The German parliament recently voted to pass a bill that significantly increases spending on defense and infrastructure, a move that represents a major shift for Germany and could reshape the defense landscape in Europe. The bill received support from more than two-thirds of the members of the Bundestag, meeting the majority required to pass the legislation.
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03-20, 2025This law will allow spending in the defense and security sectors to be exempt from Germany's strict debt rules and establish an infrastructure fund of up to 500 billion euros (approximately $547 billion or £420 billion). This move is historic for Germany, which has traditionally been cautious on debt issues, and could have a significant impact on Europe, especially against the backdrop of Russia's full-scale invasion of Ukraine and former US President Trump's hinting at uncertainty regarding NATO and European defense commitments.
However, the bill also needs to be approved by the Bundesrat (Upper House), which also requires a two-thirds majority, before it can officially take effect. The Senate is expected to vote this Friday. Friedrich Merz, the driving force behind these plans, is expected to be confirmed as Germany's new Chancellor soon. He told the Lower House during Tuesday's debate that Germany had "felt a false sense of security" for the past decade.
Merz stated, "The decision we are making today... will be the first major step towards a new European defense community." He also added that this community would include "non-EU members." European Commission President Ursula von der Leyen called the vote result "excellent news." She stated at a press conference with Danish Prime Minister Mette Frederiksen that the vote "sends a very clear message to Europe that Germany is determined to invest massively in defense." Frederiksen called it "good news for all Europeans."
Germany has long been cautious about defense spending, not only due to historical reasons since 1945 but also due to the impact of the 2009 global debt crisis. Under this measure, any defense spending exceeding 1% of Germany's GDP will no longer be subject to borrowing restrictions. Previously, this debt limit was fixed at 0.35% of GDP. This change could transform Germany's somewhat neglected armed forces, especially in an era of great uncertainty in Europe. Furthermore, this vote is not just about defense; it also involves releasing 500 billion euros for German infrastructure construction, such as repairing bridges and roads, as well as paying for measures to address climate change, which the Green Party insisted on.
Merz's CDU, after winning last month's German election, quickly proposed these measures. In an interview on Sunday, he specifically mentioned the possibility of the United States withdrawing its defense of Europe and Trump's talks with Russian President Putin, saying that "the situation has deteriorated in recent weeks." Merz told public broadcaster ARD: "That's why we have to act quickly." For Merz, this is a significant political victory. Once he becomes Chancellor, he will be able to use hundreds of billions of euros to invest in the country, which some in Germany have called a "fiscal bazooka."
This is also an important moment for Ukraine. The defense plan approved by the Bundestag today also allows aid spending to "countries attacked in violation of international law" to be exempt from debt restrictions. This will allow outgoing Chancellor Olaf Scholz to disburse 3 billion euros in aid to Ukraine as early as next week. Merz chose to push these changes through the old parliament because he knew that the voting arithmetic was more favorable now than it would be when the new parliament convenes on March 25. The far-right Alternative for Germany and the far-left Left Party performed well in the February elections, but they oppose Merz's plans. Merz has yet to reach any coalition agreements to form a German government after the election victory and has announced ambitious plans to form a government before Easter. However, coalition negotiations in Germany could last for months.
