European defence stocks surged following President-elect Donald Trump’s reaffirmation of his position on increasing NATO spending and his remarks on Greenland’s strategic importance. Trump’s statements, made during a press conference at Mar-a-Lago, have prompted speculation that European nations will be pressured to significantly ramp up defence spending. This has led to noticeable gains in shares of major European defence companies on Wednesday, with Leonardo SpA rising by 4.8%, Rheinmetall AG jumping 6.1%, SAAB AB increasing by 3.8%, and Kongsberg Gruppen ASA climbing 2.9%.
Trump Pushes for Increased NATO Spending
Trump has long been critical of NATO allies for their insufficient contributions to the alliance, and he doubled down on that stance during the press conference. He asserted that NATO’s current spending benchmark of 2% of GDP is inadequate and suggested it should be raised to 5%. According to Trump, a higher percentage would ensure better military readiness and a fairer distribution of financial responsibility among NATO members. He emphasized that his previous direct actions had led to over $680 billion (€652 billion) in additional funds for NATO, showcasing his aggressive approach to securing greater contributions from member states.
NATO Compliance Report for 2024
The most recent NATO report for 2024 revealed a record year for military spending compliance. 23 out of the 31 NATO members met the 2% of GDP target. Poland led the European bloc with military expenditures at 4.1% of GDP, followed by Estonia at 3.4% and Latvia at 3.1%. However, some countries, such as Italy, Portugal, and Belgium, still fell short of the target. Notably, Belgium remained under the 2% benchmark but ensured that at least 20% of their defence budgets were allocated to military equipment, in line with NATO guidelines.
Trump Calls Greenland a National Security Priority
Turning his focus to Greenland, Trump stressed the territory’s growing importance to US national security, particularly amid rising Russian and Chinese military presence in the Arctic. He boldly stated that the US needed Greenland for national security purposes and suggested that Denmark should relinquish its legal rights over the territory. Although no formal proposals were made, Trump hinted at imposing tariffs on Denmark if negotiations over Greenland’s status encountered difficulties, signaling potential geopolitical tensions. In response, Denmark’s King Frederik updated the royal coat of arms to prominently feature Greenland, reaffirming the kingdom’s sovereignty.
Trump on the Russia-Ukraine War and Europe’s Role
In his comments on the ongoing Russia-Ukraine conflict, Trump criticized the Biden administration’s handling of the situation, claiming that Russia would never have invaded Ukraine under his leadership. He described the war as a “disaster” and lamented the extensive human toll, especially in Ukrainian towns now devastated by the conflict. Furthermore, Trump highlighted the discrepancy between Europe’s financial contributions to Ukraine and those of the United States. He emphasized that, while Europe is much more affected by the conflict, its financial support has been significantly lower than that of the US, suggesting a reevaluation of Europe’s role in global security and defence alliances.
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