On October 13, 2025, the world watched as Spanish Prime Minister Pedro Sánchez and U.S. President Donald Trump shook hands at the Gaza Peace Summit in Sharm el-Sheikh, Egypt—a gesture that, while outwardly cordial, masked simmering tensions over Spain’s role in NATO and its defense spending commitments. The encounter, brief and laced with laughter, was the first public meeting between the two leaders since Trump’s highly publicized threat to expel Spain from NATO for allegedly failing to meet new alliance spending requirements.
The backdrop to this diplomatic drama is as complex as it is consequential. Earlier in the year, during a NATO summit, member states agreed to a significant increase in defense spending, setting a new target of 5% of GDP—a marked jump from the previous 2% benchmark. According to Cadena SER, Spain reached the 2% target in 2025, a milestone Prime Minister Sánchez touted as proof of his government’s commitment to collective defense. But as U.S. pressure mounted, Sánchez made it clear: “We believe that with this budget we are already providing a more than adequate response to the challenges we face within NATO.”
Trump, never one to shy away from confrontation, had other ideas. In a meeting with Finnish President Alexander Stubb at the White House, he labeled Spain a “laggard” and floated the idea that Spain should be “expelled” from NATO. “They have no excuse not to do this, but that's all right. Maybe you should throw them out of NATO, frankly,” Trump told reporters, as reported by The Local. The remarks sent ripples through the Spanish press and put Sánchez in the hot seat.
Yet, despite the rhetoric, the face-to-face meeting at the Gaza summit was marked by a surprising degree of civility. As described by El País, Trump pulled Sánchez toward him during their handshake—a familiar Trumpian display of physical dominance—while Sánchez responded with a diplomatic smile, though, as body language experts noted, he seemed a touch uncomfortable. The exchange included a light-hearted query from Trump: “Where is Spain? Are you trying to convince him [Sánchez] about the GDP issue? We will get closer, we will get closer. You are doing a fantastic job.” The moment was emblematic of the complicated relationship between the two leaders: cordial on the surface, contentious underneath.
The disagreement over defense spending is not new. For months, Trump has publicly criticized Spain for what he perceives as insufficient contributions to NATO, threatening not only expulsion from the alliance but also a potential trade war. “NATO is going to have to deal with Spain. It has paid too little. Either it has been a good negotiator or it has not done the right thing,” Trump declared earlier in the year, according to The Local. During the last NATO summit, Sánchez secured a letter from Secretary-General Mark Rutte stating that Spain would not be forced to commit to the 5% threshold, despite U.S. pressure.
Sánchez, for his part, has remained steadfast. In interviews with Cadena SER and other Spanish media, he emphasized the dual priorities of national defense and social welfare. “I fulfilled the agreement...and this year we reached 2% (of GDP on defense),” Sánchez told Cadena SER. “We believe that with this budget we are already providing a more than adequate response to the challenges we face within the North Atlantic Alliance.” He has argued that the Spanish armed forces are not ready to absorb such a dramatic increase in resources, and that the current funding is sufficient to counter threats, including Russia’s ongoing war in Ukraine. “For us, compliance with the Alliance's requirements is as important as meeting the needs of our rule of law,” Sánchez added, underscoring his government’s refusal to prioritize military spending over domestic welfare.
Official sources from the Spanish Prime Minister’s Office have repeatedly assured the public that Spain is a devoted and full-fledged member of NATO, adhering to all target indicators set by the alliance. Nevertheless, the new 5% target has proved divisive, with Spain joined by Italy and Portugal in questioning both the pace and the logic of the increase. Government members have been blunt about their skepticism: “We made a political decision. We do not tolerate being told from outside that we have to spend a certain amount. We agree on the important part: increasing NATO's capabilities. The 5% does not have a report justifying the amount. Why not 7%, 9%?” they pointed out, according to El País.
Despite the heated public exchanges, Spanish government sources maintain that Trump’s threats and criticisms have not impacted Spain’s economy or its attractiveness to foreign investors. In fact, at the end of September 2025, Sánchez met with major U.S. financial firms—including Goldman Sachs, Invesco, Brookfield, CITI, and Soros Fund Management—all of which have significant interests in Spain. The message from Madrid is clear: Spain’s economic ties with the U.S. remain robust, regardless of political spats over defense budgets.
On the international stage, Sánchez’s resistance to the 5% target has found some sympathy. While some NATO members, particularly in Eastern Europe, back the increase as a necessary response to Russian aggression, others argue that such a sharp rise could destabilize their economies or divert resources from crucial social programs. The debate has exposed fissures within the alliance, with Spain, Italy, and Portugal forming a loose bloc of dissenters. “The armed forces are not ready to operationally absorb such a volume of resources, and the military say that current funding is sufficient to counter the threats, including Russia’s war in Ukraine,” Sánchez explained, as reported by Cadena SER.
For Trump, the issue is as much about alliance solidarity as it is about dollars and cents. In a statement issued by the U.S. State Department on Spain's National Day, the U.S. president insisted: “For our partnership to endure and face future challenges, Spain, like all NATO Allies, must meet our collective defense spending commitment of five percent of GDP.” The statement congratulated the Spanish people on their national holiday but left little doubt about the seriousness of Washington’s expectations.
The Gaza summit handshake may have provided a brief respite from the war of words, but the underlying dispute is far from resolved. As NATO grapples with new security challenges and shifting priorities, the question of how much members should spend—and who gets to decide—remains a source of friction. For now, Sánchez has staked his position: Spain will meet its obligations, but not at the expense of its social fabric or economic stability. Whether this stance will hold in the face of continued U.S. pressure is a story still unfolding.
In a world where alliances are tested not just by external threats but by internal disagreements, the handshake in Sharm el-Sheikh was a reminder that diplomacy is as much about managing differences as it is about celebrating common ground.