Trump’s remarks at the NATO summit in The Hague underscored a high-stakes intersection between defense commitments and economic leverage. Speaking at the annual gathering, the U.S. president framed Spain’s stance on defense spending as a potential obstacle to broader trade arrangements, arguing that the southern European country’s failure to meet the 5% of gross domestic product target would necessitate a tougher position in trade negotiations. He characterised Spain’s current level of spending as insufficient and suggested that Madrid would face consequences in the form of punitive measures on trade, explicitly stating that Spain would “pay twice as much” in trade terms while maintaining his belief that Spain is a strong country with valuable people and a robust economy. The rhetoric highlighted the broader dynamic within the alliance: the United States seeks not only military commitments but also a synchronized approach to economic arrangements that reflect collective responsibilities to deter security threats.
As the summit progressed, the alliance marked a significant milestone by agreeing to increase the defense spending target from 2% of GDP to 5% by 2035. The joint declaration described NATO as united in facing profound security threats and challenges, with particular emphasis on the long-term strategic risk posed by Russia to Euro-Atlantic security and the persistent threat of terrorism. This agreement signaled a broader consensus among member states about the level of defense investment considered necessary to sustain deterrence and operational readiness in a rapidly evolving security environment. Yet, even as the bloc reaffirmed its commitment to higher defense spending, individual member states, including Spain, navigated domestic considerations about what those targets mean for welfare, public services, and overall fiscal sustainability. The tension between collective commitments and national budgets remains a central feature of the alliance’s dynamic in the mid-2020s, and it situates Spain at a critical point where security obligations and economic policy intersect.
This publication will examine the unfolding tension between defense commitments and trade policy, analyze Spain’s position within the European Union framework, and explore the potential implications for transatlantic relations in the context of a rapidly shifting geopolitical landscape. It will also consider how Spain’s stance on defense spending interacts with the EU’s role in negotiating trade agreements with the United States, and what the July 9 deadline signifies for ongoing discussions between Washington and Brussels. The aim is to provide a thorough, multi-layered understanding of how this moment in early 2025 might shape future security and economic arrangements across the Atlantic.
NATO Defense Spending Target and Spain’s Position
The NATO consensus reached at the summit in the Netherlands established a bold trajectory for the alliance’s defense outlays. The decision to lift the target to 5% by 2035 represented a clear signal that member states are expected to commit a higher share of their economic resources to defense spending over a decade. In the wake of this decision, Spain’s stance emerged as a focal point of discussion. Spanish Prime Minister Pedro Sánchez articulated a contrasting assessment of the current defense spending level, arguing that Spain’s 2% of GDP expenditure on defense is “sufficient, realistic and compatible with the welfare state.” This stance highlighted a domestic policy calculus in Spain that prioritizes social welfare outcomes alongside national security obligations, a balance many European governments have sought to maintain given public sentiment and fiscal constraints.
From Trump’s perspective, the insistence on meeting a 5% target by 2035 was not merely a technocratic matter but a strategic lever with potential knock-on effects for trade and economic relations. The U.S. president suggested that Spain’s decision to forgo alignment with the heightened defense benchmark would create an uneven playing field in trade negotiations. He stated in no uncertain terms that Spain would be required to compensate for its stance in trade deals by accepting more onerous terms, framing it as a corrective measure against what he characterized as a “free ride.” The rhetoric underscored a broader view in Washington that defense investment and trade policy are not separate, but rather interconnected instruments of national strategy. The underlying logic is that stronger defense postures among allies are expected to translate into more predictable and balanced economic relations, which, in turn, can bolster bilateral and transatlantic collaboration on a range of strategic issues.
Sánchez’s position represents a claim that Spain can uphold its welfare commitments while still contributing to regional and collective security. His remarks highlighted a belief that Spain’s defense spending level is appropriate given the country’s socioeconomic commitments and the welfare state model that has long been a defining feature of Spanish governance. The tension between defense obligations and social program funding is not unique to Spain; across Europe, policymakers grapple with how to maintain credible deterrence and alliance commitments while protecting social spending that supports health care, education, and other essential services. The NATO agreement to increase spending to 5% by 2035 does not automatically determine how each member will allocate its budget, but it does set expectations that member states’ defense outlays will reflect a commensurate and sustained investment over time. This dynamic creates a framework in which Spain’s stance on 2% is not merely a defensive talking point but a substantive element that informs the broader conversation about the balance between security commitments and welfare state priorities.
