Article Summary: Germany’s military remains critically underfunded despite Chancellor Olaf Scholz’s €100 billion Zeitenwende pledge following Russia’s invasion of Ukraine.
Key Point #1 – With spending set to drop back to pre-war levels due to Germany’s strict debt brake, NATO’s push for members to allocate 3–5% of GDP to defense presents a challenge.
Key Point #2 – Economic studies suggest increased defense investment could boost GDP growth, but political gridlock may slow reforms.
Key Point #3 – With the conservative Christian Democrats poised to take power under Friedrich Merz, there is potential for greater Bundeswehr funding, though coalition negotiations will determine whether Germany can overcome its budgetary constraints and restore military strength.
Those 4 Words: A State of Total Crisis.
Germany’s Military in Crisis: Will Funding Cuts Leave the Bundeswehr Weaker?
Germany’s military is in dire straits. During the Cold War, the Bundeswehr boasted some of the largest armored formations and men-at-arms. With nearly half a million men in uniform, West Germany could have surged to 1.3 million by calling up reservists.
Today, however, the Bundeswehr is a mere shadow of its former self.
Germany’s Military: The Times They Are A-Changin’
Shortly after Russia’s full-scale invasion of Ukraine, Chancellor Olaf Scholz announced a special one-off fund for the Bundeswehr to the tune of €100 billion.
He called that moment a Zeitenwende, or historic turning point: Germany would exceed NATO’s two percent of GDP defense sending target and rushing increasingly heavy weapons to Ukraine.
But now, three years on from that speech, it’s clear that after the €100 billion fund runs out, Germany will face a funding gap and revert to pre-war spending levels.
Debt Brake
The crux of the issue is Germany’s constitutionally enshrined debt brake, a piece of legislation that prevents surplus spending over a piddling 0.35 percent of GDP.
That Teutonic fiscal discipline, while balancing budgets, has come at a steep long-term cost: underinvestment in infrastructure, digital services, and, notably, a harsh hollowing of German military capabilities.
The debt-brake rule can be waved during a national crisis, as was the case during the COVID-19 pandemic when the government splurged spending on vaccines, testing, and personal protective equipment to combat the disease. And while some parliamentarians have called for another waiver in order to boost defense spending, that has not yet happened.
There is, however, a powerful argument for boosting defense spending: economic growth.
Money, Money, Money
NATO Secretary General Mark Rutte said that NATO countries would have to boost their defense spending and allocate “considerably more than 3 percent” of GDP on defense.
Though there is widespread acknowledgment that the traditional NATO target of two percent of GDP for defense spending is no longer adequate to face down a revanchist Russia, the new target is still up for debate.
President Trump wants to see NATO allies allocate five percent of GDP for defense spending, a target that may prove difficult to meet in the near term.
But moving European defense spending targets from the current two percent of GDP to 3.5 percent of GDP or more, as well as opting for and investing in domestic European platforms rather than buying into existent American programs and weaponry, could be a significant driver of economic growth.
Recent data from the Kiel Institute, an economic research institute based in Germany, show that if the right investments are made in high-tech armaments, it could boost the continent’s GDP by 0.9 to 1.5 percent per year.
The Power of the Ballot Box
Following the success of the center-right conservative party over the weekend, Berlin is poised to welcome a new Chancellor into parliament, almost assuredly Friedrich Merz.
The leader of the Christian Democrats, Merz, has voiced full-throated support for Ukraine and urged deeper investment in Germany’s armed forces.
German Air Force Eurofighter. Image Credit: Creative Commons.
Merz has previously acknowledged that Germany’s old export and manufacturing economic model, which powered the country to become Europe’s largest economy, is no longer viable.
Merz has also called for significant long-term investment into the Bundeswehr and hinted that Germany might have to find a legal workaround to bypass the debt brake to do so.
However, coalition negotiations at the German capital are expected to take several months, and without an outright majority, the Merz party will have to compromise to form a governing coalition. If his Christian Democrats can convince other parties to join a coalition and secure long-term funding for the Bundeswehr, it remains to be seen.
Type 212A Submarine from Germany.
About the Author: Caleb Larson
Caleb Larson is an American multiformat journalist based in Berlin, Germany. His work covers the intersection of conflict and society, focusing on American foreign policy and European security. He has reported from Germany, Russia, and the United States. Most recently, he covered the war in Ukraine, reporting extensively on the war’s shifting battle lines from Donbas and writing on the war’s civilian and humanitarian toll. Previously, he worked as a Defense Reporter for POLITICO Europe. You can follow his latest work on X.
