COLOGNE, Germany — Newly released budget figures risk putting Germany on a path to miss NATO-wide spending expectations and even undershoot its own, lower target, warn defense industry advocates.
The assessment by the BDSV industry association comes after details emerged this week about the government’s newest spending blueprint. While a bump of €2 billion (U.S. $2.3 billion) is in the offing for 2020 — to €45 billion, or 1.37 percent of gross domestic product — defense spending is slated to drop in the ensuing years, down to 1.25 percent of GDP in 2023.
BDSV chief Hans Christoph Atzpodien called the projections “disappointing,” especially in light of equipment problems plaguing the armed forces. He also warned that Germany could lose its standing on the world stage. The budget would have “negative effects … on Germany’s role in the European Union’s defense-cooperation policy and in NATO,” Atzpodien wrote in a statement.
The military budget as a percentage of GDP is a key yardstick for NATO members. All allies have pledged to boost defense spending toward 2 percent by 2024, mostly in reaction to a resurgent Russia. Germany was never on track to reach that level, which would translate into tens of billions of dollars extra within just a few years. But Defence Ministry chief Ursula von der Leyen had told allies Berlin would at least target a rate of 1.5 percent.
The 2020-2023 spending proposal, crafted by Finance Minister Olaf Scholz of the Social Democrats, or SPD, is on the agenda for a Cabinet meeting Wednesday.
Key drivers shaping the four-year plan include the expectation of slowing economic growth, and the government’s policy of averting any new debt.
Speaking at a think tank event in Berlin on Tuesday, Chancellor Angela Merkel said she had no intention of overruling her finance minister on defense spending, noting that differences between the Defence and Finance ministries would be resolved collaboratively. Her party, the Christian Democratic Union, traditionally leans more hawkish than the SPD.
Merkel said actual annual defense spending traditionally has been higher than the planning figures presented this time of the year, which marks the beginning of the budget-crafting cycle. She was referring to the possibility of midyear boosts, which are a common budgetary tactic here.
The chancellor also played up the importance of non-military funds devoted to crisis prevention and humanitarian aid, which Germany has increased in tandem with its military spending. Besides, she noted, “We have no ambition to be a world power. ... We want to be an important actor.”
The government is slated to finalize its request by the summer, handing it off for deliberations and passage by parliament in the fall. “The budget deliberations for 2020 are only in the initial stages,” a defense ministry spokesman said. “The negotiations will begin in the coming weeks.”
According to the BDSV statement, defense companies fear to feel the pinch in two ways: For one, a soft military budget means less spending on domestic defense programs. In addition, the government is also allowing fewer arms exports to other countries.
The criticism refers to another brewing dispute in Germany, notably exports to Saudi Arabia. The government has put in place an export embargo that is slated to last through the end of March. Officials have tied the embargo to progress in peace talks to end the war in Yemen.
Sebastian Sprenger is Europe editor for Defense News, reporting on the state of the defense market in the region, and on U.S.-Europe cooperation and multinational investments in defense and global security. He previously served as managing editor for Defense News.