Seoul: Following the recent NATO agreement to raise defense spending to 5 percent of GDP by 2035, U.S. allies in Asia, including Korea, are facing increased pressure to align with this directive. This initiative is part of a broader strategy driven by U.S. President Donald Trump, who has consistently urged allies to boost their military budgets.
According to Yonhap News Agency, on June 25 in the Netherlands, NATO's 32 member states issued a joint statement in The Hague. This statement commits the members to allocate at least 3.5 percent of GDP annually to direct military expenditures, with an additional 1.5 percent directed towards indirect security-related expenses. The agreement also reaffirmed the principle of collective defense as outlined in Article 5 of the NATO treaty.
Korea is now confronted with a significant challenge. The nation's defense budget for 2025 is projected to be around 61.2 trillion won ($45.2 billion), which equates to 2.3 percent of its GDP. To meet the 5 percent target, Korea would need to increase its defense budget by an additional 70 trillion won based on current economic output, potentially straining public finances. However, as NATO's experience suggests, ignoring U.S. pressure may not be a feasible option.
To mitigate this burden, Korea needs to adopt a comprehensive strategy. This includes linking defense cost-sharing negotiations with trade and tariff discussions. Additionally, the country could seize this opportunity to enhance its self-reliant defense capabilities by reallocating increased defense spending towards force enhancement and strategic asset development. Investing in military modernization and expanding security infrastructure could transform this challenge into a strategic advantage.
Korea's defense industry stands to gain as well. With NATO members increasing their military expenditures, there could be expanded opportunities for exports from Korea's defense sector. The government should explore ways to connect increased defense funding to long-term industrial competitiveness.
Importantly, the new NATO target is not legally binding. A shift in U.S. domestic politics, particularly if Republicans lose influence in the 2026 midterms, could diminish Trump's influence. For the time being, Korea must closely monitor the evolving U.S. position while developing a flexible and pragmatic response that aligns with national interests. A diplomatic approach rooted in practicality will be essential.