VILNIUS, Lithuania — Lithuania has made a significant decision to increase its defense budget to between 5% and 6% of its national economic output beginning in 2026, in response to perceived threats from Russian military activity in the vicinity. This announcement was made by President Gitanas Naus?da on Friday. With this commitment, Lithuania becomes the first NATO member to aim for the 5% defense spending target advocated by U.S. President-elect Donald Trump, as the country currently allocates just over 3% of its GDP to defense.
During a press briefing in Vilnius, Naus?da referred to this increase as a “historic decision” made by the State Defense Council, emphasizing the ongoing possibility of Russian aggression, which he deems to be significant though currently not immediate. “We need to substantially enhance our defense capabilities and deterrence by allocating more resources,” he stated.
This announcement comes at a crucial moment as NATO’s European members confront the challenges presented by Russia’s aggressive posturing, especially after its invasion of Ukraine. The anticipation of a new U.S. administration under Trump has reignited discussions around defense budgets, particularly given Trump’s prior skepticism regarding NATO’s value and his insistence that members must meet spending targets to ensure collective security.
Achieving the new 5% goal would position Lithuania at the top of NATO in terms of defense spending relative to its economic size. Poland leads the current spending ranking, contributing over 4% of its GDP, with plans to increase that figure.
“Our security relies heavily on our NATO membership,” Naus?da noted, emphasizing that effective defense depends on a country’s preparedness. The government, leaning center-left, has raised the permissible international borrowing limit to facilitate increased spending in defense.
European NATO leaders have expressed varied responses to the call for a drastic rise in defense budgets, with some noting the difficulty of managing such increases alongside existing public debt. While the Baltic states remain below the EU’s debt ceiling of 60% of annual economic output, other nations like Germany and France face significant constitutional and financial constraints, with France’s debt exceeding 110% of GDP. Meanwhile, Spain has raised its defense budget from a mere 1% during the onset of Russia’s invasion in 2022 to 1.5%.
Countries situated on NATO’s eastern flank, particularly those feeling most vulnerable, are increasingly supportive of heightened defense expenditures. Many of them argue that the costs associated with upgrading their defenses now will prove considerably less expensive compared to the potential expenses incurred from defending against potential Russian incursions in the future.
“The threat perception is much higher for Baltic states than for countries like Portugal,” remarked Guntram Wolff, a senior fellow at the Bruegel think tank in Brussels, indicating a disparity in investment requirements among NATO members. He further stated that bolstering the defenses of these frontline states is essential for the security of Europe as a whole.
Initially, any additional defense spending is expected to be financed through borrowing to mitigate the immediate economic impact, although future political decisions will eventually dictate reallocating funds from other budget areas. Margarita Šešelgyt?, who heads the Institute of International Relations and Political Science in Vilnius, argues that heightened defense spending is unavoidable as Russia’s military actions in Ukraine continue unabated.
“We are a front-line state and must act accordingly,” she asserted in a recent interview. The ongoing war and Russia’s robust military production highlight the urgency of increased investments in security. The uncertainty introduced by a new U.S. administration raises concerns over American commitment, prompting calls for Lithuania to expedite its security investments.
Šešelgyt? acknowledges the challenges of financing defense acquisitions but notes that Lithuania’s recent economic growth provides a strong foundation for international borrowing. “We need urgent initiatives and investments,” she added, pointing out that an economy like Lithuania’s cannot sustain prolonged vulnerabilities to external threats.