The rhetoric around “unfair” treatment in trade negotiations speaks to a longstanding issue in transatlantic relations: the perception that allied obligations must be reciprocated in the form of trade concessions or favorable terms. Trump’s assertion that Spain would “pay twice as much” in trade is a bold articulation of the leverage he sees in tying defense expenditure to trade outcomes. It is a reminder that alliances are not purely military coalitions; they are also economic ecosystems in which the behavior of member states on one front can influence negotiations on another. In this sense, the remarks function as a signal to the Spanish government and to other EU states about the potential consequences of deviating from a path that Washington perceives as cooperative and robust in defense spending. The exact mechanics of how such leverage would be exercised—whether through tariff adjustments, procurement terms, or other negotiation tools—are not laid out in detail, but the rhetoric makes clear that the Trump administration would consider a “payback” in trade as a component of ensuring alignment on defense spending.
The question for policymakers in Madrid and across Europe is how to reconcile the aspirational target set by NATO with the practical realities of national budgets and social investment needs. The 2035 timeframe provides a room for policy planning, but it also sets expectations for incremental increases in defense outlays over a relatively long horizon. Spain’s position, which emphasizes a welfare-oriented fiscal framework, suggests a preference for gradualism rather than abrupt shifts in defense spending that could require large fiscal reallocations. The divergence between the United States’ urgent call for greater defense expenditure and Spain’s emphasis on maintaining the welfare state reflects a broader European conversation about how to sustain credible deterrence while preserving social protection programs that voters expect to be protected. This tension at the national level interacts with the EU’s collective approach to defense and foreign policy, where member states must balance national sovereignty with shared strategic objectives.
The NATO summit’s declarations about unity in the face of security threats reemphasize that the alliance seeks to present a united front, even as member states pursue distinct economic and social priorities. The reference to Russia as a long-term threat and to terrorism as an ongoing concern underscores the strategic stakes of higher defense spending. The alignment of 5% by 2035 is not simply an economic target; it is framed as a commitment to the durability of the transatlantic security architecture, including the capabilities needed to deter and respond to evolving threats. Spain’s position within this framework thus becomes a test case for how the EU leverages internal cohesion to meet collective objectives while accommodating diverse national policies. The interplay between Spain’s defense spending posture and its role within the EU’s broader strategic framework illustrates the complexity of achieving consensus in a union of 27 member states with varied fiscal capacities and political priorities.
The 2% vs 5% Target: A Timeline
Looking ahead, the transition from a 2% baseline to a 5% target by 2035 is designed to signal a durable upgrade in European defense investment. For Spain, this means assessing how incremental increases in defense spending could be reconciled with domestic public finance priorities. The timeline is structured to provide member states with a long ramp that supports procurement plans, modernization programs, and personnel costs associated with expanding capabilities. It also provides a window for joint European defense initiatives, including industrial collaboration and shared procurement, which could help spread costs and maximize the impact of increased spending. The timeline’s gradualism is relevant given Spain’s welfare commitments; it allows policymakers to consider alternatives such as targeted defense modernization that aligns with broader national priorities, including economic growth, employment, and social protection.
From a strategic perspective, the 2035 target aligns with broader global security dynamics. The continued emphasis on deterrence and the need to keep pace with conventional and hybrid threats justify higher levels of defense expenditure. The joint declaration’s language about unity suggests that EU member states intend to sustain a credible and visible security posture—one that signals resilience to adversaries and reassurance to allies. The timeline thus functions as both a planning tool and a political signal: it communicates to NATO partners and to potential adversaries that the alliance is committed to a robust defensive capacity that is financed through credible, predictable budgets. Spain’s alignment with this timeline, whether incremental or incremental with reserved domestic spending, remains a central element of how the country will position itself in relation to the United States’ expectations and the EU’s strategic ambitions.
