Germany - Military Spending

Chancellor Olaf Scholz, in a major shift for Germany’s defence policy, committed 100 billion euros ($113bn) in military spending as he promised a revamp of the country’s armed forces following Russia’s invasion of Ukraine. “It’s clear we need to invest significantly more in the security of our country, in order to protect our freedom and our democracy,” Scholz said on 27 February 2022 during a lengthy special sitting of the German parliament in Berlin. “We will from now on, year after year, invest more than two percent of gross domestic product (GDP) in our defence,” he said, which would potentially increase the annual defense budget to around €70 billion ($77 billion). The speech marked a clear change of policy that effectively tore up the playbook of successive German governments since the end of the Cold War.

Scholz told the Bundestag again on 22 June 2023 that the German government currently plans to spend 2% of GDP in 2024 "for the first time in decades," at least if its current budget and GDP projections prove accurate. "With this, we underline what I said in this house on February 27, 2022: Our promise of mutual defense in NATO is valid with no ifs and no buts," Scholz said.

However, a year on, Berlin has only doled out (but not spent) €30 billion of the promised €100 billion, and indicated that the money wouldn’t be transferred to defense contractors until the promised weapons and gear were actually delivered. The Scholz government’s cautious approach has sparked complaining both within Germany and from Berlin’s NATO allies, with some observers picking apart his comments and concluding that the chancellor may not make good on the spending commitments.

The Kiel Institute for the World Economy’s Ukraine Support Tracker calculated that Germany had delivered or committed to deliver over €7.5 billion in military support to Ukraine between January 2022 and May 2023 – more than any other country besides the US.

The German government stepped back from its plan to commit to NATO’s defense spending target of 2% of the gross domestic product every year. German Chancellor Olaf Scholz's cabinet deleted at the last minute the corresponding clause from the draft budget financing law which it passed on 16 August 2023. This way, Germany will be able to continue targeting its current commitment to spend 2% of GDP on defense on average over a five-year period. When asked to comment on this report, German government spokeswoman Christiane Hoffmann told reporters that the plans to reach the 2% military spending target still stand for Berlin. However, she refused to give any further comments on the change to the budget law.

Germany’s government and conservative opposition agreed on 30 May 2022 a deal that will release 100bn euros ($107bn) to modernise the country’s army in response to Russia. An agreement was reached to create a special fund for military procurement that will also allow Berlin to achieve NATO’s target of spending two percent of GDP on defence. The deal, which involves amending budgetary rules in the national constitution, was struck after weeks of difficult negotiations between the parties in the governing coalition and the conservatives of former chancellor Angela Merkel. On June 3, the center-right opposition in the Bundestag joined forces with the ruling parties to change the constitution and allow the additional debt — an unprecedented occurrence in the history of the Federal Republic.

Boris Pistorius took office in January 2023 after his predecessor Christine Lambrecht, also a Social Democrat, resigned in part because of a wave of discontent with her leadership that leaked from within the army ranks. And the new minister has been pushing for more money: he suggested that the special fund was not enough to cover the military's needs, and called for his ministry's budget to be increased by an extra €10 billion. Some of his colleagues, among them his party's co-leader Saskia Esken, appeared less than enthusiastic about the idea.

German Defense Minister Boris Pistorius said the country's military, the Bundeswehr, will not be able to bridge gaps in funding and supplies by 2030. "We all know that the existing gaps cannot be completely closed by 2030... It will take years. Everyone is aware of that," Pistorius told the weekly Welt am Sonntag newspaper in an interview published 01 April 2023.

"Should the worst case happen, and an American president enters the White House who ends up distancing themselves from Europe and NATO, we would be faced with a challenge which at the moment is barely imaginable," he said. Even a pro-European US president will be shifting their focus to the Indo-Pacific region, according to the German defense minister. "That means for us in any case: more European responsibility for security and defense in Europe," he said.

The Defense Ministry had previously calculated that the armed forces would need an investment of €300 billion ($326 billion) to replenish and update its stocks. Pistorius considered such an investment by the end of the decade not possible, but also "not necessary," saying instead that priorities must be chosen. "One of these priorities is the protection of the eastern flank of NATO. For us, that means we first set up a fully equipped division by 2025 and adequately contribute to NATO's Response Force," he told the Welt am Sonntag.

