Spain and Rutte Locked in Defense Showdown on Eve of NATO Summit

(Bloomberg) -- By refusing to agree spending increases to appease US President Donald Trump, Spanish Prime Minister Pedro Sanchez threatens to derail a NATO summit that Secretary General Mark Rutte needs to run smoothly for the sake of the military alliance’s future survival.

On the eve of the gathering in The Hague, things are going off the rails. European officials have expressed irritation at the spoiler role that Sanchez is playing when their number one task is to line up behind a pledge to raise defense spending to 5% of GDP. Rutte needs to keep Spain in line while preventing others like Slovakia from breaking ranks.

The NATO leaders are meeting against the backdrop of surging tensions in the Middle East after the US bombed three nuclear sites in Iran at the weekend, prompting Tehran to threaten retaliation. Russia’s invasion of Ukraine is also well into its fourth year with Russian President Vladimir Putin continuing to make hardline demands for territory.

As host, and making his own debut in the top job, this is shaping up to be a worst-case scenario for the Dutch secretary general on his home soil. The risk is that Trump, who has already cottoned on to “notorious” Spain and has kept his trip short, sees the divisions spill out in the open and gets an excuse to walk out.

Rather than securing his iron-clad pledge to stand by the post-war alliance’s most sacrosanct principle of collective defense known as Article 5 (an attack on one is an attack on all), Spanish intransigence on spending may throw the optics into disarray.

“Spain thinks they can achieve those targets on a percentage of 2.1%” of gross domestic product, Rutte told reporters Monday. “NATO is absolutely convinced Spain will have to spend 3.5% to get there.”

On Monday, Slovak Prime Minister Robert Fico joined Spain in saying that his country now would also reserve a right to decide how fast and by how much it increases its defense budget. Slovakia can meet the alliance’s requirements without hiking spending to the 5% level, he said.

All member countries have signed off on ambitious new lists of weapons and troops — so-called capability targets — that each country needs to provide as part of its NATO commitment. The alliance has broken down the 5% goal to 3.5% spending on defense with an additional 1.5% dedicated to related investment. 

“Each country will now regularly report what they are doing in terms of spending and reaching the targets,” Rutte said. “So we will see and anyway there will be a review in 2029.”

Spain has refused to sign up to the 5% target, while also assuring NATO that it will fulfill the capability requirements. It’s arguing that 2.1% of defense spending will be sufficient to achieve that.

Rutte has gone out of his way to accommodate Spain. The statement adopted at the summit will give Spain “flexibility” to “determine its own sovereign path for reaching the capability targets,” he told Sanchez in a letter on Sunday.

The question facing the NATO chief now is whether he can get all members to mute their objections by the time alliance members sit down for dinner on Tuesday hosted by King Willem-Alexander of The Netherlands.

--With assistance from Max Ramsay and Michal Kubala.

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