FIREPOWER: NATO delivered Trump’s deal on spending. Now Europe considers how to buy

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Good morning and welcome back to Firepower.

We’ve been publishing daily all week to deliver updates and insights from our teams covering the NATO and EU summits. We’ll continue our daily newsletter again tomorrow before returning to our weekly schedule.

The NATO summit came off as well as any European leader could reasonably hope. NATO chief Mark Rutte managed to ensure that the allies lined up behind spending 5% of GDP on defence, delivering on Donald Trump’s straightforward demand. The temperamental US president declared himself won over: “I left here saying that these people really love their countries, it's not a rip-off and we're here to help them protect their country.”

But while Trump jetted home, the long week of summits continued for the Europeans. The summit in Brussels that starts on Thursday will highlight the role many of them see for the EU in the rearmament push: Aggregating the surging demand for military hardware through joint procurement to make deliveries faster and avoid skyrocketing prices.

 

Big Beautiful Super Successful Summit

PRAISE FOR ‘DADDY’ TRUMP. The entire NATO summit compound reverberated from the sighs of relief after all 32 NATO allies signed off on the 5% deal, and Trump (as hoped) took a victory lap, crediting himself with largely fixing the alliance. The summit communiqué commits the allies to spend hundreds of billions more per year, which Trump labelled as a win (rightly so). NATO’s Mark Rutte heaped more fawning praise on the US president post-summit, suggesting no one and nothing else could’ve gotten the Europeans and Canadians to make such a pledge. He even made a reference to Trump as “daddy”.

Many in Europe see some of the grovelling as humiliating and unbecoming. BUT SO WHAT? The absolute imperative at this summit was to avoid a blow-up with Trump, lest the transatlantic rift deepen.

Trump’s tariffs haven't gone away, US support remains critical for Ukraine and Europe remains years away (in the best case) from replacing American military capabilities. From that perspective: MISSION ACCOMPLISHED. This was a vibes summit, and the key players all left in a good mood.

THE PROBLEM? Many Europeans see things quite differently. First off, they see the Russian threat as the fundamental reason they’re spending more. Several European diplomats told Firepower in recent weeks that a major sticking point in negotiations over the summit declaration was a desire from many European capitals to see the major spending hike directly linked to the looming Russian threat and the invasion of Ukraine. Macron and Merz were among the leaders who reiterated that point repeatedly throughout the summit.

THE FRAMING MATTERS because politicians need to convince voters back home that major investments are truly justified – and this isn’t just tax money being used to satisfy a vain and demanding US president whose brand is polarising across Europe. Pointing to the Russian danger helps.

But there’s ANOTHER REASON TO CREDIT TRUMP for the European and Canadian military spending binge, at least indirectly. His unpredictable and bullying leadership style has convinced many that they can no longer afford to risk their security on America’s continued interest in Europe. Nor do many leaders enjoy their subservience to Trump.

But that means TOUGH CHOICES to find the money through higher taxes, cuts to other programmes or borrowing. Meanwhile, many European countries are already loaded with debt. “We will have to make choices,” said Macron, who faces serious budget problems at home. Greek PM Mitsotakis, however, said no ally can use money problems as an excuse for skimping on defence. Even during the depths of Greece’s severe financial crisis, the country “always exceeded 2%” spending on defence, Mitsotakis told reporters post-summit.

IN BELGIUM, that amounts to an extra €6,000 in taxes per household, according to a study by the Ghent University.

All eyes on TRUMP AND SÁNCHEZ now, after the US president said he will launch a trade war against Madrid for being “unfair” by publicly refusing to raise military spending to anything approaching the new target. Spain’s prime minister has made his choice: the country will spend 2.1% (“no more, no less“), claiming that Spain's military can deliver on NATO-required capabilities with that amount. Almost everyone else doubts that, but no matter.

 

Now on to the next one

Perhaps THE EU CAN HELP. That’s at least what many European NATO members think (and hope). The European Commission wants to shape the bloc’s defence industry policy. Convenient, then, that they’re all seeing each again in Brussels tomorrow for an EU-only summit. A key discussion topic will be joint military procurement efforts to avoid prices inflation, along with some EU-backed funding proposals.

DON’T EXPECT AN OVERNIGHT REVOLUTION. Defence will be one of the many topics on today’s packed summit agenda. New decisions are highly unlikely. A senior German official said that a two-hour discussion of arms production should mostly be about “stocktaking”. The draft conclusions seen by Firepower say that the 27 EU countries will “review progress” and consider next steps on defence readiness at their next summit in October.

In reality, minds are already locked on the proposal for the EU’s NEXT SEVEN-YEAR BUDGET, which is due from the Commission in July. The proposal will include “substantial funding” in a window in the European Competitiveness Fund – dubbed “Resilience, Defence and Space” – according to a letter Ursula Von der Leyen and Kaja Kallas sent to EU leaders before the summit, seen by Euractiv. The pair also asks countries again to use civilian-oriented funds for defence.

Debate around the upcoming budget could also revive discussion around a contentious idea: EUROBONDS, according to a German source. Both Germany and the Netherlands vehemently oppose the idea of issuing common EU debt.

BUYING BETTER. With the 5%-target signed, the upcoming discussion will now revolve around how the promised money gets spent. Stuart Dee, RAND Europe’s expert on defence economics, told Euractiv that a particular interest for NATO members will be funnelling funds to “technologies which will shape the future conflict space”. That should prevent driving up prices and contributing to existing “defence-industrial base backlogs” by all competing to buy the same kit. Dee predicted that the next stage of the debate will be about how to allocate money between things like “running costs versus R&D and new equipment”.

 

How Trump’s prodding brought NATO allies around on remarkable spending shift

As Donald Trump flew over the Atlantic aboard Air Force One, his phone buzzed with a long text from NATO chief Mark Rutte full of breathless praise for getting the allies to sign off on shiny new 5% spending targets. Read our breakdown of what a NATO spending goal is, how it works, and navigate through Europe's map to find out how well - or terrible - everyone is doing.

Read more.

 

News from the Capitals

The UNITED KINGDOM will purchase a dozen US-made F-35A fighter jets, rolling out the announcement just ahead of yesterday’s big NATO gathering. The F-35A can carry both conventional and nuclear weapons, adding to the long list of clients for Lockheed Martin’s fifth-generation jet. The aircraft will be based in the UK and deployed as part of NATO’s shared airborne nuclear mission.

GERMANY will likely drop its opposition to selling Eurofighters to TURKEY, Handelsblatt reported, citing industry and government sources. The UK asked to export 40 of the fighter jets to Turkey, a NATO partner. But the German government objected after Turkish President Recep Tayyip Erdoğan imprisoned the mayor of Istanbul, his leading political rival. Ankara has historically flown US-made jets, but the US denied their requests for new F-35s after the country also bought Russian air-defence systems.

SWITZERLAND is now aiming for its own Security and Defence Partnership with the EU in hopes of gaining access to armaments deals under the EU's SAFE programme. Australia announced similar negotiations with the EU a week ago. The UK already inked a deal, and so did Canada. "A partnership of this kind is a prerequisite for any joint procurements in the defence sector," the Swiss statements reads, adding that "it is compatible with neutrality and helps to strengthen Switzerland's defence capabilities".

 

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