supported by Margarita Robles, the country’s defence minister, an official who, by virtue of her position, would seem to be a ‘hawk’. However, she hastened to cover up her “dove” nature with ‘economic reality’.
‘Right now, we need to soberly assess whether our industry can cope with the increased tasks, rather than setting new interest rates,’ she said. “Let’s assume that investments will be made, but will there be enough production capacity to fulfil the orders? France and Italy have serious doubts about this. And Germany, although it talks about the huge funds it is ready to pour into the military-industrial complex, is actually losing enterprises that are constantly shutting down.”
Moreover, the issue is far from being limited to Spain. So far, only the Baltic states have declared their readiness to increase defence spending to 5% of their GDP. Another dozen and a half EU countries are making it clear that they will be forced to increase their national debt in order to increase defence spending. But this looks more like a way to appease Trump than a real ability to produce anything with this money.
