Poland now spends 4.48 percent of its GDP on defense, making it the heaviest spender in NATO relative to economic output after the United States. Lithuania follows at 4 percent, Latvia at 3.73 percent, Estonia at 3.38 percent, and Denmark at 3.22 percent. Yet according to a comprehensive PISM report on Baltic Sea Region security, published in March 2026, the challenge ahead makes even the Alliance's ambitious new 5 percent target look insufficient.
As "Hvylya" reports, citing the Polish Institute of International Affairs analysis, the core problem is structural: Russia allocated $183 billion to security and defense in 2025 - 41 percent of its state budget - and these levels are projected to hold through 2028. The PISM researchers warn that "limited financial resources and the time needed to acquire technologically advanced weapons and military equipment will force the prioritization of individual sectors," creating gaps that Russia could exploit.
The 5 percent target was set at the 2025 NATO summit in The Hague, with 3.5 percent earmarked for core defense and 1.5 percent for infrastructure and industrial development. But reaching this level presents enormous fiscal challenges. Finland (2.77 percent) and Sweden (2.51 percent) - despite bringing significant military capabilities through their recent NATO membership - remain well below the target. The report notes this spending is "insufficient" given the scale of the Russian threat.
On the positive side, Finland and Sweden's accession has given NATO critical strategic advantages. Finnish artillery, land forces, and a 1,340-kilometer border with Russia create "opportunities to counterattack aggressor forces." Swedish submarine warfare capabilities and the strategic island of Gotland strengthen the Alliance's ability to control Baltic Sea lanes. Swedish Gripen fighters have already participated in NATO's Steadfast Noon nuclear exercises, providing conventional cover for American B-1 and B-52 strategic bombers.
The PISM report identifies air defense, anti-drone systems, and electronic warfare as the most urgent investment priorities, driven by Russian provocations involving drones, deliberate airspace violations, and GPS jamming. Beyond defensive capabilities, the researchers call for building up artillery ammunition reserves and acquiring medium- and long-range missile systems for strike capabilities. Poland's naval modernization programs "Orka" (submarines) and "Miecznik" (frigates) are highlighted as important elements for strengthening regional maritime capabilities.
The bottom line, the researchers conclude, is that "the main challenge for BSR countries is to quickly achieve the defense capabilities necessary to implement regional plans" - and quickly, in this context, means before Russia's three-to-five-year window for achieving credible offensive capability closes. At the 2025 Hague summit, commitment to 5 percent was the political answer. Whether it translates into actual military readiness before the window closes remains an open question.
Also read: NATO 3.0: Colby Lays Out a New Alliance Model With a Harsh Reality for Europe.