5 things to know about the historic German military investment fund – Politico

Germany has spent months promoting its historic shift toward a more aggressive military policy. Now the country finally has a spending plan to make it happen.

Three months after the debut of Chancellor Olaf Schultz, announce Germany is called Zeitenwende, Or a historical turning point, political leaders late Sunday agreed The mainstay of the new policy is a massive €100 billion military modernization fund.

The cash injection – which falls outside of Germany’s regular budget – is intended to give the chronically underfunded German military a rapid equipment upgrade, helping chart a course for Berlin to play a more prominent role within the NATO military alliance and EU military missions.

“Germany will now make a much greater contribution to security in Europe … which is also commensurate with its scale,” Schulz said on Monday, upon arrival at the EU leaders summit in Brussels.

Germany, the largest and most populous economy in the European Union faced criticism withers Since Russia invaded Ukraine for its failure to send certain weapons to help Kyiv. Berlin responded by saying that its armed forces, the Bundeswehr, lacked basic military equipment and could not provide more Heavy weapons such as tanks or howitzers, a few of which it plans to send to Ukraine.

While the latter plan will help address these shortcomings, it is designed to operate over several years and cannot change the situation immediately. Some hard-line voices within Germany argue that the country should go further.

Here are five things to know about the newly agreed German military investment fund, the so-called Sondervermögen.

1) Germany will now (mostly) meet NATO spending targets

An infusion of €100 billion would raise Germany’s annual military spending from around €50 billion to an average of €70 billion over five years. This would bring Germany in line with NATO’s goal of spending 2 percent of economic output on defense – a commitment that Berlin has flagrantly violated thus far.

However, the agreement reached on Sunday night falls short of the 2% level in the German constitution. Instead, it says the benchmark should be reached “on the multi-year average,” which means Germany could spend more than 2 percent in some years due to large military investments, but less in others.

Critics such as Rüdiger Wolff, a former foreign minister in the German Defense Ministry, say this is not enough.

During a German parliament hearing last month, Wolf said that only €100 billion should be used to address modernization needs and equipment gaps – and that Germany should meet its 2 per cent target through an additional increase in the regular annual defense budget from €50 billion to €70. billion euros.

He argued that this approach was the only way to “permanently provide the necessary financial resources” for the Bundeswehr to carry out its tasks within NATO “in terms of breadth and depth”.

2) Some budget nonsense was required

But strengthening the country’s systemic defense budget is a sensitive topic in Germany, which has long adhered to strict debt rules.

In Germany’s current ruling coalition, Finance Minister Christian Lindner – a member of the fiscally conservative Liberal Democrats – wants the country to return “debt rein”, the constitutionally mandated fiscal restraint rules that have been suspended for two years due to the coronavirus. pandemic.

This is the main reason why the €100 billion was created as a special fund – it avoids counting huge investments as part of the country’s regular budget and relieves it of debt constraint.

In order to do so, the special fund must be included in the German constitution, a move that requires a two-thirds majority in the German parliament. This means that the ruling coalition led by Schulz must reach an agreement on the funds with the opposition from the center-right, which took weeks of negotiations.

With the special fund running out after five years, the idea is that by then the regular defense budget should be increased to at least €70 billion in order for Germany to continue meeting NATO’s 2 percent spending target even without the special cash injection. However, it remains unclear how such budget increases can be arranged with Lindner’s disciplined fiscal plans and debt-reinforcement.

However, given that Germany will have another general election in a little more than three years, it may well be that by the time the special fund runs out there will be a new government that will have to worry about such questions – and in the end, it can decide Always create another special military chest.

Other EU countries, which have less favorable terms of borrowing in financial markets and have greater debt than Germany, can only dream of such luxury. Many countries want the European Union Excluded military upgrades of the EU’s strict fiscal rules – a requirement rejected by the German government, particularly Lindner.

3) New planes, ships and tanks are on the way

Although the official list of military investments in Germany is classified, there is one huge project announced by the government: the purchase American F-35 stealth fighter aircraft, which is supposed to replace the Tornado combat aircraft decades ago. It should be noted that these high-tech aircraft should be able, if worst, to carry US nuclear weapons, a concern renewed with Vladimir Putin’s concern about Russia’s nuclear arsenal.

The German government has also said it wants to improve the general equipment of its troops, which has long suffered from a long list of shortcomings – missing rifles or night rifles, inadequate body armor, and defective training facilities.

“I must tell you that there are appalling shortcomings in the area of ​​equipment and combat readiness,” said Eva Hoegel, who serves as an ombudsman and advocate for military personnel as a Parliamentary Commissioner for the German Armed Forces.

Högl, speaking during a discussion in April, cited one example: the German Navy’s diving force at Eckernförde “has not had a working swimming hall for more than 10 years.”

Sunday’s agreement states that the new money must be used in the Bundeswehr’s investments, raising hopes among German defense companies such as Rheinmetall that they will get new orders for new tanks and ammunition. Meanwhile, shipyards in northern Germany hope to build five new corvettes, more frigates and several combat boats, reports NDR public radio. mentioned. About 60 percent of the German Army’s helicopters are currently unable to fly, which means there is an urgent need for investment as well.

However, one of the challenges will be to ensure that investments are implemented in a timely manner. The German Military Procurement Office is notorious for being slow and bureaucratic. Hoegel warned that these problems “are getting more, not less.”

4) But Ukraine will not benefit immediately

Given that €100 billion will be spent over five years, it is unlikely that Germany will soon have more tanks and artillery to donate to Ukraine.

However, the tanks that Ukraine has ordered from Germany for months – the Leopard main battle tank and the Marder infantry fighting vehicle – will come not from the country’s army stocks but from defense companies. These companies say they have discontinued models of those tanks for sale.

Schulz has so far refused to grant companies permission to export these tanks, Quoting concerns This move could escalate the war and possibly make Germany a target.

5) Germany’s critics will still want to see action

Schulz’s government has come under international criticism in recent months for being too reluctant to provide Ukraine with military support. While Schulz’s pledges to make Germany a pre-eminent European military power are welcomed in many EU capitals, especially in the East, many nations are waiting to see if these words will be followed by action.

On this front, Schulz’s track record to date is very poor.

The chancellor will have another opportunity to lay out his plans for the special fund, and military support for Ukraine more broadly, during a speech in Parliament on Wednesday morning. Parliament is due to adopt the special fund on Friday.