Chancellor Olaf Scholz announced a special fund to raise €100 billion for the Bundeswehr last year, although this had not yet been put to use. The government last week also earmarked €12 billion over the next nine years to supply Ukraine with newly produced weapons and ammunition rather than from German stockpiles. The original estimate was that only €8 billion of the special fund would have to go toward the interest payments on the loan that the government had taken out. By early 2023, thanks to rising interest rates, that estimate has gone up to €13 billion. So that leaves €87 billion of actual money to spend.

Scholz's center-left coalition was dogged by broadsides from the conservative opposition and critics who say Germany's troops have not benefited from this windfall. "The Bundeswehr has tremendous deficits, and the Zeitenwende hasn't even started in it," Roderich Kiesewetter, foreign policy spokesman for the Christian Democratic Union (CDU) told the Augsburger Allgemeine newspaper. "The military has lost a year and is barer than it was at the start of 2022."

The Defense Ministry said that by February 2023, over €30 billion of the €100 billion had already been earmarked for major purchases: new orders of F-35 fighter jets and heavy transport helicopters from the United States and a new digitalization drive to modernize the forces. There had been some criticism from European allies, and within Germany, that so many big orders have been placed in the United States, though ultimately most of the special fund is likely to stay in Germany, which has a strong weapons industry.

The complexities of procurement remained an issue that defied easy fixes: It's a very complex ecosystem between parliament as the budget holder, the Defense Ministry, procurement agencies and the armed forces. After the Cold War the Bundeswehr settled into a culture in which speed was not a priority. The bureaucratic colossus that is the military's procurement system suffered from a "perfectionism" in its regulations that often means the troops don't actually get what they need. There was an enormous risk aversion to doing anything wrong and spending maybe a little bit too much money on things to get them through the procurement pipeline faster.

Though it is below the 2% marker, Germany's defense budget is not exactly small. Germany has the 7th-best-funded military in the world, with a higher budget than that of France. Not only that: German military expenditure has risen over the last 10 years, from around €32.5 billion in 2011 to over €50.3 billion this year.

The German military did not seem to be in a good state. Eva Högl, the German parliament's defense commissioner, painted a sorry picture on 15 March 2022 when she presented her annual report on the military. "I was very shocked by the reports from soldiers about the material shortcomings in all three armed services," she wrote in the report's introduction. "Not a single visit to the troops and not a single conversation with soldiers in which I was not told about some deficits." Only 50% of some major hardware was operational, she said, before adding that "everyday equipment" like armored vests and winter jackets often had to be delivered later while soldiers were already in the field. "This is unacceptable and has to be improved," she wrote.

Despite all this, she contradicted the alarming verdict delivered by Army Inspector Lieutenant General Alfons Mais on his LinkedIn page in late February, when he said that the army he led was "more or less bare." That's going a bit far, insisted Högl: "I would say that that was, of course, a very emotional statement," she told reporters. "General Mais pointed out certain problems, but the Bundeswehr is ready for action … The 'cold start' capability of the Bundeswehr needs to be significantly improved, but the Bundeswehr is ready."

On 22 June 2021 the cabinet approved the government draft for the federal budget for 2022 and the financial plan up to 2025. This includes a budget of around 50.3 billion euros for the defense budget for 2022. The necessary financial support for the Bundeswehr continues and underlines the importance of operational and resilient armed forces, even in times of crisis. In the coming year 2022, the budget will be over 50 billion euros for the first time. The Federal Government reaffirmed its agreement that certain large-scale projects to close capability gaps in accordance with the capability profile of the Bundeswehr and thus to meet international commitments that have already been made will be financed and that the defense budget will be able to achieve the capability goals agreed in this regard.

In a speech delivered 07 November 2019 at the Bundeswehr University in Munich, German Defense Minister Annegret Kramp-Karrenbauer . pledged to boost defense spending to 2% of GDP, a NATO target, by 2031. While it would be well behind the 2024 goal, it could eventually make Germany the third largest defense spender in the world, behind the US and China. For now, Germany would try to reach 1.5% of GDP by 2024, she added.

