Germany‘s likely next chancellor, Friedrich Merz has announced plans to raise hundreds of billions of euros to boost defense and infrastructure amid fears that the United States is losing interest in Europe and the NATO alliance.
The announcement came amid exploratory talks between Merz’s Christian Democrats (CDU), along with its Bavarian sister party the Christian Social Union (CSU), and the Social Democrats (SPD).
Merz made the announcement alongside the CSU’s Markus Söder and the SPD co-leaders Lars Klingbeil and Saskia Esken.
It comes just over a week after the CDU won Germany’s federal election. Merz has said he aims to form a government coalition with the SPD.
The leaders said they had agreed to table a motion in parliament to alter the German constitution in order to ease controls on defense expenditure which surpasses 1% of Germany’s GDP from debt brake limits.
Based on German GDP in 2024, that would include all expenditure above approximately €45 billion ($43 billion).
Furthermore, the country’s 16 individual federal states are also to be permitted to take out loans up to the equivalent of 0.35% of their economic output in order to further boost performance.
Merz: ‘Whatever it takes’
“We are aware of the scale of the tasks ahead of us, and we want to take the first necessary steps and decisions,” Merz said, adding: “Given the threat to our freedom and to peace on our continent, the mantra for our defense has to be: whatever it takes.”
His CSU colleague Söder added: “We are sending a signal to friends and foes: Germany is here. Germany will not retreat.”
Merz said that such increases in defense spending can only be stemmed if Germany’s economy “gets back on a path of stable growth” as quickly as possible.
“That requires not only an improvement in competitive conditions but also quick and sustainable investment in our infrastructure,” he said.
Since such investments “cannot be financed solely by the federal budget,” the parties have also agreed a new €500 billion special fund for industrial and infrastructural investments, which the hope will help stimulate Germany’s ailing economy over the coming decade.
“We are finally ending the investment log-jam in our country,” said SPD leader Klingbeil, adding that Germany’s constitutional debt brake will be revised by the new government by the end of the year “to prevent it from becoming a brake on investment.”
Both motions — on defense expenditure and the infrastructure special fund — are to be tabled before the expiry of the current parliament, where the CDU and SPD will hope to rely on the support of the Greens and FDP in order to achieve the two-thirds majority vote required for constitutional change.
Merz said the Greens and FDP had been “informed of the proposals.”
Germany responds to US policy change
The moves from Berlin are intended to demonstrate Germany’s ability to act ahead of a European Union summit on Thursday, at which member states will discuss the bloc’s response to the apparent change in United States foreign policy under President Donald Trump.
“We are counting on the United States of America standing by our mutual alliance commitments in the future as well,” said Merz. “But we also know that the funding for the defense of our country and alliance must now be expanded significantly.”
As such, Merz also said that he would be pushing for the immediate approval of a three-billion-euro aid package for Ukraine which has been held up in parliament for weeks.
He told reporters he would meet outgoing Chancellor Olaf Scholz on Wednesday “to speak about the urgent help needed for Ukraine, around €3-3.5 billion, which can be approved now as off-budget expenditure.”
The parties are set to continue their exploratory coalition talks as they look to find common ground on the budget, migration, economic competitiveness and security.
Merz said the goal was to “complete the consultations promptly” but warned that it could be a “longer journey.”
Edited by: Alex Berry
Article by:Source:
