Friedrich Merz, poised to become Germany’s next chancellor following last month’s election, is urging the country to commit significant resources to defense amid growing concerns about the stability of the trans-Atlantic alliance. On Tuesday, Merz plans to request lawmakers’ approval for a substantial investment in Germany’s aging infrastructure, financed through considerable borrowing.
The outgoing parliament is set to convene for a final session to vote on these proposals. This session is crucial as Merz’s center-right Union bloc attempts to form a coalition government with the center-left Social Democrats of the outgoing Chancellor, Olaf Scholz. To implement these plans, a two-thirds majority in the Bundestag, Germany’s lower house of parliament, is necessary as the package involves amending the country’s stringent borrowing constraints, known as the “debt brake.” These rules, enshrined in the constitution, limit new borrowing to just 0.35% of the annual gross domestic product. Consequently, the Union bloc has entered into discussions with the environmentalist Greens, whose support is essential for reaching the required majority.
The proposed package seeks an exemption from the debt regulations for defense and security spending, which includes allocations for intelligence agencies and aid to Ukraine, totaling more than 1% of GDP. Furthermore, it envisages establishing a 500 billion-euro ($544 billion) fund, sourced through borrowing, intended to rebuild Germany’s infrastructure over the coming 12 years to reinvigorate Europe’s largest economy. Prompted by the Greens, 100 billion euros of this fund would be directed towards climate-related expenditures.
Merz’s policy shift represents a significant change from his party’s previous stance against accruing new debt, although they had not completely ruled out future amendments to the “debt brake.” The Social Democrats and Greens have consistently advocated for a reform of borrowing regulations. Recent developments, including the establishment of a special 100 billion-euro fund by the outgoing government to modernize the military, are indicative of the need to enhance Germany’s historically overlooked defense capabilities. This fund is also intended to help Berlin achieve NATO’s target of allocating 2% of GDP to defense spending, though it is set to be depleted by 2027. Increasing uncertainty regarding the commitment of the Trump administration to European allies has compounded these concerns.
Merz emphasized that, akin to financial stability, “whatever it takes” should also apply to defense advancements. On ARD television, he noted the budget’s unexpectedly poor condition and the recent significant escalation in the situation. He expressed optimism about Tuesday’s vote, acknowledging that while the vote may be closely contested, he believes the package will succeed.
The package is presented to the departing parliament rather than the newly elected body, which will begin its term on March 25, due to the composition of the new chamber. In the current Bundestag, the Union, Social Democrats, and Greens collectively hold 520 of the 733 seats, surpassing the two-thirds majority requirement by 31 seats. If approved, the package will face another test on Friday in Germany’s upper house of parliament, representing the 16 state governments, where a two-thirds majority is also needed. Initially uncertain, the plan now seems promising, as the conservative-led coalition in Bavaria, commanding six votes, has agreed to support the proposal.
