I live in Geneva, where a new Center for Neutrality has just sprouted. I am in the camp that still believes that neutrality is a path not only to be explored, but also to be practiced. I am glad to report that I am in good company. Quite a few of the finest of Switzerland’s diplomats are working hard on neutrality.

Our work is important because we are living at a time when Europe’s leaders seem to have developed a fixation with spending more on defense. NATO leaders have just agreed to increase defense spending to 5% of GDP by 2035.

At a time when Europe is aging and national debts are increasing, I wonder where the money will come from. Will European leaders cut spending on health? Will social services suffer? Will European leaders emulate UK Prime Minister Sir Keir Starmer and try to slash pensioners’ benefits?

From my point of view, NATO’s promise is problematic. Who benefits from the increased defense spending? Military officers? Arms manufacturers? American defense companies?

As a good Swiss citizen who believes in grassroots democracy, I want answers to many questions. We live in an era where the media, the think tanks and the universities increasingly do not ask inconvenient questions and take far too much of money from those with vested interests. That is why I am pleased this new center has opened up. I am especially delighted that one of our authors, Jean-Daniel Ruch, is the founding director.

United Kingdom: Ambitious Pledges, Uncertain Budgets

In the UK, Reuters reports that Prime Minister Starmer committed to meeting NATO’s requirement — 3.5 % core + 1.5 % additional spending by 2035 — but sources say funding pathways remain unclear .The Guardian highlights domestic tensions over Starmer’s pledge, with critics asking the same question I posed earlier, “Where will the money come from?” and cautioning against compromising public services like health and education .

Nato members willingly increasing defence spending amid rising threat from Russia, says Rutte | Nato | The Guardian 

Switzerland: Officially Neutral but What Does Neutrality Mean

Swiss media and analysis groups, including Avenir Suisse, note that with defense spending at a mere 0.7 % of GDP, Switzerland is far from the NATO threshold. Still, Switzerland’s unique militia system hides many indirect costs. Since military service is mandatory for all able men, they and the employers get an income replacement for the jobs they leave and a guarantee to keep their jobs. This bumps up costs for Swiss society and taxpayers. Neighboring Austria spends much less on defense. Per capita Switzerland spends CHF 665 per person on defense, greater than both Canada and Austria. Militia-related costs increase this figure to CHF 976 per person, exceeding Germany, France and even Poland.

Defence Spending: Switzerland Is in Better Shape than It Seems – Avenir Suisse

Note that despite its neutrality, Switzerland plans to gradually increase spending to 1 % by 2032, though staying well below NATO ambitions.

Germany Faces Budget Strains Over NATO’s 5% Defense Target

German Foreign Minister Johann Wadephul (CDU) supports the Trump-backed push for NATO members to raise defense spending to 5% of GDP by 2032. He endorses NATO Secretary General Mark Rutte’s proposal to divide the target into 3.5% for military capabilities and 1.5% for dual-use infrastructure — a compromise aimed at easing pressure on countries like Italy and Belgium.

However, the proposal is sparking domestic controversy. Due to Germany’s revised “debt brake,” military spending above 1% of GDP can be debt-financed without limit, while climate and infrastructure funding face strict caps. Critics warn that prioritizing defense could divert resources from essential social and environmental programs.

5 Prozent Nato-Ziel: Für 2025 wären das über 220 Milliarden Euro für Aufrüstung – Surplus Magazin

EU-Wide Perspective and Europe’s Internal Tensions

The Wall Street Journal reports EU leaders are framing the 5 % goal as both military unity and transatlantic bargaining power — especially by buying US weapons to rebalance trade ties. 

Buying U.S. Arms Will Help Europe Unlock Trade Deal With Trump, EU Leader Says – WSJ

However, Euronews sees internal resistance to the NATO declaration: Spain, Belgium, and Slovakia are pushing back, arguing that they cannot afford to spend so much on defense.

Carnegie Europe and Stockholm International Peace Research Institute (SIPRI) point out European leaders’ definitional ambiguity — 3.5 % core military vs. 1.5 % on broader security — with outcomes depending heavily on each country’s accounting choices 

Taking the Pulse: Does Meeting the 5 Percent of GDP Target Enable Europe to Confront the Russian Threat? | Carnegie Endowment for International Peace

The Idea of Neutrality Is Still Alive

As Swiss Ambassador Thomas Greminger, another of our authors, recently said, neutrality must evolve. “In today’s deeply unsettled global environment, it is more important than ever to reflect on the meaning, purpose, and practice of neutrality. Strategic rivalries and hot conflicts have returned, alliances are shifting, and the multilateral order is under strain. We find ourselves in a fragmented international system, one that is no longer unipolar or bipolar, but has turned multipolar, but is still fluid, and unpredictable. It is within this context that the concept of neutrality is being redefined, not only by neutral states, but also by countries that are exploring alternative ways of positioning themselves in the global order” 

The Geneva Security Debates of the Geneva Centre for Security Policy (GCSP) recently hosted a high-level panel titled “International Dimension of Neutrality” that examined the evolution of neutrality.

GCSP Article | Speech: Redefining Multilateralism in a New Geopolitical Era

Those who are interested in this topic can read the following two reports by SIPRI.

NATO’s New Spending Target: Challenges & Risks (SIPRI, June 27, 2025)

Authored by Nan Tian, Lorenzo Scarazzato, and Jade Guiberteau Ricard, this essay analyzes NATO’s recent pivot toward a 5 % GDP defense target and highlights three concerns.

Ambiguity in accounting: The 5 % target splits into 3.5 % for core military spending and 1.5 % for broader security-related investment, such as cyber and infrastructure, creating the risk of “creative accounting.”

Budgetary strain: Many NATO states face high debt and must justify the trade-off between defense, welfare and climate spending.

Capability concerns: Rising defense budgets may not translate into actual capabilities unless linked to capability targets and industrial capacity investment.

NATO’s new spending target: challenges and risks associated with a political signal | SIPRI

What Drove the Recent Wave of Arms Industry Consolidation? (SIPRI, June 24, 2025)

Authored by Florian Erdle and Lorenzo Scarazzato, this backgrounder examines the factors behind a spike in mergers and acquisitions among major European and North American defense companies between 2014 and 2023. 

Surging demand since the 2014 Crimea conflict and an even sharper rise post-2022 Ukraine invasion has spurred R&D and procurement spending.

Favorable financing conditions because of historically low interest rates in 2021–2022 made takeovers cheaper and more viable.

Strategic consolidation pressure has led governments to push for fewer, larger defense firms to achieve economies of scale, enabling both support for Ukraine and fulfillment of domestic needs.

What drove a recent wave of arms industry consolidation? | SIPRI 

5% Is More Than a Budget Line

NATO’s 5% defense target has become a litmus test not only of military readiness, but also of the balance between security and social responsibility. From London to Berlin, Brussels to Geneva, countries and supranational institutions are navigating how to reconcile rising security demands with fiscal fairness. There is also the important question of democratic accountability of all this increased defense spending, which remains. 

Even officially neutral Switzerland has been sucked into this issue. Swiss neutrality is evolving. What does it really mean today? How much can the country really spend — not topline budget numbers but in per capita GDP terms — on defense and national security?

Sitting in my garden in Geneva, it is clear to me that a silent shift is occurring in Europe’s political imagination. We must remind ourselves what late anthropologist Margaret Mead once said. In her words, “War is only an invention.” So, if he can invent war, we can also invent something more peaceful, less destructive and much better.

Wishing you a thoughtful week,

Roberta Campani

Communications & Outreach