Germany’s New Defense Deal
Berlin reaches consensus on more military spending—for now.
One big question facing the North Atlantic alliance after Russia’s invasion of Ukraine is whether Germany is serious about Chancellor Olaf Scholz’s pledge to rearm Europe’s largest country. An answer of sorts emerged Sunday evening, and allies will be somewhat reassured.
Mr. Scholz in late February promised rearmament after 30 years of underinvestment in the German military. The centerpiece of his “turning point” in foreign policy was a twin commitment to create a €100 billion ($108 billion) special fund for defense procurement and to spend 2% of gross domestic product on defense in line with the North Atlantic Treaty Organization goal.
It was an ambiguous promise. Mr. Scholz didn’t clarify whether he intended to create the special procurement fund in addition to reaching the 2% goal, or whether money from the special fund would be used to top up the annual budget to hit 2%. He also hedged on how the procurement fund might be spent. Berlin has committed to buy 35 American-made F-35 fighter jets to bolster Germany’s contribution to NATO’s nuclear deterrence, but calls have been growing to divert some of the money to boondoggles such as foreign aid.
Now Germany’s four main political parties have decided what Mr. Scholz meant. A deal reached Sunday among the three ruling parties (Mr. Scholz’s Social Democrats, the Greens, and the Free Democrats) as well as the opposition Christian Democrats paves the way for a constitutional amendment creating the special procurement fund.
Allies will be relieved that Berlin’s hawks have ring-fenced the special fund for genuine military procurement. Partly they’ve done this by setting aside even more money for worthy defense purposes. Foreign Minister Annalena Baerbock of the Greens had argued for using some of the special fund for cyber defense. The four-party deal rebuffed that in favor of limiting the special fund to military hardware, but the deal promises additional spending from the regular budget for cybersecurity.
Yet this appears to have come at a political price related to the 2% goal. The agreement says this will be treated as a multiyear average target, meaning defense spending below 2% in some years can be offset by spending above 2% in others. In practice this will let Berlin count procurement financed by the €100 billion special fund toward the 2% goal.
This avoids the danger that using the special fund as a top-up would have exhausted that money in only four years. But it leaves open the question of Berlin’s commitment to hitting 2%, on average or otherwise, whenever the special fund runs out.
Allies can still count Berlin’s political agreement as a step forward. It demonstrates a broad consensus in favor of rearmament, and Germany’s noisy pacifist movement for once failed to water down defense commitments. But the transformation Mr. Scholz promised requires a sustained attitude change in Berlin.
Having shown Germany can take the first budgetary step, now Berlin will need to take the next, and the step after that. The threat from Russia, and elsewhere, won’t end once the war in Ukraine does.