defense
Defense industry: Hardly any orders from special funds
A Leopard 2 A6 of the Bundeswehr’s 203rd Tank Battalion shoots down a smoke screen on the military training area. photo
© Ann-Marie Utz/dpa
100 billion euros is a proud sum for the Bundeswehr. But the armaments industry complains about the lack of orders from the package. And the actual scope could continue to shrink.
The armaments industry is making serious accusations against the federal government in view of the lack of orders from the 100 billion euro special fund for the Bundeswehr. “To date, the number of orders received by German industry from the special fund has been negligible,” Susanne Wiegand, head of armored transmission manufacturer Renk, told the “Augsburger Allgemeine” (Saturday).
“At some point I ask myself: Germany, what still has to happen?” The industry needs planning security. Wiegand is also Chair of the Safety Committee of the Federation of German Industries (BDI).
The defense policy spokesman for the Union faction, Florian Hahn (CSU), criticized: “The Bundeswehr is waiting for the replacement purchases in all areas, but the troops simply don’t get anything.” The “turning point” must finally materialize: in the budget, with the staff, material, ammunition and the infrastructure.
Interest causes the fund to shrink
Meanwhile, the actual sum from the special fund available for modernizing the Bundeswehr could shrink further this year, according to the Defense Ministry. The background is the rising interest rates that the federal government has to pay for borrowing from the special fund itself. At the moment, however, it cannot be said which investments would specifically be eliminated. According to estimates, the “real” investment sum has already fallen to 93 billion euros.
“There is no need to allocate concrete procurement measures to a possible need for savings at this point in time,” says the Federal Government in response to a request from Bundestag member Ingo Gädechens (CDU), which the German Press Agency has received. The “Welt am Sonntag” had first reported on it.
The fully loan-financed special fund, which the Bundestag decided in June 2022, must bear the interest burden on the loans itself. If these increase, there is less money available for specific purchases for the Bundeswehr. In addition, due to the currently high inflation, the purchasing power of the remaining amount is falling.
So far, contracts over ten billion euros
In the fight against inflation, the European Central Bank (ECB) has been continuously raising interest rates since the summer of 2022. This also increases the interest that the federal government has to pay for its loans in the form of federal bonds. For many years after the financial crisis of 2008, they were of little importance compared to today.
In his request, Gädechens named a sum of now 13 billion euros, which allegedly had to be deducted from the 100 billion euros of the special fund. In its reply, the Ministry of Defense did not name any specific figure beyond the already known seven billion euros in interest charges. However, if the Ministry of Finance calculates an increase in interest rates for the 2024 federal budget, “this will be taken into account when updating the 2024 economic plan,” it said. “All the signs are pointing once again to painful cuts in planned purchases of weapons,” Gädechens said, according to “Welt am Sonntag”.
In December, the Ministry of Defense received the green light from the Bundestag for the first multi-billion dollar Bundeswehr projects, including the procurement of the F-35 stealth jet, the purchase of a new assault rifle as a successor to the G-36 and the retrofitting of the Puma infantry fighting vehicle. In mid-January, the Ministry of Finance said that contracts for a little more than ten billion euros had been concluded so far, but no money had yet flowed.
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