Chancellor Olaf Scholz (SPD) made statements at the Munich Security Conference and in an interview with the South German newspaper a debate has been sparked as to how the significantly higher defense spending required should be financed once the 100 billion euro special fund for the Bundeswehr is used up. Germany will invest “two percent of its gross domestic product in defense in the 1920s, 1930s and beyond,” Scholz confirmed in Munich.
It has not yet been clarified how it will be ensured that Germany continues to achieve this goal agreed upon jointly by the NATO states. “I don’t know where we will find the money, but we need it,” said Defense Minister Boris Pistorius (SPD), also in Munich. This year, as part of its medium-term financial planning, the federal government must for the first time explain what the budget for 2028 should look like.
The regular defense budget is currently 51.9 billion euros. Depending on the development of economic performance, according to estimates from government circles, it would have to increase by at least 25 billion euros when the special fund is used up. An internal analysis by the Defense Ministry, however, puts the additional financial requirement at 56 billion euros Mirror reported.
In the SZ, Scholz spoke out in favor of “financing the Bundeswehr’s expenses from the general budget after the special fund expires.” Finance Minister Christian Lindner (FDP) shares this position. According to his assessment, this path is realistic, provided that the economy gets going again and the Bundestag does not decide on any additional new structural spending, such as new social benefits or subsidies. Scholz admitted in Munich that the money that is being spent on security now and in the future “is missing elsewhere.”
Pistorius wants the debt brake to be adjusted
The Chancellor’s course is apparently coordinated with Pistorius, who is interested in reliable financing not only of investments, but also of the increasing running costs of the Bundeswehr, for example for personnel and training, but also for the foreseeably more expensive maintenance and operation of newly acquired weapon systems. For this reason, the Defense Minister has repeatedly called for an adjustment to the debt brake. It would be conceivable, for example, that defense spending would not be counted towards the upper limit for new debt or that investments would at least be excluded from it.
SPD budget politician Andreas Schwarz, rapporteur for the defense budget, made a similar statement: He described NATO’s two percent target as a “lower limit” and the need in Germany “is certainly higher than these two percent if you think about issues such as capability building and endurance , but also cyber and civil protection,” he told the SZ. “We will therefore not be able to avoid a financing discussion and a debate about modifying the debt brake in the short term,” he added.
The Chancellor’s plans are met with great skepticism among the Greens. To strengthen European security and support Ukraine, “higher investments in the billions are necessary,” says parliamentary group leader Britta Haßelmann South German newspaper. However, these sums “cannot be represented within the framework of the federal budget”. Anyone who does not want to make savings in the wrong places in this challenging time in terms of security policy should not oppose the corresponding reforms. “Cuts to social cohesion are the wrong approach.”
Anton Hofreiter, the chairman of the Committee for EU Affairs, estimated the additional financial needs for the Bundeswehr, support for Ukraine and improving infrastructure and civil protection as well as securing supply chains at a total of 300 billion euros over the next three to four years. These sums “cannot be afforded without higher new debt and a reform of the debt brake.” In contrast, Federal Foreign Minister Annalena Baerbock suggested significantly increasing the existing special fund.
So far, there are no prominent advocates in Berlin for the conceivable way of raising a supplementary levy similar to the solidarity surcharge to finance defense spending. Monika Schnitzer, chairwoman of the so-called economists, had brought up such a levy to finance support for Ukraine. In Brussels there is also a proposal for new European bonds to finance arms investments and support for Ukraine, which France, for example, supports. The federal government, however, is skeptical about additional European debt.