Global Economy News
LAST UPDATE: June 26, 2025
NATO summit commits to higher spending and collective defense
At the Hague summit, NATO leaders committed to raising defense spending to 5% of GDP by 2035—3.5% for defense capability and 1.5% for resilience/cyber. They reaffirmed Article 5 mutual defense, but granted Spain an exemption amid U.S. tariff threats .
Insight
The summit marks a significant shift in alliance burden-sharing amid rising global threats. However, exemptions and trade tensions underscore internal divisions in meeting collective security commitments.
Trump Threatens to Double Tariffs on Spain Over NATO Spending
At the Hague NATO summit, President Trump criticized Spain for not committing to the 5% GDP defense spending goal, calling it a “free ride” and threatened to double trade tariffs on Spanish exports. He said he would negotiate directly with Spain, even though trade matters are managed by the EU (thetimes.co.uk, reuters.com).
Insight
Trump is using tariff threats as political leverage to pressure allies into higher defense contributions, blending trade policy with security objectives. This risks triggering EU retaliation and complicating intra-alliance unity.
Spain’s Sanchez Insists Current Defence Spending ‘Sufficient’
Spanish PM Pedro Sánchez reaffirmed Spain’s 2% GDP defense spending is “adequate, realistic and compatible with welfare,” despite NATO’s push for 5%. NATO Sec-Gen Rutte rejected Spain’s exemption request. Sánchez emphasized focusing on joint procurement and capabilities over spending percentages .
Insight
Spain is defending its sovereign approach, balancing alliance obligations with domestic social priorities. Emphasizing joint capabilities reflects strategic reframing of its defence role.
All NATO, including US, ‘totally committed’ to keeping Ukraine in fight, Rutte says
NATO Sec-Gen Mark Rutte confirmed the entire alliance, including the U.S., is fully devoted to helping Ukraine sustain its defense against Russia. He noted a shift toward European-led military aid but affirmed continued U.S. involvement—including intelligence sharing and air defense systems .
Insight
Rutte’s statement reassures continued alliance unity and support for Ukraine amid concerns over Trump’s stance. It signals a transition toward European operational responsibility, maintaining strong transatlantic ties.
Macron: ‘Aberration’ to ask Europe to spend more on defence amid trade war
French President Macron condemned the inconsistency of urging European nations to increase defense spending while simultaneously imposing tariffs on allies. He stressed Russia remains the core threat but called for ending intra-alliance trade tensions to restore cohesion .
Insight
Macron underscores the strategic incoherence in simultaneous defense and trade offensives. His call for trade peace highlights a push to separate economic friction from security cooperation.
Turkey Steps Up Race Against Australia to Host UN Climate Talks
Turkey is accelerating its bid to host the COP31 climate summit in Antalya in November 2026, entering a competition with Australia. Turkish officials are promoting Antalya’s infrastructure and past experience with international conferences .
Insight
Turkey’s assertive hosting campaign reflects its ambition to elevate its international profile and climate leadership, while engaging in diplomatic competition with Australia for global prominence.
EU Wants China to Fix Rare Earths Issue Before July Summit
The EU’s envoy in Beijing urged China to resolve export restrictions on rare earth magnets ahead of the July summit, warning shortages are hurting European industries “very very badly.” A “green channel” for licences has been created, but approval delays persist (bloomberg.com).
Insight
The move shows growing EU urgency to secure critical mineral supply chains essential for electric vehicles, defence, and green tech. Pressuring China marks a shift toward strategic industrial autonomy.
Declining Climate Funding Spurs Index of Most Vulnerable Nations
A new Climate Finance Vulnerability Index was launched to highlight countries most exposed to climate hazards like floods and heatwaves that have inadequate adaptation funding .
Insight
The index underscores widening climate finance gaps for vulnerable nations. It aims to drive targeted adaptation investments, spotlighting inequity in global climate response.