In its yearly financial report on military capacity and engagement to NATO, in February 2019 Germany promised to increase expenditures to more than 1.5 percent of gross domestic product by 2024. That goal fails to satisfy the alliance's agreed spending benchmarks and could ultimately be politically tricky to implement at home in the wake of new financial forecasts. The plan, known as the "Strategic Level Report," envisions an 80 percent increase in defense spending between 2014 and 2024, or €27 billion ($31 billion) in absolute figures. That would bring Germany's total military expenditures to €60 billion by 2024.

The proposed 2019 defense budget was set at US$51.2 billion for defense, which was US$4.7 billion more than Berlin was slated to spend in 2018. The German military actively lobbied for increased funding amid pressure from Washington to increase NATO defense spending, even as the Federal Republic's military budget was already set to reach over $51 billion in 2019. Germany’s parliamentary budget committee agreed 09 November 2018 to allocate billions of euros in additional funding to the Bundeswehr, after 15 hours of intense negotiations. The new budget, which was only agreed after several revisions and amendments were made, would see the Ministry of Defence allocated €43.2 billion [US$49.1 billion] to procure a fleet of new transport helicopters and ships.

Just over a third of the new military equipment delivered to the Bundeswehr by manufacturers in 2017 is fit for service, the German defense ministry has revealed in an October 2018. Of the 97 major pieces of equipment delivered to the armed forces last year, only 38 of them were combat ready, the report said. According to the report, of the 71 Puma infantry fighting vehicles delivered, 27 are combat ready. Of the eight new Airbus A400M Atlas military transports, half are fully operational. Just two of the seven Eurocopter Tiger combat helicopters and four of seven NH Industries' NH90 transport helicopters are combat ready. Furthermore, just one of the four Eurofighter Typhoon fighter jets delivered in 2017 is fit for service.

Berlin is looking to achieve an equipment readiness level of 70 percent, and is most concerned with the state of the Puma and A400M deliveries. Defense ministry parliamentary secretary of state Peter Tauber said the quality of the planes was "increasing," while urging the defense industry to "reach the agreed upon indicators as soon as possible."

Defense Minister Ursula von der Leyen on 20 June 2018 reaffirmed Germany's commitment to significantly increasing its defense budget. Germany had announced that it would increase its defense spending to 1.5 percent of GDP by 2024, but will fail to meet its NATO spending obligation of 2 percent of GDP. US Secretary of Defense Jim Mattis said "I think they are on the right track. We welcome the announcement that Germany wants to increase its defense spending by 80 percent by 2024".

German Chancellor Angela Merkel said on 15 June 2018 that Germany would not be able to meet its NATO spending obligation until well after 2024. German Defense Minister Ursula von der Leyen put in a request for an increase to the military budget of €12 billion ($14.6 billion) over the current term of parliament, an amount greatly in excess of present budget plans, a newspaper reported on 29 April 2018. The Bild am Sonntag said Finance Minister Olaf Scholz had so far foreseen an increase in defense spending of just €5.5 billion over the four years to 2021. The Defense Ministry had already criticized Scholz's plan on Friday as "inadequate in view of the huge accumulated needs and required modernization, particularly in the medium term."

According to the paper, von der Leyen will threaten to stop at least one international armaments project scheduled for 2019 if the defense budget is not given a considerable boost. The first to go would be a planned submarine deal with Norway, followed by the purchase of six C-130 Hercules transport aircraft, according to Bild.

Germany's defense budget in 2017 was around €37 billion and is expected to reach €39 billion in 2018. Although that represents the ninth-highest defense budget in the world, it still falls far short of the 2 percent of national GDP that NATO would like to see. Over the past few years, there has been growing criticism that the Bundeswehr is underequipped.

Donald Trump called for NATO members to increase their defense spending to 2 percent of their GDP by 2024. If Social Democratic chairman and candidate for chancellor Martin Schulz won power in Germany's national election in September 2017, Trump won't get anywhere near that much. "I'm not of the opinion that NATO has agreed to achieve this 2 percent goal in defense spending," Schulz told members of the foreign press in Berlin 10 April 2017. "Twenty billion euros ($21 billion) or more in additional defense expenditures would certainly not be a goal my government would pursue."

