German legislators have approved a significant increase in defense and infrastructure funding, marking a major shift that could alter the landscape of European defense. The Bundestag passed the measure with the necessary two-thirds majority on Tuesday.
This new legislation exempts defense and security expenditures from Germany's stringent debt regulations and establishes a €500 billion infrastructure fund. This decision is a notable departure for Germany, traditionally cautious about debt, and could have substantial implications for Europe amid ongoing tensions from Russia's invasion of Ukraine and previous uncertainties about the US commitment to NATO under former President Donald Trump.
However, the Bundesrat, Germany's upper house, must still approve the changes with a two-thirds majority for them to become law. This vote is scheduled for Friday.
Friedrich Merz, who is expected to become Germany's next chancellor, spearheaded these initiatives. During the debate, he remarked that Germany had been under a "false sense of security" for the last decade. He emphasized that this decision is a crucial step toward a new European defense community, including countries outside the European Union.
European Commission President Ursula von der Leyen praised the decision as "excellent news," highlighting Germany's commitment to significantly investing in defense. Danish Prime Minister Mette Frederiksen also welcomed the move, calling it "fantastic news for all Europeans."
Germany's cautious approach to defense spending has historical roots and was influenced by the 2009 global debt crisis. Despite concerns about a close vote, the measure passed comfortably with 513 votes in favor and 207 against, surpassing the required majority.
A prominent German newspaper described the vote as a "day of destiny for our nation." The new policy allows defense spending exceeding 1% of Germany's GDP to bypass borrowing limits, previously capped at 0.35% of GDP. This change could revitalize Germany's underfunded military amid Europe's uncertain future.
The vote also addresses infrastructure, allocating €500 billion for improvements like roads and bridges, and funding climate change initiatives, a priority for the Green Party. Merz, whose CDU party recently won the general election, swiftly proposed these measures.
In a recent interview, Merz expressed concerns about the US potentially reducing its defense role in Europe and the implications of Trump's discussions with Russian President Vladimir Putin, stating that the situation has deteriorated recently. He emphasized the urgency of action.
This development is a significant political victory for Merz, who, upon becoming chancellor, will have substantial funds to invest in the nation, described by some as a "fiscal bazooka." It also holds importance for Ukraine, as the approved defense plans allow for aid to countries attacked in violation of international law to bypass the debt limit. This provision enables outgoing Chancellor Olaf Scholz to release €3 billion in aid to Ukraine soon.
Merz strategically pushed these changes through the current parliament, anticipating a more favorable vote outcome than after the new session begins on March 25. The far-right AFD and far-left Linke parties, both of which gained ground in the February election, oppose Merz's plans.
Merz has yet to finalize a coalition agreement to govern Germany following his election victory and aims to establish a government by Easter, although coalition talks in Germany can be lengthy.