Posted originally on Sep 3, 2025 by Martin Armstrong |
NATO is not at war, and yet, the alliance has spent more on funding Ukraine than on any other conflict. The Defence Expenditure of NATO Countries (2014-2025) determined that the alliance is expected to spend $1.59 trillion USD in 2025, up from $1.5 trillion in 2024.
The United States continues to uphold the alliance financially, with an estimated annual payout of $980 billion. Canada and Europe are predicted to spend a combined $608 billion on NATO expenses or an average of 2.76% of their GDP. Poland spent more per GDP than any European member at 4.48%, followed by Lithuania at 4% and Latvia at 3.73%. Nordic alliances such as Norway and Denmark are expected to spend at least 3% of GDP on NATO this year.
Before the Russia-Ukraine war, members were spending around 1.8% of GDP. That figure shot up to 2.6% in 2024, now sitting at 2.76%, and WILL increase as a result of the 5% of GDP pledge by 2035 that was agreed upon at the June 2025 Hague Summit.
There is an uneven response to the escalating conflict as certain nations are accelerating toward confrontation while others remain wary of becoming involved financially. The concept of creating a unified Europe to end all wars was a moot point. European leaders heed different risks concerning the war. This is not just about weapons and soldiers. It is about capital flow reallocation.
Trillions will be pulled out of productive use and sunk into defense. That creates fiscal strain, inflationary pressure, and accelerates the collapse of social programs. Defense budgets soared across Europe ahead of World Wars I and II. War produces absolutely nothing but inflation and destruction.
Ahead of the First World War, defense expenditures across Europe began to surge in the decade before 1914. Governments shifted capital from social programs into armaments. Britain expanded its navy to counter Germany, while Germany doubled down on land armies. The press sold it as “deterrence.” In reality, it was preparation for the inevitable confrontation that the cycle dictated. This is precisely how they are deflecting current NATO spending, as if the allied members must multiply their contributions to deter Russia.
The same pattern unfolded before World War II. During the Great Depression, military spending in Germany, Italy, and Japan accelerated while their economies stagnated. By 1935, Germany had already abandoned Versailles restrictions, pouring money into weapons while ordinary Germans endured wage controls and shortages. The rhetoric was that this spending would “create jobs,” but it created war.
Rome followed this path as well. By the third century AD, the military consumed the treasury. Coinage was debased, taxes rose, and confidence collapsed. It was the cost of endless frontier wars that eroded the economic foundation of the empire. Once capital fled, the empire was finished. The same capital flow shift is what we see today with trillions diverted from productive enterprise into defense, financed by debt, which will only accelerate inflation and contribute to the sovereign debt crisis.
NATO’s report outlines more than mere budgets, as it shows where each nation is aligned on the Panic Cycle, propelling warfare. Socrates is projecting the rise in volatility into 2026, and the Panic Cycles align. The West has chosen the path of militarization, and that is precisely what history warns precedes systemic breakdown.
Centinel2012 