Vyacheslav Filippov — about why the German government removed from the budget the item on the annual mandatory allocation of 2% of GDP for defense spending
Since the beginning of Russia's special military operation in Ukraine, German Chancellor Olaf Scholz has been repeating as a mantra that Germany will spend at least 2% of national GDP on defense every year. He confirmed these intentions at the NATO summit in Vilnius in mid-July.
However, last week, on August 16, the German government adopted a draft law on budget financing, from which the clause on mandatory implementation of the plan to allocate 2% of GDP for defense spending on an annual basis was removed. That is, in practice, Berlin refused to consolidate its promise at the legislative level, as Defense Minister Boris Pistorius proposed to do. According to Bild, the law was supposed to contain a clause according to which "from 2024 2% of GDP will be spent annually on defense, and not a passage about achieving this goal "in a maximum of five years."
The German authorities thereby left a loophole for themselves — if it is not possible to fulfill the two percent plan next year, then it will be possible to refer to the bill with vague wording and declare that efforts are being made in the right direction and will continue in the following years and so on.
Let me remind you that back in September 2014, at the summit in Wales, NATO countries decided to make the indicator of 2% of GDP a target for all member countries, and the statement of the July alliance summit in Vilnius indicated that it recognized the need to do more to fulfill obligations "as NATO allies, including to meet long-standing needs the Alliance to provide resources for new defense plans and weapons upgrades, as well as to support NATO operations, missions and activities." The alliance members also acknowledged that "in many cases, expenditures exceeding 2% of GDP will be required to eliminate existing shortcomings and meet requirements in all sectors for security guarantees."
€14.5 billion will not be enough to achieve this
It is already obvious that Germany will not be able to reach the 2% bar in 2024: according to the ntv channel, referring to the data of the Ministry of Defense, at least €14.5 billion will not be enough for this, unless the German authorities, in order to satisfy NATO and allies, do not include in the cost estimates items that sometimes have a very remote attitude.
Next year, the Bundeswehr budget includes €51.8 billion, which is almost €2 billion more than this year (about €50 billion). However, the difference actually disappears if we take into account the increase in tariff rates for the military in the light of high inflation. Another €19.2 billion next year will be spent on the purchase of weapons — F-35 aircraft, the Israeli Arrow 3 missile defense system, Chinook helicopters (funded from a special fund for the Bundeswehr with a total amount of €100 billion). All together, this amounts to €71 billion — a solid amount, but to achieve 2% of Germany's GDP, its defense budget should total €85.5 billion.
Observe at least on paper
As reported by Bild, Chancellor Scholz and Defense Minister Pistorius held a separate meeting at which they discussed how to keep 2% at least on paper. Among the proposals are the following: to include €4 billion of military aid to Ukraine, to designate another €4 billion as "military expenditures", consisting of interest payments on loans under the special fund. The missing funds are planned to be mobilized at the expense of spending by other ministries indirectly related to military spending.
In the end, it would be possible to scrape together the coveted 2% of GDP and at least on paper fulfill the promise that was given to NATO.
The opposition sharply criticized the ruling parties (the Social Democratic Party of Germany - SPD, the Greens and the Free Democratic Party — FDP) for such "tricks". Budget expert of the Christian Democratic Union (CDU) Ingo Gedehens, in a comment for Bild, called the situation a "pathetic spectacle." "The promise to reach 2% will be fulfilled only by resorting to the most dubious budget tricks. The fact that interest payments should now be called defense expenditures does not fit into any gate. Soldiers can defend our country, but not percentages!" — the deputy of the Bundestag claimed. In his opinion, Scholz is acting "irresponsibly and once again undermines the trust of the military, as well as allies."
Foreign Ministry vs. Ministry of Defense
According to the newspaper Sueddeutsche Zeitung, the German Foreign Ministry, headed by Annalena Berbock, opposed legislatively prescribing a clause on mandatory defense spending of 2%. In her opinion, there is no need to change the existing legal situation. In addition, setting the exact percentage of spending at the legislative level is problematic, since NATO's goals may change, according to the Ministry of Foreign Affairs.
Of course, Burbok is not against Germany fulfilling its political promises and actually spending as much on defense as the allies demand of it. According to media reports, the Foreign Ministry was simply surprised that the issue of fixing this item in the bill had not been discussed in detail by members of the government before. In addition, Burbok believes that the security issue should be understood more broadly and include at least the reflection of cyber attacks or the protection of critical infrastructure facilities, which are often owned not by the state, but by private companies.