Spain’s Economic Strength and Trade Levers
A central question for Spain is how its economic strength interacts with its defense obligations and its role in EU-wide trade negotiations. Spain has been described as having an economy that is performing well, a point that Trump highlighted when he suggested Spain could be “blown right out of the water” by something adverse if macroeconomic stability were jeopardized by security spending decisions. The interplay between robust economic performance and national security commitments is complex. On one hand, a healthy economy provides the fiscal space needed to increase defense spending without sacrificing social programs. On the other hand, heightened defense outlays could create pressure on public finances if not matched by sustained growth, reforms, and efficiency gains in defense procurement. The Spanish government’s insistence that a 2% spending level is compatible with the welfare state reflects a belief that social expenditures can be preserved even as defense budgets rise gradually. The feasibility of achieving a higher defense share depends on a combination of economic performance, productivity gains, and strategic choices about priority investments within the armed forces and related defense industries.
Within the EU, Spain’s stance also interacts with collective trade policy. The bloc negotiates trade agreements as a single entity, which means that Spain’s defense spending posture can matter in negotiations with the United States and other partners. A stronger Spanish commitment to defense could bolster EU credibility in security terms, potentially strengthening the EU’s bargaining position in the trade talks. Conversely, if Spain were perceived as dragging its feet on defense spending, it could complicate the EU’s ability to present a cohesive front in broader negotiations. The July 9 deadline referenced in the original coverage marks a concrete milestone for ongoing discussions between Washington and Brussels. While the details of how Spain’s defense policy would translate into trade terms remain to be negotiated at the EU level, the alignment of defense investments with economic objectives is likely to be a recurrent theme in any future talks.
In practical terms, Spain will need to weigh the potential economic effects of higher defense outlays against the benefits of greater security and the strategic advantages of stronger alliance commitments. This balancing act is not solely about private sector interest; it also encompasses public perceptions of security, the political viability of higher taxes or reallocation of spending, and the long-term implications for social welfare programs. The European social model, which places a premium on universal healthcare, education, and social protection, must be considered alongside security imperatives and alliance commitments. Spain’s approach will therefore involve a careful calibration of fiscal policy, defense modernization, and social spending, in a way that preserves the welfare state while delivering credible defense capabilities.
The broader Spanish economic strategy will also be influenced by the EU’s own defense and industrial policy. Cooperation in defense procurement, research and development, and industrial base diversification can provide efficiencies that help absorb higher defense costs without a sharp increase in taxes or reductions in social services. Spain’s participation in pan-European defense initiatives could yield cost savings and enhanced interoperability with allied forces. At the same time, it is essential to recognize that defense spending is not an isolated line item; it affects the broader budget envelope, including investments in education, infrastructure, and technology. The challenge for Spain is to manage these interdependencies in a way that supports sustainable growth while strengthening its role within NATO and the EU’s defense and trade ecosystems. The interplay between defense spending, welfare commitments, and trade leverage will continue to shape policy debates in Madrid, Brussels, and Washington as NATO’s 2035 targets move from rhetoric to implementation.
Trade Implications and the Potential for a Spain-US Agreement
Trump’s assertion that Spain would have to bear higher costs in trade if it does not align with the 5% defense spending target reflects a broader strategic approach to how security commitments translate into economic bargaining power. The claim that Spain would be required to “pay twice as much” in trade terms is a stark illustration of the leverage that defense policy can exercise in bilateral trade discussions. While the precise mechanisms of such leverage are not laid out in specific policy steps within the public record, the underlying concept suggests that Washington intends to use the alignment of security and economic agendas as a bargaining chip in negotiations with Spain and potentially the European Union as a whole.
The European Union negotiates trade deals collectively, which means that Spain’s position on defense spending is part of a larger EU-level dynamic. The bloc’s approach to trade with the United States is not solely determined by Madrid but is shaped by the broader interests of 27 member states. Spain’s defense spending stance could thus influence how the EU engages with the United States on trade issues, including tariff structures, market access, and regulatory alignment. The United States’ push for a more assertive defense outlay among its allies could be interpreted as part of a broader strategy to secure more favorable trade terms and a more predictable security environment for U.S. businesses operating in Europe and beyond.
The July 9 deadline for a trade deal referenced in the coverage suggests that the United States is pursuing a time-bound approach to negotiations. The EU’s willingness to engage in a comprehensive trade agreement with the United States by that deadline would require careful alignment among member states on multiple fronts, including defense spending, industrial policy, and regulatory standards. Within this framework, Spain’s stance on defense spending could influence how the EU negotiates concessions or protections in trade arrangements with the United States. If the U.S. position emphasizes higher defense investment as a condition for favorable trade terms, Madrid and Brussels would face a strategic decision about the balance between security commitments and economic openness.
