Germany confirms its expenses in defense for the coming years. Berlin wants to unlock unprecedented investments of hundreds of billions of euros to strengthen his army, in view of the current fracture with the United States, and to set off his economy in recession, by freeing himself from his budgetary discipline rules. This was announced in the evening of Tuesday, March 4, the Conservative and Social Democratic parties.
These projects, described as “Grand Bazooka” by economists, reflect a spectacular acceleration of upheavals at work in the first European economy. They were provoked by the transatlantic breakdown initiated by American president Donald Trump and his rapprochement with Russia, at the expense of Ukraine and Europe. This international context more generally pushes Europe to “rearm”.
“The dangers that threaten our freedom and peace”
After decades during which Germany has placed itself under the protection of the American umbrella, the country engages in a national and European rearmament of unprecedented magnitude. Berlin, which could reintroduce the compulsory military service, opens for this without counting the valves of public spending, even if it means putting aside decades of budgetary orthodoxy. “Given the dangers that threaten our freedom and peace on our continent, the watchword for our defense must be: whatever it costs!” Said the future German Conservative Chancellor Friedrich Merz, taking up the watchword of the European Central Bank to save the euro zone during the debt crisis in 2012. The winner of the recent elections announced in the evening to the agreement Social Democrats of the SPD, with whom he negotiates the constitution of the future government coalition.
Regarding the defense, the two training courses will request a vote in the Chamber of Deputies next week to soften the national constitutional rules which strictly cap the annual budget deficit.
All defense expenses exceeding the threshold at a percentage point of the German gross domestic product may be voted without taking this so -called “debt brake” mechanism. The latter in principle limits the government’s annual deficit to 0.35 % of GDP. The objective envisaged is thus to reach an order of magnitude of “at least 100 billion euros per year” of expenses for the defense, said one of the SPD negotiators, Manuela Schwesig, on the Ard channel, twice as much as what is currently planned. This would bring Germany closer to the annual threshold of 3 % of the GDP devoted to defense, corresponding to the new objective that the NATO countries could soon be set.
“A signal to friends and enemies”
The Minister of Defense, Boris Pistorius, spoke in the Spiegel “A historic day for the Bundeswehr and Germany”, which will be able to assume “an engine role” to strengthen NATO and Europe. “We send a signal to friends and enemies: Germany is there. Germany does not withdraw. We will do everything necessary to protect, strengthen Germany. And advance Europe,” said a conservative leader, Markus Söder.
In addition, another reform of the “debt brake” has been announced: regional states will be authorized to make deficit, up to 0.35 % of annual GDP, which was not the case so far.
A desire to return to growth
At the same time, Friedrich Merz said he wanted to unlock “quickly” additional military aid between 3 and 3.5 billion euros for Ukraine, following the United States decision to suspend theirs.
In addition, an agreement was reached on a gigantic public subsidy plan to improve the country’s infrastructure and “economic competitiveness”: the return to growth, in a country in recession for two years, is perceived as the condition to be able to finance the effort in the defense. Concretely, the parties will vote for the creation of a special fund of 500 billion euros over ten years in this direction. “Germany is thinking again as big,” said the economist Carsten Brzeski for AFP, Ing Bank.
The two measures require a majority of two thirds in the Chamber of Deputies because they require an exception to the constitutional rules. This majority can be found in the current Bundestag operating until the end of March – hence the urgency of the announcements – but it would be much more difficult to find in the next, resulting from the legislative elections, due to the thrust of the extremist parties, such as AFD.