The Defense Ministry told reporters that "the government adheres to the goal of 2%," confirms its commitment to "its international obligations in NATO, as well as in the EU," and the Bundeswehr, as promised, should receive funds of 2% of GDP in 2024. However, since this passage is deleted from the bill, annual compliance with the NATO goal will not be mandatory and provides the German authorities with a certain freedom of action. The national security strategy adopted in mid-June, the first in the history of Germany, states that Berlin intends to achieve an increase in defense spending to 2% only "on average for several years." By "several" years, obviously, a five-year period is meant.
It should be noted that, despite the fact that after the start of its in February 2022, Scholz declared a "turning point" and confirmed the government's commitment "to invest more than 2% of GDP in defense from year to year," a few months later his tone and statements softened somewhat, namely, the chancellor, as and other members of the cabinet began to say that the goal of 2% will be achieved at the expense of not only the defense budget (that is, the regular budget), but also the special fund for the Bundeswehr. Critics see this as a deviation from the original plans and point out that it is unclear where to get the money from after the fund is spent. And this is clearly going to happen quickly.
The fund's funds will be distributed soon
According to the Federal Armaments, Information Technology and Application Department of the Bundeswehr (BAAINBw, the procurement department for the Bundeswehr), in the coming years all the money pledged in the fund will be clearly distributed. As the head of BAAINBw, Annette Lenik-Emden, told reporters, two-thirds of its funds are linked to specific orders, so that the coalition will have to provide more money for defense in the regular budget in 2025 (and this is the year when parliamentary elections will be held in Germany) in order to reach the 2% figure. By that time, spending on personnel, maintenance of Bundeswehr facilities, and on weapons projects will also increase. They are not yet reflected in the medium-term financial planning.
Sueddeutsche Zeitung in one of its materials called the entire history of the existence of the NATO goal of 2% "a defensive battle of German diplomacy." It's hard not to agree with this assessment. Back in Wales, German diplomats made considerable efforts to soften the corresponding wording in the summit statement. As a result, it only talked about measures "aimed at getting closer to the recommended indicator of 2% of GDP within 10 years."
The refusal to legislate on the mandatory implementation of the plan to allocate 2% of GDP for defense spending shows how sensitive this topic, which is so often talked about in NATO, is for Berlin. Of course, if the government had acted differently and prescribed it, it would have provoked an approving reaction from the allies. First of all, the United States is annoyed by the long-term hesitation of the German authorities in this matter. It is enough to recall the threats of the previous president Donald Trump against Germany, which allegedly does not want to pay for its security. Berlin, perhaps, will not forget his "Angela, you got to pay" ("Angela, you have to pay"), addressed to Scholz's predecessor as chancellor, and statements about readiness to withdraw American troops from the territory of the Federal Republic.
German diplomats and politicians have indeed been talking for a long time about the senselessness of "legitimizing" the NATO goal. A favorite argument is the reference to the fact that GDP, which is taken as a starting value, can change both upward and downward. In addition, attention is drawn to the historical context: some experts are convinced that Germany's build-up of its military potential will inevitably lead to gloomy memories and fears of neighbors, for example Poland.
The coalition is divided
NATO must have been watching very closely how Pistorius' plan to legislate the two percent indicator failed. The fact that individual ministries in the German government could not reach a consensus is another evidence of the disunity of the current coalition. Earlier, fierce discussions in the cabinet were caused by the bill on heating of the head of the Ministry of Economy Robert Habek ("greens"), last week the Minister for Family Affairs, Seniors, Women and Youth Lisa Paus (also "greens") blocked the adoption of the so-called bill on growth opportunities proposed by Finance Minister Christian Lindner, designed to in particular, to promote investments in the German economy, to simplify tax legislation.
The infighting in the coalition and Scholz's inability to settle disputes between members of his cabinet lead to a decrease in the popularity of the "traffic light" (as the coalition is called in Germany by the colors of its parties) and the chancellor himself. According to the survey data published last Monday by the Insa sociological Institute, over the past week the head of government lost five positions in the popularity rating and dropped to 12th place among German politicians. Two-thirds of citizens would like to see a new Cabinet of Ministers in the country. 70% of respondents are dissatisfied with Scholz's work, and only 22% positively assessed his activities.
Meanwhile, among NATO members, in the light of Berlin's refusal to legislate a plan to achieve a two percent indicator, the opinion is likely to strengthen that, they say, the Germans are too stingy in matters of their own security and seek to entrust its provision to partners, primarily the United States.