From a strategic perspective, the potential for a Spain-US trade agreement hinges on several interrelated factors. First, the EU’s internal cohesion on trade issues will shape how Madrid negotiates terms with Washington. Second, Spain’s own economic health and public opinion play a critical role; voters often weigh the trade-offs between security commitments, tax burdens, and social services when evaluating government policy. Third, the defense spending trajectory set by NATO will influence expectations about corresponding economic and industrial policy commitments. The alignment of these elements could either facilitate a smoother path toward a comprehensive agreement or introduce frictions that complicate negotiations. In this milieu, Spain’s defense spending policy becomes a lens through which the United States gauges the reliability of European partners in sustaining a robust security architecture alongside a demanding trade agenda.
The European Union’s Bloc Negotiating Dynamics
The EU’s approach to negotiating trade agreements with the United States is shaped by a blend of shared strategic priorities and national-level sensitivities. Because trade negotiations must be reconciled with welfare state commitments, industrial policy, and social protection, the bloc must negotiate compromises that reflect the diverse preferences of its member states. Spain’s defense spending stance intersects with these negotiations in meaningful ways. If Spain advocates for a more incremental approach to defense investment, arguing for a measured increase within the 2035 framework, it could influence the EU’s willingness to concede on some trade terms that might otherwise have been on the table in a more aggressive security posture scenario. Conversely, if Spain is perceived as pressing for rapid increases in defense spending or for a hard stance on security commitments, it might push the EU toward a firmer stance in trade negotiations that emphasize security protections and stronger regulatory alignment.
The EU’s strategic posture toward defense and trade is also affected by external threats and political dynamics, particularly given tensions with Russia and ongoing concerns about terrorism and regional stability. The bloc’s capacity to present a unified front on both security and economic fronts depends on the ability to balance national-level prerogatives with collective aims. The NATO target of 5% by 2035 provides a framework for member states to demonstrate their commitment to deterrence and alliance cohesion, which can, in turn, influence how the EU negotiates concessions in trade and investment terms. Spain’s position within this framework is thus not merely a domestic issue but a component of a broader European strategy that seeks to align defense readiness with economic openness and global competitiveness.
US Trade Negotiations and Potential Outcomes
For the United States, the outcome of trade negotiations with Spain and the wider EU will depend on a constellation of factors, including defense spending commitments, regulatory compatibility, and market access considerations. The insistence on higher defense spending by NATO allies is, in part, a signal of Washington’s desire for allies to share in the burden of collective security. This stance can be aligned with long-standing U.S. priorities, including a robust industrial base, secure supply chains, and a stable security environment that cushions American economic interests abroad. In a practical sense, if Spain and the EU are willing to adopt measures that reflect greater defense spending and enhanced deterrence capabilities, the United States may be more inclined to offer favorable terms in other areas of the trade relationship, including access to markets for goods and services, regulatory harmonization, and cooperative frameworks for digital economy governance.
However, the negotiations are not straightforward. Spain’s defense policy remains a sensitive domestic issue, and any trade agreement must contend with the EU’s internal political dynamics and social expectations. The potential outcomes range from a comprehensive agreement that delivers broad market access and regulatory alignment to a more incremental, phased arrangement that prioritizes security commitments as a precondition for deeper economic integration. The July 9 deadline, if adhered to, would serve as a pressure point for both sides to expedite negotiations, while also providing a timeline within which Spain and the EU can shape policy stances that reflect domestic priorities and broader continental security objectives. The ultimate result will likely reflect a careful balance between defense spend—understood as a cornerstone of European security—and the EU’s willingness to commit to reciprocal and favorable trade terms with the United States.
Spain within the EU: Defense Spending, Sovereignty, and Welfare Trade-offs
Spain’s stance on defense spending is inseparable from its broader role within the European Union. The country’s emphasis on maintaining a welfare state while contributing to enhanced defense capabilities reflects a nuanced approach to balancing security with social protections. Sánchez’s assertion that 2% of GDP is “sufficient, realistic and compatible with the welfare state” signals a prioritization of social programs and public services as central to Spain’s political mandate. The EU’s framework encourages member states to align their security commitments with shared values, including social welfare, democratic governance, and economic resilience. In this sense, Spain’s position illustrates the ongoing negotiation between national sovereignty and supranational obligations—a dynamic that characterizes much of EU governance.
