Russia, Ukraine, and German Rearmament: A Turning Point?


May 16, 2022

Only three days after the Russian invasion of Ukraine, Germany’s SPD Chancellor Olaf Scholz announced a seemingly unparalleled expansion of the German military budget, consisting of €100 billion of additional spending for the Bundeswehr. In addition, a commitment was made to increase yearly military spending to meet the 2% of GDP that NATO has demanded. Yet, while being heralded as a defensive reaction to the new threat from the East, this move towards rearmament is neither new nor reactive.

Special funds in Germany are passed by law and are not part of the regular government budget, which is why they are also called “Shadow Budgets”. Examples of special funds include the Federal Railroad Fund (Bundeseisenbahnvermögen) and the Special Fund for Child Day Care (Sondervermögen Kinderbetreuung) which are required in order to bypass the constitutionally mandated debt limit. This boost in military spending has yet to be passed because the Chancellor wants to ensure that this change is permanent, which requires an amendment to the German constitution. Such an amendment would require a supermajority in the German federal parliament and the parties are currently wrangling over exactly how this new money will be allotted. Yet, the need for such a fund is not in itself contested and will most likely pass.

Germany’s increase in military spending will, no doubt, be welcomed in many quarters of Washington DC. Former US President Donald Trump famously complained about Germany’s failure to meet NATO’s target that members of the alliance should spend 2% of GDP on what is often euphemistically called “defense”. This new guideline, which is not legally binding, emerged in the wake of the last Ukraine crisis in 2014. In this regard, Germany pledged to hit the 2% mark by 2022, but what is not fully clear yet, is whether the Special Fund for Bundeswehr will be used to meet the 2% target or will be additional spending.

A turning point?

Significantly, this new tranche of military spending is being sold to the public in the most bombastic of terms. In a speech to the Bundestag in late February 2022, Chancellor Scholz proclaimed that:

We are living through a watershed era. And that means that the world afterwards will no longer be the same as the world before. The issue at the heart of this is whether power is allowed to prevail over the law. Whether we permit Putin to turn back the clock to the nineteenth century and the age of the great powers. Or whether we have it in us to keep warmongers like Putin in check. That requires strength of our own. [...]To make it possible, the Bundeswehr needs new, strong capabilities.[...] It is clear that we must invest much more in the security of our country. In order to protect our freedom and our democracy. [...] This is a major national undertaking. The goal is a powerful, cutting-edge, progressive Bundeswehr that can be relied upon to protect us.

Implicit to this narrative is the idea that German military spending has been reduced and so this new infusion of cash represents a remarkable change of tides. Yet even a cursory look at the numbers shows that this is not the case. Statistics offered by the Federal Ministry of Finances show that spending on the military rose from €32,44 billion in 2014 to €46,93 billion in 2021 - a shift that the Bundeswehr itself calls the “Trend Turnaround of Finances” (Trendwende Finanzen).