Tooling Up

Germany’s defense budget gets a small boost of €650 million

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It’s a start. Source: Reuters

Defense Minister Ursula von der Leyen won a small increase in the latest budget plan, Handelsblatt has learned, but German military spending will still fall far short of the 1.5 percent of GDP by 2024 that Chancellor Angela Merkel will pledge at the NATO summit next week.

Berlin already abandoned the original target of 2 percent of GDP by 2024. The new boost of €650 million ($754 million) grudgingly given by Finance Minister Olaf Scholz brings the increase in spending to €4 billion and the overall defense budget next year to €42.9 billion. But critics claim the planned increases in spending through 2024 will actually reduce military expenditures, rather than increase the spending quotient.

Too little, too late

Moreover, Jürgen Schnell, the former deputy inspector general for the German armed forces, said the spending will go mostly to an increase in personnel and won’t begin to cover urgently needed modernization in equipment and weapons systems. “In spite of a healthy economy, the armed forces remain enormously underfinanced,” said Mr. Schnell, who is currently at the Bundeswehr University Munich.

Mr. Schnell estimates that defense spending would have to increase by another €2 billion a year through the government’s current term ending in 2021, and €3 billion a year after that to reach 1.5 percent of GDP. In fact, under the current financial plan, defense spending will rise to only €43.9 billion by 2022, pushing it below 1.2 percent of GDP from 1.3 percent currently.

And increasing the number of soldiers will eat up most of the budget boost, Mr. Schnell calculates. Funds available for investment in weapons systems will decline from €8 billion in 2019 to just €4.3 billion in 2022.

The increase in the 2019 budget came only after Ms. von der Leyen formally dissented from Mr. Scholz’s original proposal in May, complaining that budget would not allow Germany to keep its international commitments. But the increase is too small to achieve her goals. Mr. Scholz is making a further concession that the defense ministry can put unspent funds up to €500 million into a reserve if some weapons projects fall behind schedule.

German spending on defense has been one of the many contentious points between Berlin and President Donald Trump, who has accused Germany of free-riding on US spending and called on NATO allies to live up to their commitments.

Martin Greive and Donata Riedel are Handelsblatt reporters in Berlin. Darrell Delamaide adapted this article into English for Handelsblatt Global. To contact the authors: greive@handelsblatt.com and riedel@handelsblatt.com.

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