Spain stands up to Trump and NATO’s lack of forthrightness

Spain showed the world that it has the backbone to resist the strong-arm tactics of US President Donald Trump.

Spain’s admirable courage was perfectly exemplified during the recently concluded NATO Summit held at The Hague last June. There, President Trump demanded that NATO members increase their defense spending to five percent of GDP.

Spain was the only nation that rejected Trump’s demand. Prime Minister Pedro Sánchez described the five percent figure as “unreasonable and counterproductive,” citing negative impacts on welfare, pensions and other government programs. As a compromise, Sánchez committed to an aspiration to spend 2.1 percent of GDP on defense since this is the level the Spanish government deems feasible.

Slovakia signaled its refusal to commit too, stating it reserves its sovereign right to determine its own spending. And although not vocally outspoken, Belgium expressed discomfort on Trump’s five percent demand.

Spain and, to a lesser extent, Slovakia and Belgium, were left standing alone. The rest of NATO leaders readily yielded to Trump’s demand without a fight even if compliance could damage their respective economies.

Sánchez’s refusal to capitulate to Trump earned Spain the ire of the American leader. Trump said he would make Spain pay “one way or another” and later mentioned doubling Spain’s tariff rate for exports to the US.

Fast forward to October and Trump publicly floated the idea of expelling Spain from NATO altogether. This happened during a meeting in the Oval Office with Finland’s President Alexander Stubb. To the Finnish President, Trump said, “You people (referring to EU nations) are gonna (sic) have to start speaking to Spain … You have to call them and find why are they a laggard … Maybe you should throw ’em (sic) out of NATO frankly.”

Upon hearing such strong words from the American leader, Sánchez responded with five arguments that exposed Trump’s arbitrariness and ignorance on tariff policy.

First, Sanchez asserted that Spain is a sovereign nation and its spending will be decided by Spaniards alone – not by the demands of foreign leaders. That said, Spain will choose its own path in terms of defense spending and will comply with what it can realistically absorb. The 2.1 percent of GDP figure was put forward as what is “sufficient and realistic.”

Second, Sánchez stressed that while Spain is fully committed to NATO, it must defend the interest of Spain, first and foremost.

Third, Sánchez described the five percent spending target as “unreasonable and counterproductive.” It is so absurd that not even the US can spend at this level. To do so will increase debt and divert valuable resources away from sectors like education, health care and social welfare.

Fourth, in response to being called a “laggard,” Sánchez reminded everyone that Spain had already increased its defense spending by some 70 percent in absolute terms. With this, it can never be said that the Iberian nation had ignored its obligations on defense. Further, Spain has been a constant contributor to NATO missions, wherever needed.

Finally, Sanchez exposed Trump’s ignorance by highlighting the fact that tariffs and trade policies for Spain is governed by the European Union, collectively, and not by single nations individually.

Why 5 percent is unsustainable

In reality, no expert study has established that allocating five percent of GDP to defense is the minimum amount required for NATO to deter Russia’s expansionist aims. The figure appears to be arbitrary – an idea introduced by Trump without any analytical basis.

Since 2018, Trump repeatedly complained that NATO members rely too heavily on the United States and are not contributing their fair share. He then demanded a five percent minimum spend on defense to rebalance the burden.

And in true Trump fashion, the demand came with a threat. Should NATO members refuse to accede to the five percent minimum spend, the US could (or would) pull out of the alliance.

The five percent minimum defense spend was not well thought out. To comply, NATO members will have to borrow like madmen to meet the five percent threshold. Problem is, defense spending carries little economic benefits. Studies show that for every dollar spent on defense, economies get a return of only .03 to .06 cents in economic dividends. Compare this to physical infrastructure like roads and bridges where economic returns range from 1.50 to 2.50. Naturally, financial institutions will charge a premium via high interest. This will drive NATO economies to a fiscal black hole.

Moreover, to spend five percent of GDP on defense will mean deep cutbacks on social spending as well as higher taxes. It will mean political suicide for political leaders, many of whom are up for re-election.

And then there is the issue of money supply. If every NATO member spends five percent on defense every year, the financing requirements will amount to some $2.715 trillion annually. Financial institutions will be hard pressed to cough up such enormous requirement, given limited money supply.

A breakdown of trust

Spain was right to reject the five percent defense spending target. Other nations should have been more forthright. By agreeing to Trump’s unrealistic demand, they effectively misled him, perhaps counting on the fact that he would no longer be in office by the 2030s to demand accountability.

This leads to a deeper issue. The fact that most member-states – except Spain, Slovakia and Belgium – chose not to be fully transparent with an ally raises serious concerns. Trust lies at the core of NATO. If commitments among members are insincere or opportunistic, how can any nation truly rely on the alliance’s central promise – mutual defense under Article 5?

NATO’s strength has always rested on integrity and trust. Without them, its commitments become hollow, and the alliance risks losing its very reason for existence.

*      *      *

Email: [email protected]. Follow him on Twitter @aj_masigan