Germany rushes to assure allies about defence spending

1 year ago 35

Germany’s €100 billion special fund to boost its defence capabilities will not be affected by an emergency budget freeze, the Defence Ministry clarified on Thursday following the uncertainty caused by a court that ruled parts of Germany’s spending commitments unconstitutional.

“The precautionary extension of the budget freeze to […] the Bundeswehr special fund (Sondervermögen Bundeswehr) was lifted,” the German Defence Ministry said in a final statement published Thursday afternoon, pointing to coordination with the finance ministry.

“This ensures that the financing of projects not exclusively covered by the Bundeswehr special fund is also guaranteed,” it continues.

The statement came as a reassuring move following an ambiguous prior statement by the ministry and media reports, which asserted that spending from the defence special fund had been suspended, jeopardising the future state of Germany’s armed forces.

The confusion follows the country’s constitutional court ruling last week, which found the government’s repurposing of a COVID-19 support fund to finance the green transition to be in breach of the constitution. The ruling had Germany’s coalition in a frenzy as it put its budget planning into question.

In an emergency decision, Finance Minister Christian Lindner (FDP/Renew) suspended future spending commitments amidst uncertainty about which items could be accounted for after the ruling.

Even if the defence special fund was, in principle, not affected by the freeze, certain Bundeswehr spending items were partially funded by alternative sources and could have been impacted.

Scholz had announced the creation of the fund last year following Russia’s invasion of Ukraine and a self-declared ‘Zeitenwende’, a turn of the times, which required Germany to reinvest into its armed forces after years of under-investment, the chancellor had argued.

The special fund is also a key part of fulfilling its obligations within NATO to spend 2% of its GDP on defence, to which Berlin subscribed.

Thursday’s announcement indicated the nervousness in the German camp, as defence officials were anxious to preserve Germany’s reputation as a reliable partner.

Earlier in the day and before the release of the final statement, which asserted that all projects would be safe, the ministry rushed to comment on the emerging media reports regarding the dubious future of the special fund.

“The Federal Ministry of Defence has restricted until further notice financing authorisations for [projects planned from the special fund whose financing is not covered exclusively by the special fund]. (…) This offers the [defence ministry] the opportunity to submit applications to the [finance ministry] to secure alternative funding for these projects,” the earlier statement read.

(Aurelie Pugnet | Euractiv.com, Nick Alipour | Euractiv.de)