European allies and Canada increased defense spending by 20% in 2025 compared with the previous year, funneling hundreds of billions of dollars into the arms industry since 2014. This surge in military expenditure comes as NATO leaders have agreed to move toward a new framework approaching 5% of GDP by 2035, ensuring sustained capital accumulation for defense contractors for years to come. The escalation follows years of pressure from President Donald Trump and growing alarm over Russia’s war in Ukraine, now in its fifth year.
President Trump had repeatedly accused NATO allies of relying too heavily on U.S. military protection while underinvesting in their own defense. His threats to reconsider U.S. commitments to allies that failed to meet spending targets transformed what had once been an obscure alliance benchmark into one of NATO’s central political metrics, effectively mandating increased public spending for private military contractors. Jim Townsend, a former deputy assistant secretary of defense for Europe and NATO policy, stated that the 2022 invasion by Putin and Trump's actions "woke everyone up," adding "whether he scared them or he shamed them or whatever he did, that certainly added fuel to the fire as well."
Countries closest to Russia have moved fastest to expand their military budgets. Poland now dedicates a larger share of its economy to defense than any other NATO member. Estonia, Latvia, and Lithuania have all sharply increased military budgets since 2022. Germany, long seen as a symbol of Europe’s post-Cold War military decline, launched a major rearmament push, creating a 100 billion euro special fund specifically aimed at rebuilding the Bundeswehr.
Across Europe, governments are now engaged in massive procurement, buying tanks, air defenses, fighter jets, and artillery systems. This spending is also directed at racing to replenish stockpiles depleted by the war in Ukraine, creating guaranteed demand for arms manufacturers.
Who Profits from the War Machine
The spending surge has exposed the limits of existing industrial capacity, highlighting the lucrative opportunities for capital. Townsend noted that both Europe’s and America’s defense industries "atrophied" after decades of lower military spending following the Cold War. He explained that they "lost the scale to be able to surge a lot more production," indicating a period of renewed growth and profit for these sectors.
Governments are now confronting the reality that factories cannot instantly produce the weapons NATO states demand, despite the influx of capital. Townsend reported that while the money is available and orders are coming in, producers are struggling to meet the requirements, signaling a boom period for those who can expand production. Some civilian industrial firms have already begun shifting portions of their operations toward defense manufacturing, re-orienting capital towards the more profitable war economy.
Europe remains heavily dependent on American military technology and production capacity, ensuring U.S. defense corporations a significant share of the new spending. Townsend stated, "Europe right now is dependent on the United States and U.S. industry to provide a lot of the capabilities they know they need." He identified air defense systems, long-range strike weapons, logistics networks, intelligence capabilities, and deep ammunition stockpiles as among the most difficult capabilities for Europe to rebuild quickly, securing future contracts for U.S. firms.
The State's Role in Capital Accumulation
NATO Secretary-General Mark Rutte, earlier in 2026, acknowledged that the issue is "not just about more spending," calling for "smarter investment in the right capabilities." This framing, while appearing to address efficiency, ultimately reinforces the need for continued military expenditure and the transfer of public funds to private industry. Rutte also warned that rising defense budgets must be matched by expanded production capacity, directly signaling to capital where investment is needed to meet state demands.
The war in Ukraine exposed how quickly modern industrial warfare can overwhelm peacetime production systems, revealing the inherent contradictions of a system that prioritizes profit over collective security. European governments that announced major procurement plans after 2022 have frequently encountered long delivery timelines, strained supply chains, and shortages in key sectors, from artillery ammunition to air defense interceptors.
A recent McKinsey analysis warned that "structural constraints could slow the path from spending to military capabilities," pointing to fragmented procurement systems, industrial bottlenecks, and long production timelines across Europe’s defense sector. These structural issues, inherent to a fragmented capitalist production model, highlight the inefficiencies in the state's efforts to rapidly expand its imperial garrison. Poland, for example, turned to South Korea for major weapons purchases as governments searched for faster delivery timelines, demonstrating the global competition for arms contracts.
Future of Imperial Garrison
Townsend concluded that rebuilding Europe’s military capacity will take years, posing the question, "Will the Russians take advantage of this gap?" This question underscores the ongoing nature of imperial competition, which continues to drive the militarization of states and the enrichment of the arms industry. The state, through NATO, acts as a primary mechanism for directing public wealth into the coffers of private capital under the guise of national security.