Washington, D.C., February 10, 2026 — In a recent feature published by The New York Sun, Nestpoint Managing Director John Thomas examined what the outlet described as NATO’s “trillion-dollar paradox”: why the alliance’s long-standing two percent defense spending benchmark, even when fully met, may fall short of what the current security environment demands.
For the first time in NATO’s 75-year history, all 32 member states are projected to meet the two percent defense spending threshold in 2026. Yet, as the report outlines, that milestone may be more symbolic than strategic. The goalposts have already shifted. At the June summit in The Hague, NATO members agreed to pursue a five percent of GDP target by 2035, with 3.5 percent allocated specifically toward core military capabilities.
Thomas cautioned that headline spending targets can obscure deeper structural gaps.
“The 2035 timeline for five percent is overly ambitious and likely designed as political leverage rather than a realistic goal,” Thomas told The Sun. “Most European allies struggle with budgets strained by welfare states and domestic politics.”
From Percentages to Capability
While overall European and Canadian defense spending is projected to exceed $600 billion this year, the article emphasizes that higher spending does not automatically translate into readiness. European militaries, long optimized for peacekeeping and limited deployments, face constraints in industrial capacity, procurement timelines, and high-end capabilities.
“Europe still lacks critical high-end capabilities like long-range precision strike, integrated air missile defense, strategic airlift, heavy armor sustainment, and robust logistics for rapid deployment,” Thomas explained. “These are gaps that money alone can’t fix quickly due to industrial base limits, procurement delays, and over-reliance on the U.S. for too long.”
Thomas further argued that even if countries formally reach the five percent benchmark, deterrence requires coordinated planning and interoperability — not just higher topline numbers.
Burden-Sharing and Strategic Leverage
The feature also underscores President Trump’s renewed pressure campaign for meaningful burden-sharing within the alliance. American defense spending still accounts for roughly two-thirds of NATO’s total expenditures, a disparity that has shaped the administration’s posture.
“This high bar, pushed by Trump, forces accountability and exposes chronic free-riding,” Thomas said. “This has more value to expose the freeloaders in NATO than it does functionally increasing their spending.”
He framed the effort as both strategic and economic leverage.
“Trump’s push is genuine burden-sharing to strengthen deterrence and end decades of European free-riding,” Thomas told The Sun. “America shouldn’t carry 70 percent of NATO’s load while allies skimp.”
Thomas acknowledged that encouraging allies to scale up defense investment may also channel spending toward American defense systems, reinforcing U.S. industrial capacity while strengthening alliance capabilities.
A Window Closing
As the report concludes, NATO’s transformation is as much about political will as it is about percentages. While the two percent milestone marks progress, the alliance now confronts a more demanding strategic reality — one defined by Russian aggression, industrial bottlenecks, and fiscal constraints across Europe.
“The problem is that spending targets are meaningless without real combat readiness and interoperability,” Thomas said. “Regardless, the targets and pressure are a start.”
The full article, “NATO’s Trillion-Dollar Paradox: Why Hitting Two Percent Means Less Than You Think,” was published by The New York Sun on February 10, 2026. You can read it here.
About Nestpoint
Nestpoint, with a global footprint and a formidable presence in Washington, D.C., is a leading government affairs, finance, and private equity firm. As a strategic ally, Nestpoint transforms challenges into opportunities through its expertise in policy influence, global networks, and financial innovation, delivering customized solutions for sustained client success. Nestpoint advises multibillion-dollar companies in the manufacturing, energy, and technology sectors as well as foreign nations.
