The German Bundestag finally approves Merz’s massive investment plan
The Bundesrat, Germany’s upper house of the Bundestag, approved incoming Chancellor Friedrich Merz’s massive investment plan to re-arm and modernize the country’s military on Friday, removing the final hurdle to its final adoption.
This historic plan, estimated to be worth hundreds of billions of euros and requiring amendments to the Basic Law, which serves as Germany’s constitution, received a two-thirds majority (53 votes) in the Federal Council, which represents the states, after it was approved on Tuesday by the lower house (the Bundestag).
This project, prepared in partnership with the Social Democrats, with whom Merz intends to form a government coalition, is considered a revolution in Germany.
The German Republic, known for its financial discipline, has long neglected military spending, benefiting from the American umbrella that has protected it since the end of World War II.
But after the shock of the Russian invasion of Ukraine in February 2022, Berlin now sees Washington distancing itself from it and moving closer to Moscow, under the sway of Republican President Donald Trump.
“We must do everything in our power to make Germany one of the strongest armies in Europe again, capable of protecting itself and our country,” Bavarian State Premier Markus Söder told the Bundesrat.
Merz, leader of the conservatives who won the February 23 parliamentary elections, described the package on Tuesday as the first major step toward forming a new European defense bloc that includes countries that aren’t members of the European Union, such as Britain and Norway.
Under this plan, Germany will relax debt rules that limit the country’s ability to borrow, with regard to military and state spending.
The project includes a special off-budget fund worth €500 billion over 12 years to modernize infrastructure and stimulate the economy, which has been in recession for two years, as €100 billion of this will be allocated to climate protection, under pressure from the Green Party.
The constitutional amendments on debt were supported by 53 out of 69 votes in the German lower house of the German Bundestag, with at least 46 votes were needed to pass the fiscal plan.
Only Brandenburg, Saxony-Anhalt, Thuringia, and Rhineland-Palatinate abstained, while all other states voted in favor, with abstentions are considered rejections in the lower house.
Easing Germany’s strict constitutional limits on government borrowing, known as the debt brake, will allow unlimited borrowing to finance defense, civil defense, intelligence services, and cybersecurity.
Loans for all these expenditures can be obtained up to 1% of GDP, which could amount to around €44 billion this year, according to politicians’ estimates.
German President Frank-Walter Steinmeier is now expected to review the law to determine whether it has been enacted in accordance with the constitution, and once he signs it, the constitutional amendments will be published in the Federal Law Gazette and enter into force.
In another context, Germany approved a new €3 billion military aid package for Ukraine on Friday, days before Saudi Arabia hosts talks between US officials and officials from Moscow and Kyiv.
The Bundestag’s Budget Committee formally approved the aid, which had been pending for months due to reservations expressed by outgoing Chancellor Olaf Scholz regarding the country’s budget situation.
