If Montenegro allocates five percent of its gross domestic product (GDP) to defense by 2035, in line with a new NATO directive, that figure could exceed 460 million euros that year.

Based on Montenegro’s current budget data, GDP is estimated at 7.96 billion euros for this year, with projections indicating it could reach 10 billion euros by 2040. Applying an exponential growth model, GDP in 2035 may be approximately 9.23 billion euros, meaning five percent earmarked for defense would total around 461.5 million euros.

The Ministry of Defense informed “Vijesti” in early June that the proposed military budget for this year stands at 161.42 million euros, suggesting that by 2035, it could increase nearly threefold, surpassing 300 million euros.

During this week’s NATO summit in The Hague, member states agreed to raise defense spending to five percent of GDP by 2035—2.5 times higher than the existing two percent mandate. Of this, 3.5 percent will be allocated to direct military spending, with 1.5 percent for “broader security expenses.”

U.S. President Donald Trump, a longstanding advocate for increased defense contributions from NATO allies, called this new decision “a great victory for Europe and Western civilization.” Head of State Jakov Milatović described it as a “historic decision… crucial for strengthening defense capacities among all allies.”

He emphasized the strong message of unity this sends and reaffirmed Montenegro’s status as a credible member of the North Atlantic Alliance.

A significant challenge

Geopolitical and security advisor Nikola Lunić told “Vijesti” that the new NATO standards will necessitate fiscal reforms in Montenegro, potentially requiring tax hikes or budget cuts in other areas.

He cautioned that the political leadership in Podgorica will need to undertake “thorough cost analyses, long-term planning, and a high degree of financial accountability,” or risk straining the budget and diminishing citizens’ quality of life.

“The NATO summit in The Hague has set a clear trajectory for defense spending: 3.5 percent for basic military needs and 1.5 percent for broader security measures. For Montenegro, this represents a substantial challenge given current economic capabilities and infrastructure,” Lunić elaborated.

He noted that fulfilling this “quota” could entail budget restructuring, increased debt, or reduced investment in other sectors like healthcare and education.

Enhancing air defense and naval capabilities

When asked how the 3.5 percent of GDP allocated for military spending might be utilized, Lunić mentioned it could cover the procurement of conventional arms and military equipment (like tanks, artillery, patrol vessels), as well as military base maintenance, personnel training, salaries, and participation in multinational operations.

He pointed out the necessity for Montenegro to boost its air defense capabilities by procuring air defense systems and drones while bolstering naval and land forces with modular platforms and modern communication systems.

“The recent acquisition of French OPV 60-class patrol ships, while beneficial for basic security tasks in peacetime, does not align with NATO’s current approach to contemporary security threats. These ships are non-combat platforms with limited range and autonomy that won’t enhance collective defense capabilities or interoperability with larger NATO fleets,” he explained.

Lunić emphasized the need for naval deterrence forces adept in “anti-submarine warfare and electronic warfare,” ensuring a high level of interoperability.

He suggested that Montenegro might also focus on electronic reconnaissance and cyber defense systems, which are essential for countering modern hybrid threats.

Modernization, cyber defense, civilian training…

NATO has stated that member countries will allocate up to 1.5 percent of GDP annually to protect critical infrastructure, safeguard networks, ensure civil preparedness, foster innovation, and strengthen the defense industrial base.

Lunić highlighted that investing 1.5 percent of GDP in areas beyond “direct combat training or armaments” is vital for operational readiness and resilience.

“This can be utilized for modernizing infrastructure (like roads for heavy military equipment or ports for rapid supply), enhancing cyber defense capabilities, reinforcing civil resilience and emergency response systems, and supporting the defense industry and innovation,” he said.

He noted that Montenegro might allocate these 1.5 percent of GDP in various effective ways, depending on national interests.

“For infrastructure protection, improvements could be made to safeguard ports and airports against sabotage or enhance the security of the power grid. Strengthening cyber defense could include more training for data protection specialists or establishing a national CIRT center,” Lunić added.

He also mentioned the importance of developing an early warning system, educating citizens, and conducting regular drills to empower civil society in responding to emergencies.

“Ultimately, we should not overlook the contribution to innovation and the advancement of the defense industry through promoting research in security or subsidizing local initiatives for defense technology development,” Lunić stated.

Krapović: Defense funds remain in Montenegro

Defense Minister Dragan Krapović shared on TV Vijesti that NATO’s decision for members to raise defense spending to five percent of GDP will be executed over ten years, amounting to roughly 400 million euros.

“That money remains in Montenegro; it doesn’t go to Brussels or Washington. It is reinvested in Montenegrin capacities. This will approximate 400 million euros annually,” Krapović remarked.

He confirmed that the increase in the defense budget would occur gradually, adjusted each year.

“This translates to about an additional 20 million or more each year. While this may seem sizeable given our economy, it’s not entirely out of reach in the budget. Being a small country, these are significant allocations. I completely understand that the main concerns of average citizens lie in social welfare, education, and healthcare, which is entirely justified. However, without fundamental security and stability, none of those investments will yield results,” he concluded.

When asked about potential borrowing due to increased defense spending, he stated that existing debts and loans have already been established, such as for purchasing patrol vessels.

“That said, I believe it’s a justified endeavor,” he added.

Krapović insists that such investments would return multiple benefits to Montenegro.

“Remember the chaos caused by cyberattacks in 2022. The country faced lockdown-like conditions, with most governmental systems collapsing, aside from the Defense Ministry and Armed Forces. Such events can bring substantial disruptions in daily life and incur unforeseen costs,” Krapović elaborated.

By investing in capacity, he argues, Montenegro can lessen the likelihood of such occurrences and be better equipped to respond, allowing for a stable functioning of society and the economy.

Could police special forces be included in the new military budget?

Nikola Lunić indicated that specialized units within the Ministry of Internal Affairs (MUP) might fall under the purview of the new defense budget.

Although the capabilities of the Ministry are viewed in a broader security context, he noted that their budget cannot typically be factored into the new NATO guidelines, though specialized units may be an exception.

“… This could involve units under joint military-civilian command that fulfill military roles (like the Special Police Unit and the Counter-Terrorism Unit) or provide emergency protection services (the Directorate in the Ministry of Internal Affairs),” he said, adding that this largely depends on national reporting and NATO’s methodology with defined criteria.

Expenditure to be reassessed in 2029

The NATO summit’s statement highlighted that member states would invest five percent of GDP “united in the face of significant security threats and challenges, particularly the prolonged threat from Russia towards Euro-Atlantic security and the ongoing menace of terrorism.”

It was further noted that the spending trajectory and balance will be reviewed in 2029 based on the evolving strategic environment and updated capability goals.

News