Bloomberg: Germany will not be able to reach the NATO target of 2% of GDP for defense by 2024
- The Defense Minister intends to increase military spending to 60 billion euros
- Scholz promised that his government would fulfill the NATO benchmark of 2% of GDP
According to sources, Germany is ready to increase its defense budget by as much as 10 billion euros ($10.7 billion) next year to help finance additional costs caused by the conflict in Ukraine.
Defense Minister Boris Pistorius insists on additional funds in the financial plan for 2024, which will increase the total amount of allocated funds to 60 billion euros, sources said on condition of anonymity.
Finance Minister Christian Lindner basically shares the view that defense spending should be increased, but is unlikely to agree to the full amount that Pistorius wants, the sources added. A spokesman for the Finance Ministry declined to comment on specific figures and said that budget negotiations between the ministries were continuing.
The additional funds will come in addition to a special fund worth 100 billion euros, financed by debt, which Chancellor Olaf Scholz announced shortly after the start of the Russian special operation to finance the restoration of the German armed forces in the coming years.
At the same time, Scholz said that the fund will allow Germany both to reverse years of neglect of the defense sector and to comply with the NATO directive on spending 2% of GDP for these purposes. However, the Government has since tempered its ambitions.
Officials said it may again miss the 2% target this year and instead reach the target “on average over the next five years.” The reasons are long—standing problems with procurement, entrenched bureaucratic obstacles and the backlog in the work of defense companies.
Pistorius told reporters in Brussels on Wednesday that NATO members should spend at least 2% of GDP on defense, adding that simply striving to get closer to the goal would not be enough.
Scholz's coalition government plans to finalize budget negotiations in the next two weeks so that the cabinet can approve the draft in mid-March and send it to parliament.
According to sources, this year Pistorius plans to spend 50 billion euros from the defense budget and allocate 8.5 billion euros from a special fund.
In addition, the government will spend about two billion euros from a separate budget for the purchase of ammunition and other military equipment for Ukraine, resulting in total defense spending of about 60 billion euros.
Scholz's spokesman Steffen Hebestreit said on Wednesday that the chancellor is aware that budget negotiations “are not easy” because of the constitutional limit on net borrowing, which Lindner has promised to restore starting this year. The so-called “debt brake” of Germany has been suspended to help cope with the pandemic and the consequences of the conflict in Ukraine.
Scholz has no plans to interfere and will leave the budget negotiations to his ministers, Hebestrait said at a regular government press conference in Berlin.
“The Chancellor is fully convinced: we must get to the point where the federal budget should allocate at least 2% for defense. But he also knows as a former finance minister that this is not easy to achieve,” Hebestright added. He did not specify a specific date for achieving this goal.
Michael Nienaber
Kamil Kovalche