The defense spending question is also tied to Europe’s broader strategic approach to deterrence, alliance management, and industrial policy. A higher defense burden can stimulate investments in defense technology, public sector jobs, and industrial capacity—factors with potential spillovers into the wider economy, including technology sectors, manufacturing, and research and development. Yet a higher defense burden could also necessitate adjustments in tax policy, public debt management, and public service financing, all of which bear directly on the welfare state. The European model emphasizes social protection, universal access to essential services, and progressive taxation policies designed to sustain welfare programs. In this context, Spain’s 2% stance is not simply a number; it is a reflection of the country’s political economy and social contract.
The EU’s collective defense and security posture also influence Spain’s international alignments. NATO’s enhanced spending target signals a commitment to strengthening transatlantic security capabilities, while the EU’s internal market framework binds Spain to a set of rules and standards that shape its economic and regulatory environment. The interplay between these two spheres—defense commitments within NATO and economic integration within the EU—helps determine Spain’s strategic options for future policy adjustments. It also informs how Spain may approach defense procurement, industrial base development, and cross-border cooperation in defense innovation. The potential benefits of deeper European defense collaboration include cost-sharing, increased interoperability among Allied forces, and a broader capacity to influence the direction of defense technology development within the EU and NATO ecosystems.
Spain’s Sovereignty and the Welfare State
Sánchez’s insistence on the sufficiency of 2% defense spending is partly an argument about sovereignty and national policy design. Spain, like many EU member states, has built a welfare state system that requires ongoing funding for health, education, pensions, and social protections. In political terms, any steps toward higher defense outlays must be reconciled with voters’ expectations and the fiscal mechanisms needed to fund them. The issue is not solely whether defense spending should rise; it is about how best to finance those increases without diminishing the welfare state’s integrity. The EU context amplifies this challenge because any national policy change must be compatible with shared regulatory and fiscal norms that govern the eurozone and broader European economy.
The sovereignty argument also intersects with the broader question of how Europe positions itself relative to the United States. The United States, as a major ally, expects its partners to contribute meaningfully to collective security, but European states also seek to preserve their autonomy in setting defense priorities and social programs. In practice, this means that any shift in Spain’s defense spending must be framed within a plan that preserves fiscal sustainability and social integrity. The EU’s framework provides a mechanism for coordinating such policies, permitting member states to work together on defense procurement, research, and development, while maintaining a degree of national autonomy in budgeting and social policy decisions. The ongoing debate thus highlights the challenge of integrating defense ambitions with welfare commitments in a way that sustains public support and political legitimacy.
Implications for Transatlantic Cooperation
From a strategic perspective, Spain’s position within the EU and NATO has implications for transatlantic cooperation beyond defense and trade. A robust defense posture among EU members, including Spain, contributes to the resilience and credibility of the alliance as a whole, reinforcing deterrence against potential aggressors and enhancing security in the Euro-Atlantic region. At the same time, maintaining strong welfare systems remains a central political priority in Spain and across Europe, signaling to citizens that security commitments will not come at the expense of social protections. This dual objective—strong defense capabilities and robust welfare protections—has long characterized European political economies and remains central to Spain’s approach in the 2020s and 2030s.
For the United States, a credible and comprehensive European defense posture is a crucial component of strategic planning, especially given the evolving security environment that includes a range of regional threats and competing powers. The ability of European allies to sustain higher defense outlays while preserving social protections represents an important balance that the United States seeks to support through diplomatic and economic channels. The interplay between Madrid’s defense spending posture, EU trade negotiations, and transatlantic security assurances will continue to shape policymakers’ decisions in Washington, Madrid, and Brussels as they navigate the complexities of a changing geopolitical landscape.
The NATO Summit Context: Russia, Terrorism, and European Security
The NATO summit’s broader context centers on addressing long-term security threats, including Russia’s strategic posture and the persistent threat of terrorism. The alliance underscored its unity in the face of profound security challenges by reaffirming the commitment to a defense spending target of 5% by 2035. This emphasis on renewed investment is framed within the understanding that security threats from various sources require a comprehensive and sustained response. The language of unity reflects a shared conviction among member states that resilience, interoperability, and modernized capabilities are essential to maintaining a credible deterrent and a secure European space.