At their 2014 summit in Wales, NATO members set 2 percent as a "guideline." Trump's White House treats this as a commitment, but the SPD led by Schulz say it's no such thing. "If I interpret it correctly, all that was agreed was that we'd try to approach it," Schulz said. "It doesn't seem to me to be the highest priority to spend 20 billion euros more just to have a force armed to the teeth in the middle of Europe." Foreign Minister Sigmar Gabriel, a member of Schulz' party, has questioned how the target should be assessed, arguing it should include aid and development programs.

Social Democratic Party (SPD) leader Martin Schulz in an interview published 26 March 2017 by the German weekly "Bild am Sonntag" said he wanted to increase defense spending, saying Germany's armed forces, known as the Bundeswehr, needed more money and should receive it. "We owe it to our soldiers that they are optimally equipped," Schulz said in the interview. However, he stopped short of calling for a comprehensive overhaul of the armed forces, in contrast to Chancellor Angela Merkel, who has vowed to go forward with a significant increase in defense spending.

To completely equip the army, Germany needs to significantly increase its defense budget. NATO requires all its members to spend 2 percent of their GDP for military purposes, but Germany spent only 1.16 percent in 2015 and 1.15 percent in 2016.

The German armed forces are 30 percent underequipped and will need years to bring their lacking arsenals up to speed, Lt. General Bruno Kasdorf, Inspector of the German Army, warned in a radio interview on 22 June 2015. He praised the government’s decision to ramp up the country’s defense budget. The Bundeswehr will need a lot of new arms and other military hardware in the coming decade, General Kasdorf told Deutschlandfunk radio, adding that the country had neither the money nor production capacities to quickly rectify the situation.

At 1.29 percent of output, by 2014 Germany's defense spending was well below NATO's 2 percent target. The military said in late 2014 that a large proportion of equipment such as helicopters and fighter jets is unfit for service, casting doubt on Germany’s ability to help provide defence for its NATO allies. The military said only 70 of 180 Boxer armored fighting vehicles, seven of 43 navy helicopters, 42 of 109 Eurofighters and 38 of 89 Tornados were operational. Transall transport planes were also in poor condition, with only 24 out of 56 deployable. These are symptoms of Germany's push for fiscal austerity. Germany has pushed strict austerity measures in order to combat deficits and public debt.

By 2015 Germany planned to boost its defense budget by 6.2 percent over the next five years, aiming to increase defense spending to more than €35 billion by 2019 and comprehensively modernize the army. Between 2010-2014, Berlin had raised defense spending seven percent to €32.4 billion, while French defense spending fell 2.5 percent over the same period to €31.4 billion.

In 2011, Berlin decided to save money by providing only 70 percent of required equipment for some branches of the military, such as armored divisions.

On 07 July 2010 Germany's Cabinet approved a 2011 budget that foresaw a 3.8 percent cut to spending from 2010 and lower new borrowing, aimed at putting Europe's biggest economy on track to reduce its debt. The Defense Ministry was getting a 1.4 percent increase to euro31.5 billion [US$39.8 billion]. However, Defense Minister Karl-Theodor zu Guttenberg stressed the need to save euro 1 billion a year in the long term. By mid-2010 Finance Minister Wolfgang Schäuble was seeking savings of €80 billion, or about $102 billion, between 2011 and 2014. Under pressure to find cuts in the Defense Ministry, Guttenberg said the armed forces would have to save as much as €8 billion over that time. The defense ministry is aiming to cut some 8.3 billion euros ($10.6 billion) off its budget over the next four years.

Military officials proposed staying out of defense contractor EADS' Talarion drone project, revising the number of Airbus A400M transport planes Germany is ordering, a reduction in plans for helicopter purchases, tanks and jet fighters. Reductions might include the immediate grounding of 15 Transall cargo aircraft. The number of Tornado jet fighters in service would be reduced from 185 to 85 “as quickly as possible”, and orders for Puma tanks reduced from 400 to 280. The number of NH-90 naval helicopters on order could be cut from 122 to just 80, and the number of Tiger multi-role attack helicopters from 80 to 40. The Germany navy might have to cut its plans for new frigates from four to three, and take up to eight frigates, 10 high-speed motor launches and 21 Sea King helicopters out of service. Other cuts will include closing many of the 403 barracks, as well as trimming the 9 separate military commands.

