Berlin Christian Lindner (FDP) had to have difficult talks in the past few days. The Federal Finance Minister met his cabinet colleagues to talk them out of exaggerated spending requests in the final budget talks – with one exception: Defense Minister Christine Lambrecht (SPD) was largely spared from austerity appeals.
The war in Ukraine has given the German government new priorities: Defense spending will increase in the coming years, and there is broad agreement on this in the traffic light coalition. “Declining defense spending is no longer appropriate,” said Lindner on a talk show on Thursday. It is clear “that the funds for the Bundeswehr must be increased”.
The fact that the treasurer publicly advertises additional spending during budget negotiations makes the new situation clear. At the end of January, Lindner’s Secretary of State for the Budget, Werner Gatzer, sent his colleague in the Defense Ministry, Margaretha Sudhof, a four-page letter in which he complained about excessive spending. The message was that there would not be more money than previously provided for in the draft budget.
Ukraine war: Christian Lindner wants to increase the Bundeswehr budget
In parts of the SPD, however, Lindner’s demands are critical. “We will provide the Bundeswehr with everything it needs for its mission. But more rearmament cannot be the answer,” said SPD faction leader Rolf Mützenich in an interview with the “Neue Osnabrücker Zeitung”. “It would be wiser to finally pool our military forces in Europe.”
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In the previous budget for the current year, 50.3 billion euros have been earmarked for the Ministry of Defence. But that’s the lower limit. “Defense spending will increase,” says FDP chief householder Otto Fricke. Even the Greens, traditionally rather skeptical about armaments projects, are now emphasizing the need to spend more money on the Bundeswehr.
>> Also read here: The day the war came to Europe: Eyewitness accounts from Ukraine.
This applies above all to the coming years. Until now, the medium-term financial planning provided that the funds for the Lambrecht department would fall from 50.3 billion euros this year to 46.7 billion euros in 2025. This plan now seems to have fallen out of time. Lindner will have to raise additional billions every year.
NATO spending ratio for the Bundeswehr a long way off
German politicians must learn “that defending the alliance is also a political priority,” says Lindner. For years, Germany has been failing to meet the so-called NATO quota, i.e. investing two percent of gross domestic product in defense.
The rate is currently 1.5 percent. An increase of 0.1 percentage points costs the federal budget around four billion euros, because according to the coalition agreement, development spending must also be increased at the same time. In order to comply with the NATO quota, additional expenditure of around 20 billion euros a year would be necessary.
With such budgetary burdens, the question arises as to whether they are realistic under the conditions of the debt brake. On the other hand, the Ukraine war and the threat from Russia have fundamentally shifted priorities in Berlin.
Only minister with the prospect of more funds.
(Photo: imago images/Björn Trotsky)
The previous plan of not incurring more than 100 billion euros in new debt this year is no longer considered sacrosanct. In view of Corona and the developments in Ukraine, one will see whether one slavishly sticks to the 100 billion euros, says Fricke.
However, the FDP head of budget also makes it clear that increasing defense spending should not be a “white ointment”. You also have to address the fundamental problems, such as ensuring more efficient procurement. The Greens also emphasized that the aim must be to improve the equipment of the Bundeswehr in a targeted manner, instead of haphazardly adding billions to the defense budget.
German armaments industry promises fast delivery
The German armaments industry sees itself in a position to quickly supply the Bundeswehr with new material. Products that have already been completed for other nations could be made available to the Bundeswehr at short notice in consultation with them, said the head of the Federal Association of the German Security and Defense Industry (BDSV), Hans Christoph Atzpodien, the Handelsblatt. These include air defense systems, missiles and ammunition. It is also conceivable to defer orders from civil customers to the federal government for helicopters.
According to Army Inspector Alfons Mais, the Bundeswehr has significant deficits in its equipment. The army he was allowed to lead was more or less empty, he complained on Thursday. The options that the army can offer in support of politics are extremely limited. In recent years, the Bundeswehr has received new vehicles such as the Puma infantry fighting vehicle or other Boxers, but from the point of view of Mais and military experts, this is not enough to maintain combat effectiveness.
War in Ukraine: According to the inspector, the Bundeswehr is not well equipped
For years, the German armed forces have also been kept short when it comes to supplying ammunition. With the offer of the armaments companies, the stocks could be increased more quickly.
In his statements, Atzpodien refers to a survey among the member companies of the BDSV, which he conducted on Thursday after the invasion of Russian troops in the Ukraine. The manufacturers Airbus, Rheinmetall and Krauss-Maffei Wegmann (KMW), among others, gather their interests under the umbrella of the association.
German armament association calls for quick orders
The armaments association is linking its willingness to give priority to the Bundeswehr with the expectation that the award of contracts will be streamlined. “A decisive point for a speedy delivery is that the order is placed in the first place,” said Atzpodien.
Germany generally advertises armaments contracts throughout Europe, while countries such as France or Italy conclude contracts directly with selected companies. European law expressly allows this route, as it is about the national security of a nation.
From the point of view of the association, another important prerequisite is support from the federal government in order to eliminate bottlenecks in the supply chains. Some raw and primary materials – such as semiconductors – have become scarce, which has also impacted other industries. With the help of the federal government, this deficiency could be eliminated more easily.
Deceptive statistics on expenditure for the Bundeswehr
At first glance, Germany’s defense spending is not that small, at least compared to Russia. The peace research institute Sipri reports a military budget of 61.7 billion US dollars for Russia in 2020, while it was 52.8 billion US dollars for Germany.
But experts complain that this comparison lags behind. The reason: SIPRI converts defense spending from Russian rubles to US dollars. But if they were calculated using purchasing power parity – i.e. adjusted for the higher purchasing power of the Russian ruble for its own military equipment – then Putin’s defense budget would be many times higher.
According to the think tank International Institute for Strategic Studies (IISS), in 2021 the Russian military budget, calculated purely according to exchange rates, will be around USD 178 billion under purchasing power parity from USD 62.2 billion. Russia thus has the third largest military budget after the USA and China, which the IISS also calculates in purchasing power parity.
This type of calculation is controversial because it distorts the values of the states that import many expensive primary products for their armament spending. According to Franz-Stefan Gady, military analyst at the IISS, it is permissible for Russia and China. Russia hardly imports any primary products and China only a few.
Sipri knows about the problem, but sticks to the pure exchange rate conversion because of the difficulties in calculating its official statistics. Nevertheless, Sipri also once calculated the Russian expenditure using purchasing power parity as an example and arrived at figures similar to those of the IISS.
“There is strong evidence that military goods and services cost less in Russia than in the US or most European countries and that Russian military spending therefore has higher purchasing power,” Sipri said. In contrast to the USA and other large European countries, there is still compulsory military service in Russia. In addition, the salaries of Russian professional soldiers are significantly lower.
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