Germany’s parliament has approved a significant increase in defense and infrastructure spending, marking a major shift in the country’s economic and security policies. On Tuesday, lawmakers in the Bundestag voted with a two-thirds majority to remove strict debt restrictions for defense spending and establish a €500 billion ($547 billion) infrastructure fund. This move reflects Germany’s response to the ongoing war in Ukraine and growing concerns over European security.
Before the plan becomes law, the Bundesrat, Germany’s upper house, must also approve it with a two-thirds majority. The vote is expected to take place on Friday and is seen as a crucial next step in the process.
A Strategic Shift in Leadership
Friedrich Merz, the key proponent of the spending package and the expected next German chancellor, emphasized that the country had been operating under “a false sense of security” for the past decade. He described the decision as “the first major step toward a new European defense community” that could extend beyond the European Union.
European Commission President Ursula von der Leyen welcomed the Bundestag’s decision, calling it “excellent news” for European security. Danish Prime Minister Mette Frederiksen echoed this sentiment, stating that it “sends a very clear message that Germany is committed to massive investment in defense.”
Germany has historically been cautious about increasing military spending, influenced by its post-war policies and strict fiscal rules. However, the proposal passed with a strong majority of 513 to 207 votes, surpassing the necessary threshold. A leading German newspaper called the vote “a defining moment for the nation.”
Implications for Defense, Economy, and Ukraine
The new reform allows defense spending above 1% of Germany’s GDP to bypass previous borrowing limits. Until now, Germany’s borrowing was capped at 0.35% of GDP, restricting its ability to modernize its military. With this change, Germany aims to strengthen its armed forces and increase its contributions to NATO.
Beyond defense, the legislation allocates €500 billion for critical infrastructure projects, including much-needed repairs to roads and bridges, as well as funding for climate-related initiatives. The Green Party played a key role in securing support for these investments.
Merz, whose CDU party secured victory in last month’s general election, has acted swiftly to push the measure forward. In a recent interview, he expressed concerns about the possibility of reduced U.S. involvement in European defense. He also cited recent conversations between former U.S. President Donald Trump and Russian President Vladimir Putin as a reason for urgency. “The situation has worsened in recent weeks,” Merz stated. “That is why we must act quickly.”
The decision also has significant implications for Ukraine. Under the new framework, Germany can provide financial assistance to countries facing external aggression without being constrained by previous debt limitations. This enables outgoing Chancellor Olaf Scholz to approve an immediate €3 billion aid package for Ukraine, which could be released as soon as next week.
Political Challenges and the Road Ahead
Merz pushed the reforms through the current Bundestag, taking advantage of a favorable vote count before the new parliamentary session begins on March 25. The far-right Alternative for Germany (AfD) and far-left Linke parties, both of which gained traction in the February elections, have opposed the measures.
While Merz has yet to finalize a governing coalition, he aims to establish a government by Easter. However, coalition talks in Germany are known to be lengthy and complex, often stretching for several months.
This historic decision marks a turning point in Germany’s fiscal and defense policies, setting the stage for a stronger European security strategy. As the Bundesrat prepares for its final vote, the outcome will determine the future of Germany’s defense and infrastructure commitments.