What Does Estonia’s Hike in Defense Spending Mean for NATO?

An Estonian soldier guides vehicles at a military base in Tapa in May 2023. Source: Jaap Arriens / AFP

On March 19, Estonian Prime Minister Kristen Michal announced that his country will raise its defense spending to at least 5% of GDP in 2026, a remarkable increase from its current 3.3% benchmark for 2025. This action, Michal said, is in response to Russia’s ongoing invasion of Ukraine. Since Estonia shares its eastern border with Russia, the small Baltic state hopes that increased defense spending will deter possible territorial aggression on the part of its neighbor. However, the question remains, why did Estonia choose this particular moment to announce its military spending hike? And, perhaps more importantly, will other NATO members follow suit?

The clearest reason for Michal’s announcement is U.S. President Donald Trump’s reduction in American support for Ukraine, which has helped make the prospects of a Russian victory more likely. After a tense Oval Office meeting with President Volodymyr Zelenskyy of Ukraine on February 28, the Trump administration halted all military aid to Ukraine in an effort to force the aggressed country to negotiate with Russia. This pause was only lifted when Ukraine agreed to a 30-day ceasefire under pressure from the United States, a deal that Russia has consistently violated in the past month. Without the reliable support of the United States, Ukraine faces a decreased capacity to defend itself—and an ascendant Russia that has conquered Ukraine, Estonian leaders fear, may turn its eyes to the other countries on its border. Because of this, Michal’s government seeks to build up its defensive ability in order to deter a possible Russian attack.

Another key reason for Estonia’s announcement is pressure from Trump to increase military spending among NATO countries. Shortly before entering office, Trump demanded that all NATO countries raise their defense spending to at least 5% of GDP. Trump has also called the alliance “obsolete” and threatened to withdraw if other members do not raise their military spending. Of course, while NATO formally requires members to spend at least 2% of their GDP on defense, fewer than half of the alliance’s 31 members currently meet that target in most years. This has long been a point of contention, particularly for the United States, which has a larger military than any other country in the alliance. Consequently, especially in light of the unprecedented 10% tariffs the United States has placed on Estonia and most of its other trade partners, the decision to far exceed the 2% threshold serves as a way of reducing any ill will the Trump administration may feel toward Estonia in hopes of avoiding further barriers to trade, military cooperation, or diplomatic ties.

Notably, Estonia’s move could have a ripple effect. NATO's eastern flank, particularly Russia-adjacent countries like Latvia, Lithuania, and Poland, may feel compelled to match Estonia’s commitment in order to present a united and formidable regional deterrent against Russia. Already, Poland has made significant defense investments in recent years, and Lithuania recently announced plans to approach the 5% GDP mark. Alternatively, Estonia’s bold spending increase could serve as a catalyst for an “arms race of deterrence” among NATO’s easternmost members, as each country seeks to avoid being Russia’s “easiest” military target. In either situation, the most likely outcome is that the Baltic states and other countries in Eastern Europe will increase their defense spending.

​Furthermore, Estonia's decision may prompt Western European NATO members to reevaluate their own military budgets. President of the European Commission Ursula von der Leyen has already announced a "ReArm Europe" initiative aiming for joint procurement and greater coordination among member states' armed forces. The initiative, which would allocate €800 billion to European Union members’ defense budgets, could be further expanded if Western European countries observed their Eastern neighbors rushing to build up their defensive capacity, since demonstrating solidarity could help further deter Russian aggression and thereby make a larger-scale war in Europe less likely.

The long-term impact on NATO as a whole will likely depend on how the security situation evolves in Ukraine—and how other NATO members interpret the implications of U.S. disengagement. If Russia continues to make gains and the United States remains inconsistent in its support for Ukraine, more countries may view Estonia’s example as a necessary model for self-reliance. In this sense, Estonia’s decision is not just about defending itself; it is a call for Europe to once again reassert control over its own security, especially in a world where the United States no longer seeks to actively enforce democratic geopolitical norms. Of course, whether that message will be heard across Europe remains to be seen.