What are the political and economic trade‑offs for NATO countries aiming to meet the 5% by 2035 target?

1. Political sovereignty versus alliance solidarity

Committing to a fixed share of GDP reallocates sovereign budget prerogatives into an alliance-level political objective: it pressures reluctant governments to harmonize spending but risks backsliding into exemptions and bargaining—Spain’s near‑exit from the text shows national politics can force exceptions that weaken collective credibility ^{[5] [4]}. Proponents argue the target is a stronger deterrent signal to Russia and a tool to reassure U.S. partners; critics counter that it primarily advances U.S. leverage and can entrench dependency if European procurement remains tied to American systems ^{[6] [7]}.

2. Fiscal trade‑offs and macroeconomic effects

Economically, meeting 5% implies very large reallocations: SIPRI and macroeconomic studies estimate trillions in additional annual spending by 2035 and project meaningful increases in alliance defence outlays—roughly an additional $2.7 trillion to hit the full 5% scenario for NATO as a whole—while CEPR modelling suggests moderate GDP gains are possible if spending is productively organised, but with higher public debt ratios as a likely cost ^{[3] [8]}. The arithmetic forces either higher taxes, increased borrowing, or cuts in non‑defence priorities—education and health are repeatedly flagged as politically sensitive targets for displacement ^{[3] [9]}.

3. Industrial policy, procurement and innovation trade‑offs

Shifting hundreds of billions toward equipment and R&D can catalyse defence industrial renewal and scale economies, improving supply‑chain resilience and technological adoption—NATO explicitly counts 20% of defence budgets for major equipment and the 1.5% resilience slice covers cyber, infrastructure and innovation ^{[1] [2]}. But rapid demand risks inefficiency: fragmented procurement, skills shortages, and overreliance on allied suppliers could lock in costly platforms and deepen strategic dependence on larger partners, especially the United States ^{[8] [7]}. The political temptation to relabel existing spending as “resilience” also risks little new capability for the headline number ^[4].

4. Domestic politics, electoral risk and public consent

Sustaining multidecade increases requires durable domestic political coalitions; where public trust is fragile, voters may revolt if defense spending visibly crowds out visible social goods, producing electoral volatility that undermines long‑term plans ^{[7] [10]}. Leaders face a timing dilemma: ramp up quickly to be operationally relevant or phase increases to avoid elections backlash—both choices carry risks: too slow and the pledge becomes symbolic; too fast and governments face political unravelling ^{[2] [11]}.

5. Credibility, timing and strategic risk

The 2035 horizon is politically expedient but invites criticism that the timeframe is too lax for immediate deterrence needs; scholars warn the signal may be strong but its operational impact depends on timely delivery and capability conversion, not simply headline spending percentages ^{[2] [3]}. If national roadmaps and mid‑term reviews (e.g., the 2029 collective review) fail to bind behaviour, the pledge risks becoming another unmet benchmark like the old 2% target ^{[5] [1]}.

Conclusion

The 5% target presents a classic alliance trade‑off: greater collective capability and deterrence in exchange for hard fiscal choices, domestic political exposure, and potential industrial dependencies; its success hinges on credible national roadmaps, transparent procurement reform, and sustained domestic political buy‑in—absent those, the pledge could be more symbolic than strategic ^{[1] [3] [4]}. Different actors read the pledge through different agendas—security‑minded capitals see necessity, some analysts see leverage for the U.S., and skeptics warn of political theater—making implementation the real test.