Donald Trump demands that Europe should make a greater contribution to its own defence, and he has expressed that spend target as a proportion of GDP. He claims that the US spend of 3.4% is well above the European average. But in a recent video, a former Finnish senior officer argues that this is misguided. European and US defence budgets count different things, a lot of US defence expenditure is wasteful and our priorities are different. The experience of current wars shows that Europe’s rearmament debate should focus less on hitting a GDP percentage and more on what that money buys in deployable capability.
What Europe spends on defence
During the Cold War, European NATO members spent around 4% of GDP on defence, and the UK figure was still well over 5% in the mid 1980s. But after the collapse of the USSR, Russia no longer looked like an enemy, and spending fell across the board, with only three countries staying above 2%.
But, despite a long-shared border and a fractious history with Russia, Finland was an outlier. Its defence spending had been under 2% of GDP since 1962, and it has only recently risen to 2.6%. But despite this, it has maintained Europe’s largest artillery and manpower reserve, showing that careful procurement, domestic production, and reserve systems can deliver disproportionate capability.
False comparisons
In 2023, the total US defence budget was $886bn, including military aid to Ukraine, Taiwan and Israel. That is 3.4% of GDP.
However, that figure is seriously misleading. European countries all operate some form of welfare state, which provides healthcare and pensions to all citizens. But in the US, the cost of providing these to military personnel is included in the defence budget. In 2023, the US defence budget included $61bn health care costs for service personnel, and $31bn welfare costs for veterans. Removing those elements brings the US total below 3%, a figure already exceeded by the Baltics, Norway, Poland and Denmark.
There is a second way in which the comparison is misleading. Although Finland is now only spending 2.6% of GDP on defence, their capability is comparable or better. And the key element of this is the size of the potential armed force. In Finland, military service is compulsory for all young men (some women volunteer). They then form a reserve for ongoing training and potential call up to the age of 60. This means that, if necessary, Finland could mobilise around 290,000 people, around 5% of the population, for an annual cost of around $1,600 a head. With a much larger population, the US has a larger number, but the proportion of the population is only around 0.6% of the population, and and each one costs over $93,000 per year.
Research and development waste and lessons for Europe
The video’s narrator also criticises the US for inefficiency in research and development, which cost over $100bn spent in 2023. But, historically, very large sums have been spent on advanced systems which had to be abandoned, including the Freedom-class combat ships, the Comanche helicopter and the Zumwalt destroyer.
He argues that an efficient research and develoopment programme would focus, not on such ambitious schemes, but rather on streamlining and scaling production of proven platforms, and encouraging multinational cooperation. Current wars in Ukraine and Iran have demonstrated the value of low cost and plentiful systems which are “good enough”, rather than exotic and expensive low-volume systems.
Strategic recommendations and pitfalls
His argument is clear: Europe should rebuild its own production capacity, making better use of existing civilian manufacturers like motor manufacturers. They should prioritise ammunition and consumables, and avoid over-reliance on expensive high tech US systems that can be restricted or come with political strings.
The video singles out France as having the most independent, “US-parts-free” industrial base and suggests others should emulate that autonomy. The closing warning is to avoid the “American trap” of wasteful R&D and bloated cost structures, and instead, focus on jobs and scalable industrial activity that can be sustained in a prolonged conflict.
In short, Europe should challenge Trump. The debate should be shifted from percentage targets to measurement of capability: trained reservists, stockpiles, production lines and sovereign supply chains – areas where Finland’s model offers a template for cost-effective deterrence.
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