The 2025 Hague Summit’s biggest hit was the Allied commitment to the 5% pledge, NATO’s ambition to reach a 5% defense spending target by 2035 to meet the Alliance’s Capability Targets – a strong political signal vis-a-vis Russia’s ongoing aggression in Ukraine. One year down the line, we are still discussing issues concerning defense innovation and multinational capability development.
Pinning down the numbers
Under The Hague Defence Investment Plan, Allies pledged to raise defense investment to 5% of GDP annually by 2035, split across two distinct tiers. The Secretary General Annual Report 2025 lays out the details for this ambition. The larger share — at least 3.5% of GDP each year, measured against NATO's standard definition of defense expenditure — is earmarked for core military needs and NATO's Capability Targets, with each Ally required to submit annual roadmaps showing credible, step-by-step progress toward the goal. The remaining tier, up to 1.5% of GDP annually, covers a wider set of security priorities critical for the Allied deterrence: safeguarding critical infrastructure, strengthening cyber defense capabilities, building civil resilience, driving innovation, and expanding the defense industrial base. Allies plan to revisit both the pace and the balance of this spending in 2029, taking stock of the strategic landscape and any changes to the Capability Targets by the review year.
The momentum was supported by concrete political action – translating to an overall defense spending of $1.4 trillion, a 6 percent increase on 2024 despite the spending discrepancies between the Allies. 2025 saw a ~20% real increase in European/Canadian defense spending — the largest since the Cold War. In 2025 alone, NATO Allies in Europe and Canada invested a total of USD 574 billion in defence, corresponding to a 20% increase in real terms compared to 2024. Germany’s Zeitenwende and "Verantwortung für Europa" ("Responsibility for Europe"), the nation’s first military standalone strategy since World War II, the European Commission’s ReArm Europe Plan/Readiness 2030, the UK’s new Defence Investment Plan and the climbing Indo-Pacific rearmament are all concrete steps in this direction.
However, a year later, in the Ankara Summit, it is time to hold a mirror – one year in, what are the concrete outcomes and the value in this defense spending surge for Allied capability development.
The devil lies in the details
Defense planners know that real defense innovation stems from actionable, practical mechanisms that allow for the defense spending to be channelled and implemented correctly.
Firstly, military expenditure is a flow measure; it reflects the current year's investment in defence but does not capture the accumulated stock of military capabilities such as existing equipment, infrastructure, doctrine or institutional knowledge. Military spending as a share of GDP is easy to communicate on political levels, but must not be mistaken for a direct indicator of military capabilities. Regarding the 5% pledge, the Allies will get there. But more importantly, what needs to be established is a realistic roadmap to spend this money or a 'spending plan', as well as the availability of the implementing mechanisms, rather than solely fixating on the numbers in the books.
Deployable readiness, industrial capacity, information sharing, interoperability, speed and efficiency of defense procurement are all parts of the jigsaw puzzle – but two pieces in particular determine whether the rest falls into place: procurement mechanisms, and the collaborative infrastructure needed for multinational capability development.
Procurement Mechanisms
There is a mismatch between the Allied ambition and commitment, compared to what is actually possible in the Allied capitals – given widespread bureaucracy, the low-risk appetite and the lack of a suitable delegation within Ministries to enable spending with greater agility. In fact, the main bottleneck in military capability development is often not the absence of funding. The friction and the dead-ends inside the procurement itself are the greater issues. Even when budgets increase, the process of turning money into deployable capability remains slow and structurally constrained. Especially in Europe, tight legislations and the multiple layers of bureaucracy further complicate the equation.
The design of current procurement mechanisms is definitely part of the problem. The first issue with procurement is financial and administrative: simply finding and allocating the money to the right segments to fuel innovation is rarely straightforward. Defense budgets are fragmented across programs, timelines and a vast spectrum of political priorities – meaning the funds often arrive late, in partial tranches or with conditions attached.
Additionally, even after funding is secured, the design and management of contracts introduces further delays to the process. Procurement contracts in defense are complex, highly regulated instruments that need extensive negotiation, legal scrutiny and compliance checks. This is a double-edged sword for defense innovation – it yields robust results, but it also creates slow and unagile procurement mechanisms that cannot respond to rapidly changing operational needs. The other issue pertains to human capital to fuel real change. Even when funding is available, exploiting is another thing. Defense procurement organizations like NSPA and OCCAR continuously face a human resource challenge: limited availability of procurement specialists, subject-matter expert program managers, and technical experts who can navigate both military requirements and industrial realities.
The other issue is the dense layer of certifications, standards and peacetime regulatory frameworks; a stark difference with Ukraine, a nation in war, which is often referred to as the model when it comes to rapid defense innovation. Western democracies in peacetime, in particular, operate with a high-trust, high-accountability environment where procurement must satisfy not only strategic necessity but also legal scrutiny, auditability and public transparency.
Limited collaborative infrastructure to fuel multinational defense capability development
The availability of the tools for cooperation is another critical enabler. Speed of implementation is a critical issue. The ongoing conflicts also create a sense of urgency that forces the Alliance to think, and act, at a faster pace than the current defence capability development mechanisms allow.
Another important factor is trust. At times, Allies prefer using their national guidelines and targets for capability development – an information not fully shared with the other nations, which make common defense capability development challenging despite available funding. Additionally, the nature of the information that is being transferred across these networks, which is mostly classified, is also adding a complexity into this dimension. When it comes to establishing a joint data sharing architecture, trust forms the main foundation of a fruitful collaboration ecosystem.
Even if a foundation of trust is established, at present, interoperability within the Alliance is still significantly hampered by the lack of common interfaces for data sharing and joint operations. The second Allies consider a multilateral initiative, they are blocked by a lack of easy access to the tools and guidance they might need to establish such projects. NATO’s Reoccurring Process for Aggregating Demand, referred to as the REPEAD process, which pools countries’ capability needs based on in-depth discussions with the Allied capitals — is a step in that direction.
Ambition plans need concrete mechanisms to support them. A fertile multinational cooperation environment needs agile, user-friendly digital collaboration tools and multiple channels for connections and dialogue to fuel an Allied approach to defense capability development. This is compounded by the abovementioned risk-averse nature of Western administrations – in peacetime governance, the system is optimized to prevent failure, not to absorb it quickly or iterate through it. This set up contradicts the essence of rapid defense innovation and favours incremental upgrades over disruptive change.
From pledges to practice
Without parallel reform of procurement systems, human capital pipelines and regulatory frameworks, the conversion rate from budget to capability would remain significantly limited.
Numbers signal political will; they don't build deterrence. The 5% pledge will likely be met, the Allies are already on track. But the real test lies beneath the topline figure: whether procurement systems can move at the speed innovation demands, whether Ministries can delegate risk instead of defaulting to caution, and whether trust between capitals can mature enough to make joint capability development the default rather than the exception. NATO's own experiments, Tiger Teams, the REPEAD demand-aggregation process, deeper industry access through operational experimentation (OPEX), point in the right direction, but they remain numbered, and are not the main operating model. Without parallel reform of procurement, human capital pipelines, and regulatory frameworks, the conversion rate from budget to capability will stay below the desired levels.
There is also a discipline the Alliance owes itself here: the difference between a polished strategy document that circulates comfortably through institutional discussion circles, and a tailored, actionable roadmap that nations can actually implement within their own political and legal constraints. Ankara should be judged not by updated spending charts, but by whether Allies leave with a credible answer to a harder question: not how much are we spending, but how fast can we turn it into something that deters.
