Rearming the Continent: NATO’s Eastern Flank and the Future of European Security

The defense posture of NATO member countries, which had already dramatically shifted after 2014, was accelerated irreversibly in 2022 with Russia’s full-scale invasion of Ukraine. The trend of boosting defense spending has been witnessed across the Alliance, however, it has been especially strong in the countries closer to NATO’s eastern flank, as Europe has recognized its obligation to share more fairly the financial burden of defending itself. At the recent NATO summit, the decision to raise defense spending targets to 5% of GDP by 2035 was met especially with strong approval from the Alliance’s eastern flank, where countries feel most exposed to the Russian threat. For industry leads, this acceleration in spending also translates into mounting pressure to demonstrate localization on production and alignment with national industrial priorities. Defense procurement is no longer just about delivering capabilities – it is increasingly tied to supply chain resilience and visible economic benefit at home.  

Following Russia’s illegal invasion of Ukraine, the European members of NATO have experienced a renaissance when it comes to boosting defense spending. This phenomenon has further accelerated in the first months of 2025, underscoring that the European continent stands ready to take greater care of its own security, providing some relief to the US, which has traditionally been the Alliance’s top financial contributor. This trend is not just about words but is observable empirically. Never before have more countries spent at least 2% of their Gross Domestic Product on defense. Today, 23 NATO Allies – more than two-thirds - have reached the spending goal set up in 2014, with some exceeding it by over 1%.  

Poland stands out as the most prominent example of NATO’s eastern flank stepping up to meet the demands of the new security environment. In the recent years, Warsaw has rapidly positioned itself as a burden-sharing champion, raising defense spending from 2.7% of GDP in 2022 to 4.2% in 2024, with projections pointing to 4.7% in 2025. While not the top spender in absolute financial terms, Poland now allocates the highest share of GDP to defense of all NATO Allies.  

In 2024 alone, Poland signed more than 130 contracts worth a total of 35.2 billion euros. Among these, the largest agreement with the United States for acquisition of 96 AH-64E Apache Guardian attack helicopters, along with missile armaments, spare parts and a logistics package, worth around 10 billion dollars. The United States remains Poland’s key defense supplier, but Warsaw has also begun to diversify by forging a strategic partnership with South Korea, signaling a broader effort to strengthen resilience. This commitment is reinforced by some of the strongest public support for NATO membership in the Alliance, shaped by both historical memory and an acute awareness of contemporary threats.

However, Poland is not the only country in Central and Eastern Europe to move decisively in this direction. The Baltic states – Estonia, Latvia, and Lithuania – were among the first to meet and sustain the 2% spending target after 2014, and they continue to invest well above that benchmark today. Their efforts are particularly striking given their smaller economies, demonstrating a clear recognition of the existential stakes involved. Romania, situated on the Black Sea and exposed to Russian assertiveness, has likewise prioritized defense, steadily increasing its spending and modernizing its forces. Czechia has joined this momentum as well, committing not only to sustain defense expenditure above 2% but also to gradually raise it to 3% of GDP by 2030. Taken together, these developments show that while Poland is the region’s most visible and ambitious contributor, it is part of a broader pattern: Central and Eastern Europe is leading by example in rearming NATO, proving that burden-sharing is not only possible, but already happening.

Alongside this surge in investment, the dual-use sector is gaining new importance. In March 2025 white paper on the future of European defense, the European Commission announced that both the European Innovation Council (EIC) and the planned TechEU Scale-up Fund will be permitted to invest in dual-use technologies, marking a shift from the EIC’s traditional focus on purely civilian applications. The aim is to maximize spillover effects between civilian and defense industries and create what EU leaders call a “once-in-a-generation opportunity” to boost innovation and strengthen Europe’s industrial base. For companies, this opens access to new markets in areas such as drones, AI, and cybersecurity, but also requires navigating more complex procurement processes that combine national defense ministries, EU-level funding instruments, and private investors.

This structural shift in European defense policy is thus reshaping the environment in which defense companies operate. Procurement can no longer be viewed as a narrow, ministry-specific process; instead, it is increasingly tied to industrial policy, technological sovereignty, and broader manufacturing strategies. For companies, this means that commercial success now requires a comprehensive approach to corporate affairs, media engagement and government relations.

Firms must also understand the EU-level financing mechanisms and policymaking, which are becoming more influential in shaping the defense market. A striking example is the European Investment Bank’s recent decision to expand its list of eligible defense - related products. With the EIB aiming to double last year’s record €1 billion in defense investments, and the EU’s “SAFE” initiative targeting up to €150 billion by 2030, companies that align with these instruments - particularly European manufacturers meeting the 65% EU content rule - will be best positioned to benefit.

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