German coalition unveils plans to up defense spending to at least $120B a year by 2030
Friedrich Merz's Christian Democrats, which won the largest share of the vote in elections on Feb. 23, working with the Social Democrats, said Tuesday they planned to ask parliament to exempt defense spending above 1% of GDP from rules that require the country's structural budget deficit does not exceed 0.35% of GDP.
Following exploratory talks, the CDU and SPD said they aimed to rush through the plan before the new parliament is formed in an unprecedented effort that would see defense spending jump to as much as $120 billion a year by 2030, paid for by stronger economic growth from a $535 billion stimulus package.
"In view of the threats to our freedom and peace on our continent, 'Whatever it takes' must also go for our defense now," Merz said.
The most recent decisions by the administration of U.S. President Donald Trump had, Merz suggested, played a role in the move by the CDU and its likely governing coalition partners, Chancellor Olaf Scholz's SPD.
"The political developments in Europe and the world are evolving faster than we anticipated just a week ago. Germany and Europe must now undertake extraordinary efforts to ensure our defense capabilities," Merz said.
SPD co-leader Lars Klingbeil called out the break-down in relations between Trump and Ukrainian President Volodymyr Zelensky directly, saying the imperative of investing in European strength and security was "the most important task of my political generation."
"With a view to the White House and the events that happened last Friday there in the Oval Office with President Zelensky, it has become all the more clear that we need a lot more money for our defense and for security in Europe," said Klingbeil.
The CDU and SPD said the urgency of the "special fund" for the German Armed Forces meant they would bring forward a law within six months of the new parliament to expedite planning and procurement for the Bundeswehr, together with a "priority list of quickly procured military equipment that will increase our country's defense readiness quickly and efficiently."
They added that given they had been forced to resort to emergency powers to unleash critically needed funds, a commission of experts would be tasked with coming up with legislative proposals to "modernize" the debt brake "to enable additional investments in strengthening our country on a permanent basis."
The defense spending increase from $86 billion in 2024 to $120 billion would bring Germany's defense budget within striking distance of the $149 billion, or approximately 3.5% of GDP, needed for German forces to plug the huge gap in the capabilities of its military to meet national defense needs and commitments to allies, according to the Bruegel Institute.
The German defense plan came a day after European Commission President Ursula von der Leyen floated a $841 billion "ReArm Europe Plan," using all the financial means at the continent's disposal to help member states urgently ramp up defense capabilities.
On Feb. 25, Britain, which after the United States has the joint second biggest NATO military alongside Germany -- announced plans to boost its defense budget to 2.5% of GDP by 2027 and 3% in the next parliament beginning in 2029.
Since coming back into office in January, Trump has been applying huge pressure on U.S. NATO allies in Europe to shoulder more of the burden of the cost of the 32-member country security alliance.
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