Russia remains a central geopolitical variable influencing NATO’s strategy and member states’ defense planning. The alliance views Russia as a long-term risk to Euro-Atlantic security, shaping discussions about deterrence, readiness, and the investments required to deter potential aggression. The persistent threat of terrorism continues to shape counterterrorism strategies and defense planning within European capitals, reinforcing the need for interoperable defense capabilities, robust intelligence sharing, and coordinated security policies across member states. The alliance’s emphasis on supplying defense capabilities also has implications for industrial policy, procurement strategies, and defense innovation within Europe, creating opportunities for collaboration on advanced technologies, defense research, and shared production initiatives.
The NATO consensus on increasing defense spending by 2035 is not merely a number but a signal about the architecture of security cooperation in Europe and its intersections with global dynamics. The plan to raise spending targets is intended to ensure that member states maintain credible deterrence and can respond to evolving threats with a robust and capable force structure. The summit’s outcome also signals a willingness to adapt to changing security conditions by investing in modernization and readiness, including personnel, equipment, and infrastructure necessary to sustain a high level of collective defense. For Spain, this context places defense spending in a broader strategic frame: it is not just about meeting a numerical target but about aligning national security capabilities with the EU and NATO’s shared goals and the needs of a fast-changing security environment.
The Western Security Threat Landscape
The security environment described at the summit underscores concerns about Russian activity and the enduring threat of terrorism across the Euro-Atlantic space. The emphasis on a unified stand against these challenges reinforces the perception that Europe’s security architecture depends on a robust and credible alliance that can deter adversaries and protect the interests of transatlantic partners. The shift toward higher defense spending by 2035 is interpreted as a pragmatic response to this landscape—one that seeks to ensure that European military capacities remain modern, interoperable, and capable of operating alongside U.S. forces and other allies in multinational operations.
The security frame also intersects with internal European political dynamics. Within EU member states, debates about defense investment often occur alongside concerns over social spending, fiscal constraints, and the distribution of defense workloads across regional economies. The summit’s declarations reflect a consensus that Europe must be prepared to shoulder greater responsibility for its own security while maintaining a strong alliance with the United States and other partners. For Spain, participating in this framework means contributing to a broader regional effort to deter threats and to safeguard stability, not only for its own sovereignty but for the stability of the European Union and the wider transatlantic community.
Implications for European Union Security and Defense Policy
The NATO agreement to raise defense spending intersects with the EU’s broader security and defense policy. While NATO provides a mechanism for collective defense and deterrence, the EU seeks to enhance its own strategic autonomy in certain domains, including defense industrial policy, crisis management, and security governance. Spain’s stance on defense spending sits at the crossroads of these two dynamics: it contributes to a stronger, more capable European defense posture while leveraging its own welfare-state commitments to maintain social cohesion and trust in public institutions. The EU’s approach to defense procurement and capacity-building can complement NATO efforts by pooling resources and fostering innovation across member states. For Spain, this means that participation in EU defense initiatives could yield benefits in terms of cost sharing, access to advanced technologies, and increased interoperability with allied forces.
From a policy perspective, Spain may explore avenues for targeted investments that maximize returns while advancing social objectives. Investments in cyber defense, missile defense, and air defense systems, as well as modernization of land and sea capabilities, could be prioritized in a manner that aligns with both fiscal realities and welfare commitments. This approach would require careful planning and coordination with EU partners, leveraging cross-border collaboration to achieve broader security gains. The NATO summit’s emphasis on unity and increased spending by 2035 thus serves not only as a strategic directive but also as a catalyst for deeper European cooperation in defense research, procurement, and joint capability development.
The Economic Dimension: Spain’s Economy, Welfare State, and Defense Spending
The nexus between defense spending, economic performance, and the welfare state is central to Spain’s position in the NATO discussion. The assertion that the economy is performing well provides a backdrop for arguments that incremental increases in defense outlays can be accommodated without compromising social protections. Yet, the interdependencies between public spending on defense and social programs are intricate. A more robust defense capacity could yield long-term economic benefits by stimulating high-technology industries, creating skilled jobs, and attracting investment in defense-related sectors. These potential gains must be weighed against short- and medium-term fiscal pressures, including the risk of crowding out other essential public services if funding is redirected away from social programs.
