Defense / Security

Europe has increasingly had to raise its defense spending, as the future of NATO, which remained the cornerstone of transatlantic security, originally formed in 1949 as a collective defense alliance against Soviet aggression, is increasingly in doubt. After the Cold War, NATO adapted to new missions, including counterterrorism and crisis management. Following the 9/11 attacks, NATO invoked Article 5 for the first time and deployed forces to Afghanistan. Today, NATO faces unprecedented challenges amid Russia's full-scale invasion of Ukraine and growing global instability. At its 75th anniversary summit in Washington in July 2024, NATO welcomed Sweden as its newest member and reaffirmed its commitment to collective defense. NATO launched Steadfast Defender 24, its largest exercise in decades, to strengthen deterrence and readiness on its eastern flank. In May 2026, NATO announced it is planning even larger exercises, the biggest since the Cold War, involving 500–700 air combat missions, more than 50 ships, and approximately 41,000 troops to practice repelling a Russian attack on alliance territory. Defense spending among the 32 allies surged by 15.9% in 2025. Total NATO defense spending was $1.6 trillion in 2025. In 2026, all NATO members met the alliance's 2% of GDP defense spending target for the first time, with total military expenditure reaching a record $1.4 trillion. Poland recorded the highest share at 4.3% of GDP, followed by Lithuania at 4%, Latvia at 3.74%, and Estonia at 3.42%. However, the United States alone continues to contribute $845 billion, accounting for 60.2% of the alliance's total military expenditure, while Europe and Canada collectively provide $559 billion (39.8%). The NATO summit in The Hague subsequently raised the guidance to 3.5% for weapons spending and 5% for defense spending overall by 2035.

Despite these efforts, NATO's performance is under scrutiny. The alliance must balance urgent support for Ukraine with long-term modernization, while managing internal political divisions and addressing emerging threats from China and hybrid warfare. NATO has pledged continued assistance to Ukraine, including advanced air defense systems, long-range precision fires, and F-16 fighter jets, but production bottlenecks and political uncertainty in member states remain major obstacles. In June 2026, Hungary's new government led by Peter Magyar lifted its previous veto, unblocking €6.6 billion from the European Peace Facility for military aid to Ukraine, likely to be used for air defense systems.
 

Asian states increasingly look to the United States as a security partner amid rising tensions with China and North Korea. Japan has embarked on its most significant military expansion since World War II. Under its revised National Security Strategy (2022) and the Defense Buildup Program, Japan plans to double defense spending to 2% of GDP by 2027, aligning with NATO standards. The FY2025 defense budget set a record at ¥8.7 trillion (US$58 billion), funding long-range strike capabilities such as Tomahawk missiles, satellite networks, and counterattack systems. For FY2026, Japan's main defense budget has reached 9.04 trillion yen (approximately US$58 billion), with total security-related spending at roughly 10.6 trillion yen, about 1.9% of GDP—effectively reaching the 2% threshold ahead of schedule. Prime Minister Sanae Takaichi signaled at the April 2026 LDP convention that constitutional revision is imminent, with a proposal targeted for 2027. This marks a strategic shift from a purely defensive posture to active deterrence against regional threats. Japan's Defense Minister Shinjiro Koizumi has declared the Global Combat Air Programme (GCAP) with the UK and Italy—developing a next-generation fighter by 2035—"an extremely important project that will determine Japan's future air capabilities," with the joint venture Edgewing consolidating design authority across BAE Systems, Leonardo, and Mitsubishi Heavy Industries.

The U.S.-India defense partnership has also deepened. India was designated a "Major Defense Partner" in 2016 and has signed foundational agreements enabling technology sharing and interoperability. U.S. arms sales to India now exceed $24 billion, including Apache helicopters, MH-60R Seahawks, and advanced surveillance systems. Joint initiatives like INDUS-X and the Critical and Emerging Technology (iCET) framework aim to co-develop next-generation military technologies, while bilateral exercises such as Tiger Triumph 2025 underscore growing operational integration. However, a critical assessment published in March 2026 found that the Indo-US defense industrial relationship remains "over-institutionalised and under-performing," with multiple initiatives—including DTTI, iCET, INDUS-X, SoSA, and the proposed Reciprocal Defence Procurement Agreement—characterized as "rich in mechanisms but poor in results" and failing to deliver tangible strategic outcomes for the Indian military.

Europe: Russia's invasion of Ukraine has forced the EU to rethink its dependence on Russian energy and critical raw materials. Under the REPowerEU plan, the EU cut Russian gas imports from 45% in 2021 to 19% in 2024, banned coal entirely, and reduced oil imports to 3%. However, in the first quarter of 2026, Russia ranked second after the United States in total value of gas imports to the EU with an 18.4% share, up from 18.2% in the same period of 2025, as Russian LNG imports rose to their highest level since February 2025. This highlights persistent vulnerabilities, with the EU roadmap now targeting a full phase-out of Russian oil, gas, and nuclear fuel by 2027, alongside diversification through trade agreements with Chile, Mexico, New Zealand, Australia, and India. The EU-Chile Interim Trade Agreement, which entered into force in February 2025, includes provisions for critical raw materials and green hydrogen cooperation, reinforcing Europe's supply chain resilience.

To support Ukraine militarily, the EU mobilized €11.1 billion under the European Peace Facility and delivered over 1 million artillery shells in 2024, though production delays remain a concern. In 2025 they supplied up to 2 million rounds, however channeling revenues from frozen Russian assets into Ukraine's defense was deferred by the European Union, deciding to support Ukraine on with its own funds.

Asia: South and Southeast Asia are modernizing their armed forces amid rising geopolitical tensions. Defense spending in ASEAN has grown steadily, with countries like Indonesia, Vietnam, and the Philippines investing in advanced naval and air platforms. The Philippines, for example, is shifting from counterinsurgency to maritime defense in the South China Sea, conducting joint drills with the U.S., Japan, and allies under Sama Sama 2025. In May 2026, military forces from the United States, Philippines, Australia, New Zealand, and Japan successfully executed Operation Sama Sama, a complex multi-domain air assault mission as part of the Philippine-led Exercise Salaknib, demonstrating the coalition's ability to rapidly deploy and integrate capabilities, including U.S. HIMARS conducting simulated long-range precision fire. Washington recently deployed MQ-9 Reaper drones and established a U.S.-Philippines joint task force to enhance maritime domain awareness and deterrence against Chinese coercion. The US Pacific Deterrence Initiative for FY2026 includes approximately $1.18 billion in funding, with Missile Defense Agency activities including the Aegis Guam System for integrated air and missile defense, alongside Army prepositioned stocks and improved logistics capabilities west of the International Date Line.

Global defense firms are also repositioning. Lockheed Martin and BAE Systems have relocated their Asian headquarters to Japan, reflecting Tokyo's growing role as a defense hub. These moves align with Japan's participation in the Global Combat Air Programme (GCAP) with the U.K. and Italy to develop a next-generation fighter jet by 2035, and with expanded U.S.-Japan industrial cooperation on missile defense and electronic warfare systems.