Germany set for massive rearmament as divide with US widens

Germany set for massive rearmament as divide with US widens
By Jastinder KHERA
Berlin (AFP) Mar 5, 2025

Germany is set to ramp up defence spending with the incoming government, saying it wants to invest hundreds of billions of euros to bolster Europe's security as US guarantees look increasingly fragile.

Likely next chancellor Friedrich Merz said Tuesday he planned to reform the country's strict constitutional "debt brake" to pump up defence spending and pursue massive infrastructure investments.

The announcement came just over a week after national elections and with talks underway between Merz's conservative CDU/CSU bloc and the centre-left Social Democrats to forge a new governing alliance.

The two sides however agreed to try to rush through the changes before a government is formed, as US President Donald Trump's public falling out last week with Ukrainian counterpart Volodymyr Zelensky added to the sense of urgency in Europe.

Trump's moves to open direct talks with Russian President Vladimir Putin have left Europeans feeling their interests could be overlooked in any deal to end the fighting that started with Moscow's full-scale invasion three years ago.

Germany's EU partners, who are gathering for a key summit on Thursday to discuss Ukraine and defence, have been waiting for movement from Berlin after months of political paralysis since the collapse of Chancellor Olaf Scholz's government in November.

- 'Dizzying' -

The proposed reform of Germany's budget rules would see military expenditure over one percent of GDP exempted from constitutional limits on taking on new debt.

In practice, the reform could see Germany's defence budget double to 100 billion euros ($107 billion) per year, said Manuela Schwesig, a senior Social Democrat involved in coalition talks.

CDU leader Merz and his partners also want to set up a 500-billion-euro fund to upgrade Germany's creaking infrastructure and help drag the country out of two straight years of recession.

The size of the investments in consideration were "dizzying", Markus Soeder, the leader of the CDU's Bavarian sister party the CSU, said Wednesday.

But the announcement sent a clear signal: "Germany is defending itself, Germany is arming itself, Germany is renewing itself."

After coming out on top in last month's vote, Merz said he had "no illusions" about the US president and has wasted no time in ditching his party's traditional aversion to debt to boost Germany's defences.

The constitutional change is set to be rushed through the outgoing parliament, where the conservatives and the Social Democrats would have the necessary two-thirds majority with the Greens.

According to the Frankfurter Allgemeine Zeitung newspaper, the first debate on the reform is planned to take place in the Bundestag on March 13, with the final vote four days later.

If the plan succeeds, it could be a "real game changer" and "quickly overcome Germany's economic stagnation", said Sebastian Dullien, director of the IMK economic research institute.

In a further sign of the changing times, Germany called for an overhaul of the EU's strict spending rules to allow countries to invest more in defence over the long term, European diplomats told AFP.

Germany's EU ambassador surprised his European counterparts during a Brussels meeting when he suggested giving member states more room to spend, beyond a four-year exemption proposed this week, several diplomats said.

EU leaders are set to approve the exemption at Thursday's summit. However, the German call to go even further was not welcomed by other states with a frugal approach.

- 'Germany, Europe must invest' -

Merz met on Wednesday with current Social Democrat Chancellor Olaf Scholz, who welcomed the moves to boost defence, according to his spokesman Steffen Hebestreit.

The conservative leader also travelled to Brussels, where he held talks with NATO chief Mark Rutte.

Merz posted on X that the talks centred on "the defence capabilities of Europe and NATO and challenges related to security policy."

"Germany and Europe must now invest massively in their own defence capabilities. That is the best protection for Europe's security."

Rutte posted that Merz's leadership will be "crucial" as Europe seeks to bolster its defences.

"It's vital that we invest more in defence, increase defence production and continue to support Ukraine."

Germany wants long-term defence exemption in EU spending rules
Brussels, Belgium (AFP) Mar 5, 2025 - Germany has called for an overhaul of strict EU spending rules to allow countries to invest more in defence over the long term, European diplomats told AFP on Wednesday.

It comes after Germany's likely next chancellor, Friedrich Merz, this week vowed billions of euros in extra spending on defence and infrastructure.

The proposal marks a significant shift for a country that has, in the past, maintained a hardline stance on budgets and sought to avoid any loosening of spending rules.

With US President Donald Trump's pivot away from backing Ukraine casting doubt on future support for Europe as well, the bloc is planning a radical ramping up of defence investments to better protect itself.

EU leaders are set to approve the four-year exemption to allow member states to surge defence spending during an extraordinary summit in Brussels on Thursday.

But the German ambassador suggested that Brussels should be "going further", given the current geopolitical situation, one EU diplomat said.

However the ambassador's call that was not welcomed by other states with a frugal approach to spending.

"The Dutch and Swedes asked not to change the text," the diplomat added.

EU members are bound by spending rules demanding they keep the public deficit below three percent of economic output and debt at a maximum 60 percent of GDP.

The subject of changing the rules outright could be discussed during Thursday's summit, at which leaders are expected to endorse a plan by EU chief Ursula von der Leyen to spur defence investments and support Ukraine against Russia.

EU powerhouse Germany is set to pour billions more into defence after Merz said Tuesday that his centre-right CDU/CSU and the centre-left Social Democrats would propose to exempt more of the spending from the country's constitutionally enshrined "debt brake".

Ramping up defence expenditure, as the bloc is advocating, could make it difficult for member states to stay within the debt and deficit limits.

After long and painful negotiations to agree on a reform of the EU's spending rules, the bloc struck a deal last year -- before Trump's election victory in November.