The welfare state in Spain has long been a pillar of social policy, with commitments to universal health care, education, pensions, and social safety nets. In this context, any shift toward higher defense spending must be carefully calibrated to avoid undermining these core programs. The challenge lies in designing defense investments that complement social goals, such as investing in dual-use technologies, stimulating innovation, and promoting economic resilience that benefits the broader population. The European Union’s economic framework can assist in this endeavor by enabling Spain to participate in joint procurement, shared research and development programs, and cross-border defense projects that reduce unit costs and create economies of scale.
The Spanish economy’s strength is also a key variable in weighing the feasibility of meeting NATO’s 5% target by 2035. If growth remains strong and productivity continues to rise, Spain could plausibly increase its defense spending gradually without compromising welfare outcomes. By contrast, if growth slows or if social spending pressures intensify due to demographic changes or fiscal constraints, Madrid may need to pursue a more cautious trajectory, ensuring that any defense spending increases are offset by efficiency gains, reform measures in public administration, and targeted tax or revenue enhancements. The political calculus will likely revolve around a balance of priorities: security and defense responsibilities that contribute to European stability and global security, and a social model that sustains citizens’ trust in government and the legitimacy of public finance.
Defense Procurement and Industrial Strategy
A practical dimension of increasing defense spending concerns how funds are allocated and used in procurement and industrial policy. Efficient procurement practices, transparency, and robust oversight can help ensure that additional spending translates into meaningful defense capability while limiting waste and cost overruns. Spain’s defense industrial base, including its capacity to produce, maintain, and modernize military equipment, becomes a strategic asset in this plan. By strengthening national industries and encouraging cross-border EU collaboration, Spain can maximize the impact of defense investments while supporting high-skill employment and technological advancement. The strategic objective is to create a defense ecosystem that delivers reliable capabilities, supports allies, and fosters innovation that can spill over into civilian sectors, contributing to broader economic growth.
In summary, the economic dimension of Spain’s defense spending debate highlights the importance of aligning budgetary decisions with structural reforms, modernization programs, and international cooperation. The outcome will require sustained political consensus, disciplined fiscal management, and a long-term strategic view of how Europe, the United States, and Spain jointly navigate the security challenges of the 2020s and 2030s. The NATO summit’s framework offers a shared reference point for evaluating the cost and benefits of higher defense expenditure, while the EU’s economic and regulatory environment provides tools and opportunities to optimize the value of every euro spent on defense. The interplay between security and social policy will shape Spain’s choices in the coming years, and its decisions will resonate across the EU and NATO in ways that influence the broader transatlantic relationship.
Conclusion
The NATO summit in The Hague established a clear, forward-looking agenda that connects security commitments with economic strategy. The agreement to elevate the defense spending target to 5% of GDP by 2035 represents a defining step in ensuring deterrence and interoperability among European allies. Spain’s stance—defending the 2% level as sufficient for the welfare state—illustrates the ongoing tension between national fiscal priorities and alliance expectations. President Trump’s remarks linked defense spending to potential trade negotiations, signaling that security commitments may bear on economic terms in a manner that affects Spain and other EU members. This convergence of defense and trade policy underscores the broader reality that transatlantic relations in the mid-2020s operate within an integrated framework where military readiness, economic policy, and public welfare are interdependent.
Within the EU, the bloc negotiates trade deals collectively, which means that Spain’s defense stance has implications beyond Madrid’s borders. The July 9 deadline for trade talks with the United States adds a concrete timeline to a process already shaped by strategic considerations about defense spending and security commitments. The outcome of these negotiations will depend on how the EU reconciles its collective defense ambitions with its social welfare priorities, how member states like Spain balance national prerogatives with EU-level goals, and how the transatlantic relationship evolves in an era of geopolitical competition and rapid technological change.
As the security environment evolves, Europe’s approach to defense and trade will continue to reflect a delicate balance between deterrence, strategic autonomy, and social protection. The decisions made by Spain, the European Union, and the United States will shape not only immediate policy outcomes but also the long-term trajectory of transatlantic cooperation. The NATO framework provides a shared foundation for security while the EU’s integrated market and regulatory environment shape economic ties. The next chapters in this evolving story will reveal how effectively European allies can translate declarations of unity into concrete policy actions that strengthen both defense capabilities and the welfare foundations that define the European social model. The path ahead will require careful policy design, robust political consensus, and sustained cooperation across the Atlantic to ensure that security and prosperity advance in tandem for years to come.