Germany’s Defence Minister, Boris Pistorius, has confessed that his nation’s security expenditure is unable to match the prevailing threats due to stringent financial rules in Berlin. His acknowledgment came ahead of Chancellor Olaf Scholz’s announcement at the NATO summit in Washington that Germany is duly complying with its alliance obligations of allocating a minimum of 2% of its GDP towards defence and security.
Scholz’s administration achieved this target for the current year thanks to a sluggish economy predicted to grow by only 0.35% and a one-time allocation from a unique off-balance-sheet fund worth €100 billion set up in 2022. Now that this fund has been depleted or allocated elsewhere, Pistorius is attempting to divert his department’s financial resources from the special fund to the routine defence budget. However, his request for €6 billion was cut down to just €1 billion, as part of a near-even budget agreement for 2025.
Commenting on a military base visit, Pistorius expressed his frustration, acknowledging the lack of funds would restrict planned investments in defence equipment based on the level of threat. He added, it’s only fair to expect more from Germany as it’s Europe’s largest economy and NATO member, hence carries a unique responsibility.
Defence experts indicate the second successive annual funding gap in Germany’s defence budget might undermine Berlin’s enduring commitment to the financial rules of NATO and its internal defence. This shortfall has also highlighted unresolved ambiguities in Germany about its defence and security priorities.
In light of Russia’s invasion of Ukraine in February 2022, Scholz initiated an increase in defence spending called the Zeitenwende, confirming Germany’s unwavering commitment to protecting its freedom, democracy, and prosperity. However, one group criticised the €100 billion special fund revealed by him as being inadequate to counter years of underfunding in the military. On the other hand, the Tageszeitung newspaper, reflecting the left-wing opposition’s resistance to increased defence spending, sarcastically reported: “Germany Rearms thanks to Putin”.
Earlier this week, the opposing Christian Democratic Union argued that Berlin had achieved its 2% NATO expenditure target through fiscal sleight of hand.
Patrick Sensburg, the CDU defence spokesperson and head of Germany’s reserve forces association, has raised serious concerns regarding Germany’s defence budget for the upcoming year. He warns that a drastic 85% decrease in extra funds than previously anticipated will lead to significant deficiencies within the German defence forces.
This concern is not confined to the opposition, as key figures from the Social Democratic Party (SPD), including Pistorius and Scholz, are also alarmed at the sobering shortfall expected for the 2025 defence budget.
Andreas Schwarz, an SPD MP and budgetary spokesperson, criticised the outcome of government budget discussions, stating it doesn’t match the requirements of the defence sector. He stressed that it’s their duty to bring about substantial enhancements in the parliamentary process. However, how much progress they can achieve is still uncertain.
Last week, Chancellor Scholz supported cuts in the budgets of all ministries in a bid to return Germany to its self-imposed constraints, put on hold during the pandemic, to control deficit expenditure.
When pressed on the subject of defence fund allocation and Germany’s Nato obligations, Scholz reassured that his Zeitenwende commitments are intact. He reassured that the regular budget would sufficiently fund Germany’s defence forces and meet Nato standards no later than 2028.
Still, even his coalition partners acknowledge that there are lingering challenges. Robert Habeck, the Green Party’s vice-chancellor, expressed that the defence spending planned for 2025 does not align with Germany’s security needs. However, he also emphasised that he would not want the improvements in defence capabilities to compromise spending on education, research, culture and social welfare.