Germany secures historic spending deal for defence and infrastructure
Germany’s conservative leader, Friedrich Merz, has secured a landmark financial package aimed at boosting defence and infrastructure, ahead of a crucial parliamentary vote next Tuesday.
Merz, who is poised to lead a government with the Social Democrats, has prioritized increased spending on military and infrastructure in response to global uncertainties. Following 10 hours of negotiations with the Greens, he declared that the deal sends a strong message to Germany’s allies, stating, “Germany is back.”
The agreement includes a €500 billion infrastructure fund over ten years, with €100 billion allocated to climate-protection initiatives. Additionally, defence, civil protection, and intelligence spending exceeding 1% of GDP will be exempt from debt restrictions. The deal also allows Germany’s 16 states to borrow up to 0.35% of GDP beyond the debt cap.
Merz is pushing to pass the reforms in the outgoing parliament before newly elected lawmakers take their seats in the Bundestag on March 25. The move is crucial as the far-right Alternative for Germany (AfD) party doubled its seats in the recent election and could obstruct the plan. The Left party also opposes the reforms.
Germany’s constitutional court rejected emergency motions by AfD and the Left to block next week’s parliamentary session, clearing the way for a vote. Under the constitution, Merz needs a two-thirds majority, which appears achievable with support from the Greens and Social Democrats.
The defence provisions in the deal also enable outgoing Chancellor Olaf Scholz to send €3 billion in aid to Ukraine next week. Outgoing Greens Foreign Minister Annalena Baerbock praised the agreement, saying it strengthens Germany’s security and commitment to Europe.
Social Democrat leader Lars Klingbeil hailed the deal as a “historic signal,” emphasizing that it strengthens Germany’s role in Europe. Meanwhile, AfD co-leader Alice Weidel criticized the agreement, calling it “a financial coup” that imposes a massive debt burden on future generations.
The deal marks a significant shift in Germany’s fiscal policy, which has long been constrained by debt limits imposed during Angela Merkel’s tenure in 2009. With the vote approaching, all eyes are on whether Merz can push through his ambitious spending agenda before the new government takes shape.
Credit: BBC
