NATO Summit: Relative ‘Stability’, But Key US-Europe Tensions to Persist

• Although the North Atlantic Treaty Organisation (NATO) summit in Ankara on July 7-8 passed relatively smoothly and reaffirmed NATO's "ironclad commitment" to collective defence under Article 5, the deep-rooted disagreements between the United States (US) and Europe over Iran, Greenland, Ukraine and defence spending remain firmly in place. As a result, BMI expects Transatlantic tensions to persist throughout the Trump presidency, reinforcing expectations that European members will increasingly prepare for reduced US involvement in NATO.
• Against this backdrop, European countries are expected to continue increasing defence spending to reduce their reliance on the US, supported by long-term commitments to raise military expenditure and invest in new defence capabilities such as the Deep Precision Strike missile programme. However, the pace of this build-up will likely remain constrained by high fiscal deficits, elevated public debt burdens and rising age-related spending pressures, limiting Europe's ability to quickly address US concerns over burden-sharing.
• The summit also reaffirmed strong Western support for Ukraine by formalising EUR70Bn in military assistance commitments for 2026 and signalling comparable support for 2027, providing Kyiv with the resources needed to continue resisting major Russian advances. While President Trump's decision to allow Ukraine to manufacture Patriot interceptor missiles should ease tensions in the near term, uncertainty over future US policy and Trump's relatively volatile approach to Russia and Ukraine will continue to weigh on the outlook.
• At the same time, President Trump's hardline positions on Iran, renewed claims over Greenland and continued review of US troop deployments in Europe remain key sources of downside risk for Transatlantic relations. Any renewed escalation in the US-Iran conflict, combined with pressure on European allies to provide greater military support or further reductions in the US military footprint in Europe, could quickly reignite tensions within NATO.
• Meanwhile, Türkiye is set to become an increasingly important player within NATO's defence-industrial base, as improving US-Türkiye relations, the potential return to the F-35 fighter jet programme, and rapidly expanding weapons exports strengthen Ankara's strategic importance. With defence exports reaching a record US$10Bn in 2025 and expected to rise further, Türkiye is likely to play a growing role in supporting NATO's long-term military capabilities while expanding its influence across the alliance.

(Source: BMI, A Fitch Solutions Company)