For Olaf Scholz, it’s about filling the turning point announced on February 27 with action. The chancellor now has the agreement he was hoping for, so he will present concrete results to his critics in his eagerly awaited speech on Wednesday in the Bundestag on the chancellor’s budget. It could be decided this week by the Bundestag with the two-thirds majority required for the amendment to the Basic Law.
An analysis of the agreement between the traffic light coalition and the Union – and the particularly controversial points.
Federal Finance Minister Christian Lindner (FDP), Foreign Minister Annalena Baerbock (Greens), Defense Minister Christine Lambrecht (SPD) and other representatives of the Ministry of Finance, including State Secretary for Budget Werner Gatzer, had scheduled a meeting with the Union negotiators for Sunday evening, including Alexander Dobrindt (CSU ), Mathias Middelberg and Johann Wadephul. Bundeswehr Inspector General Eberhard Zorn was also there.
After several hours of deliberations, an agreement was announced around 11 p.m. because of the necessary two-thirds majority, it doesn’t work without the Union.
In his government statement three days after the Russian attack on Ukraine, Scholz said the following sentence: “The federal budget for 2022 will provide this special fund with a one-off amount of 100 billion euros. We will use the funds for necessary investments and armament projects. From now on, we will invest more than two percent of gross domestic product (GDP) in our defense every year.”
The aim is now to be achieved on average over the coming years. “Together we will ensure that the Bundeswehr will be strengthened in the coming years with additional investments of 100 billion euros,” emphasized the negotiators in their agreement paper.
The so-called two percent target of NATO will be achieved “on average over several years”. According to the agreement, however, it should not have to be adhered to exactly every year.
Defense Minister Christine Lambrecht (SPD) has already increased the budget for the current year by more than seven percent to 50.3 billion euros. But depending on economic development, almost 20 billion are still missing to reach the two percent target. If the special fund does not come on top, but is included, the 100 billion can be used up in five years – then the special fund would only be a flash in the pan from the Union’s point of view. Therefore, the Union’s negotiators attached importance to the word “additional”.
In the run-up to the decisive negotiations, SPD leader Saskia Esken justified the two percent target, which cannot be achieved every year, in the “Frankfurter Allgemeine Sonntagszeitung” as follows: “If you order large equipment today, you will only get it in three or four years. That means the amounts may not be as high in the first two years, and then there comes a year when a lot becomes necessary.”
Therefore, the two percent target will not be reached in the same way every year. To the annoyance of many allies, Germany had so far fallen far short of the goal agreed years ago at NATO level – after Russia’s war of aggression, Scholz announced massive additional investments.
Among other things, new F-35 fighter jets, new tanks and other heavy, state-of-the-art weapons and drones are to be procured, as well as the Pegasus system for air reconnaissance, comprehensive air defense and ammunition worth several billion euros. With the already significantly increased defense budget, the first step is to enable soldiers to be fully equipped with all sets of clothing. Another major topic is digitization and protection against cyber attacks. But beyond all money issues, the decisive reform remains that the procurement system of the Bundeswehr is modernized in such a way that years are not wasted or material is procured that does not help or is only to be developed.
With the planned law for the establishment of the special fund, an economic plan with the specific procurement projects should also be decided, the Union and the coalition agreed. “Its implementation will be accompanied by an advisory body of the Budget Committee of the German Bundestag.” This was important to the Union so that it could continue to have a say in the future use of the money.
A point of contention up to the end was whether the new money will be intended exclusively for the Bundeswehr and whether the two percent target for armaments expenditure should apply permanently – and whether this should be enshrined in law. In his “Zeitenwende” speech on February 27 in the Bundestag, Scholz spoke exclusively of the financing of the Bundeswehr.
In tough negotiations, however, Foreign Minister Annalena Baerbock (Greens) managed to ensure that the cabinet decision to set up the special fund did not specifically name the Bundeswehr as a beneficiary, but instead spoke of strengthening alliance and defense capabilities.
This success was important to the Greens because they also want to use the special fund to invest in cyber security, which they had promised in the election program.
They also want to invest more in diplomacy and development cooperation – knowing that less will be available from other pots in the future. Finance Minister Lindner wants to comply with the debt brake again from 2023.
The Greens’ position and the Baerbock formula were also shared by parts of the SPD, including parliamentary group leader Rolf Mützenich. In the negotiations on the Bundestag’s motion for a resolution on the delivery of heavy weapons, the price of the Union’s approval was that instead of the Baerbock formula the equipment of the Bundeswehr was mentioned again, which they also demanded for the negotiation on the amendment to the Basic Law.
The solution now looks like this: It was agreed that measures for cyber security, civil protection and stabilization of partner countries would also be taken – but “financed from the federal budget”, i.e. not from the special fund. That is then financed from the defense budget or other items, a point victory for the Union.
“The special fund must be in the Basic Law before the summer break, because otherwise we will lose a lot of time,” says the defense policy spokesman for the FDP parliamentary group, Alexander Müller.
“The necessary ships, vehicles and protective vests are not in the shop window, but have to be produced again.” Before the industry hires staff and orders materials and preliminary products, they want to be sure that the funds are also legally secured. “That’s why the Union can no longer block here.”
It is planned that the Bundestag will decide this week, probably on Friday. It is still unclear whether Union parliamentary group leader Friedrich Merz (CDU) will make good on his threat that his Union of traffic lights only wants to give as many votes for the amendment to the Basic Law as the SPD, the Greens and the Liberals lack for the constitution-amending two-thirds majority. Because the construction and equipment project is controversial, especially in the left camp of the Greens and SPD. Any of their own dissenters could thus cause the central chancellor project to fail.