While many Nato members ramp up traditional military spending, Luxembourg is carving out a niche role through high-tech innovation and specialised contributions.

On Thursday, Nato published its latest report on defence spending among member states. The findings reveal that of the 32 Nato members, 22 countries allocated at least 2% of their GDP to defence in 2024.

This milestone comes amid a broader trend of increased military investment across Europe following Russia's invasion of Ukraine in February 2022, which prompted many nations to bolster their defence budgets significantly.

While most Nato members have made substantial progress toward meeting or exceeding the 2% benchmark, Luxembourg remains at the lower end of the spending spectrum. However, the Grand Duchy has adopted a strategy focused on high-tech innovation and international cooperation, an approach that has garnered partial recognition from its allies.

Luxembourg's investment in space technology

Luxembourg is actively contributing to Nato's efforts in emerging domains such as space. One key initiative is the "Nato Strategic Space Situational Awareness System" (3SAS), which aims to enhance the alliance's ability to monitor and respond to threats in space, including space debris and hostile actions. Luxembourg has committed approximately €6.7 million to support this project. Additionally, the country participates in the STARLIFT programme, which seeks to develop new launch capabilities for Nato operations in space.

Contributions to regional security

Luxembourg has demonstrated its commitment to regional security through active participation in Nato's Enhanced Vigilance Activities along the alliance's eastern flank in 2024. By collaborating closely with other member states, the Grand Duchy has contributed to efforts aimed at deterring potential threats and maintaining stability in the region.

The Nato report highlights significant disparities in defence expenditure among member states. Countries such as Poland, the United States, and the Baltic states exceed the 2% GDP threshold by a wide margin, while Luxembourg continues to allocate far less.

The future of Luxembourg's defence model

As Nato looks to the future, its success will depend not only on overall military spending but also on factors like technological innovation, interoperability between member states, and sustained political engagement.

Luxembourg exemplifies how smaller nations can carve out a unique role within the alliance by focusing on specialised fields such as cybersecurity, drone technology, and space exploration.

However, questions remain about whether this approach will suffice in the eyes of key partners, particularly the United States, which has historically advocated for higher defence spending across the board.