On 19 March 2010, the German Bundestag passed the resolution on the 2010 Federal Budget. In a roll call vote, 313 members of the German Bundestag voted for and 256 voted against the draft budget. With 31.11 billion euros this year’s defence budget is at about the same level as in the previous year. As in 2009, half of the defence budget will be accounted for by personnel expenditure. A total of 16.33 billion euros is earmarked for the remuneration of Bundeswehr personnel in the 2010 budget year, as opposed to 16.46 billion euros in the previous budget year. The same amount as last year, 454.65 million euros, is to be made available for military pay and other allowances for service conscripts.

In 2006 Germany’s defense budget totaled US$35.7 billion, or 1.5 percent of gross domestic product. Germany’s relatively low level of defense spending is in keeping with the military’s transformation into an international peacekeeping and intervention force.

Over the 1990s, Germany steadily expanded its participation in peacekeeping and humanitarian operations, development assistance, and, most recently, the War on Terrorism. Germany's armed forces form a major component of Alliance military capabilities. Germany is in the process of a significant reform of its Armed Forces. As part of this reform, and with the aim of creating a more professional and deployable force, Germany has reduced active-duty military strength from 338,000 to 282,000 (of whom 85,000 are conscripts). Dedication of adequate resources at a time of tight budgets will be crucial to the successful completion of this reform.

Germany's defense spending increased by a modest 0.6 percent in 2002 (to $29.4 billion), but relative to GDP, remained stable at 1.5 percent -- below the average of 1.9 percent of GDP for all non-U.S. NATO nations. Continuing economic difficulties make it doubtful that defense budgets will be increased in the near-term, and defense spending as a percentage of GDP is expected to remain flat through 2006. In December 2002, Defense Minister Struck accordingly announced deep cuts in most of Germany's major defense acquisition and modernization programs, including A-400M air transports, Eurofighter tactical aircraft, Tiger attack helicopters, Meteor and IRIS-T air-to-air missiles, and frigate, corvette and submarine construction projects. Germany provides the second largest share of total NATO ground combat capability and fourth largest shares of total NATO naval supply, tender and transport tonnage; combat aircraft capability; and military transport aircraft capacity.

Germany ranked first among NATO nations in personnel contributions to multinational peace operations at the end of 2002. There were about 3,800 German troops serving with KFOR in Kosovo, another 1,300 supporting SFOR in Bosnia, and 159 deployed with NATO's Operation ALLIED HARMONY in the Former Yugoslav Republic of Macedonia (FYROM). Moreover, Germany commanded NATO's Task Force Fox in FYROM from September 2001 to June 2002, supporting the international observers monitoring implementation of the peace settlement which resolved that nation's recent civil war. During 2002, Germany also contributed small military contingents to UN peace operations in Sierra Leone, the Republic of Georgia and along the Iraq-Kuwait border, and about 360 civilian police to the UN Interim Administration Mission in Kosovo (UNMIK). Germany also made very large financial contributions to UN peace operations, ranking fourth in absolute terms after the United States, Japan and France ($186 million).

German foreign development assistance contributions totaled almost $6 billion for 2001, ranking third among all the nations covered in this Report. Germany has pledged about $280 million over four years for Afghanistan reconstruction and humanitarian assistance, and has taken the lead in training and equipping the Afghan police. About $12 million was contributed to humanitarian assistance programs in the Balkans during 2002. Germany also contributed $5.1 million for counter proliferation and nuclear threat reduction efforts in 2002, mainly to programs for the destruction and physical protection of chemical and nuclear weapons stocks in Russia and the Ukraine.

Since September 11, 2001, German federal and local governments have allocated considerable resources to enhance force protection for U.S. military personnel and dependents. Bundeswehr troops have been deployed to protect U.S. military facilities and additional support provided by local police. Germany contributed over $861 million in 2001 to offset the costs of maintaining U.S. military forces on its soil, representing about 21 percent of U.S. non-personnel stationing costs in Germany. Almost all cost sharing was in the form of indirect contributions (i.e., waived taxes, rents and other forgone revenues). Finally, Germany works diligently to assure that its airspace is available for both U.S. and NATO training needs, and has granted a blanket clearance for U.S. military aircraft transiting its territory.