EXPLAINER Is NATO set to agree spending 5% of GDP on defense? Not quite

NATO countries look on course to agree a deal on ramping up their defense spending target at a summit in The Hague next month in a bid to satisfy U.S. President Donald Trump. 

The outspoken leader has been pressuring allies to spend 5 percent of their GDP on defense – a level none of NATO's 32 members, including the United States, currently hit. 

To make him happy, alliance chief Mark Rutte has floated a proposal for 3.5 percent of GDP on direct defense spending by 2032, and 1.5 percent of broader security-related expenditures. 

That should give Trump the chance to claim a win by reaching his headline figure of 5 percent.

But the reality is that not all of that may need to be new spending.

What's the real increase?

The current minimum agreed by NATO's countries for defense spending is 2 percent of GDP. 

Under the compromise being hatched for The Hague, that amount should rise to 3.5 percent and be devoted to direct military spending – such as troops and weaponry. That's roughly the amount NATO estimates needs to be spent by countries to be able to counter threats in the coming years.  

To pad that out further, for the first time the alliance could then count things such as infrastructure spending, cyber protection, border security – and even support for Ukraine. That would make up the additional 1.5 percent, taking the overall figure to 5 percent.

NATO diplomats say that much of that broader spending is likely already on the books and filling it out would just be a matter of redefining it in their budgets.

"We have to make sure that we not only concentrate on the core defense spending, but also making sure that we do these defense related investments," Rutte said.

To ensure countries stick to the plan, which hasn't been made public, diplomats say Rutte has proposed a 0.2 percentage point annual increase on the direct military spending. 

What are the implications for each country?

For some countries – such as Poland and the Baltics on NATO's eastern flank – the new 3.5-percent target would actually be lower than what they're already planning to spend. Worried by the threat from Russia, they're already planning to dedicate five percent of their GDP to core military spending from next year.

The United States wouldn't have far to go to reach the new target as it already spent 3.19 percent of its GDP on its military last year. 

For others it will be a bigger leap. European heavyweights France and Germany are only just hovering over the 2 percent target and a raft of stragglers such as Italy, Spain, Canada and Belgium are still reaching that level this year. 

Is everyone on board?

Rutte's compromise deal received backing from Germany and France at a meeting of NATO foreign ministers in Türkiye last week. 

Berlin's top diplomat Johann Wadephul said the plan would meet Trump's 5 percent demand – and that Germany was willing to "follow" the U.S. lead. French Foreign Minister Jean-Noel Barrot also gave the green light to the 3.5 percent number. 

Elsewhere there was little public dissent from other NATO members. Even those who have struggled to reach 2 percent seemed open to the deal – with Italy's Foreign Minister Antonio Tajani welcoming counting broader security spending. 

And the United States? 

Even though it doesn't necessarily satisfy Trump's original demand, Washington supports the compromise widening out the parameters to reach 5 percent.

U.S. NATO Ambassador Matthew Whitaker said the Hague investment plan wouldn't cover "just missiles, tanks and howitzers". 

But he warned that the broader "defense-related" spending should not just be "a grab bag for everything that you could possibly imagine".

What's left to agree?

While allies seem generally to accept the contours of the new plan, there's still some haggling to be done in the weeks before The Hague summit on June 24-25. 

Diplomats say sensitive areas will include hammering out exactly what can and can't be included in the 1.5 percent. 

On top of that, some countries are pushing for the 2032 timeline to be extended beyond the seven years currently on the table, and for annual targets to be eased.