Germany aims for modernisation with €100bn military spending spree

One-off budget splurge comes amid historic shift in Berlin's policy towards Russia

German military vehicles in Lithuania, where troops have been sent to shore up Nato's defences. Germany's postwar military has endured years of underfunding and logistical problems. Photo: AFP

Live updates: follow the latest news on Russia-Ukraine

Amid a historic shift in Germany’s foreign policy, one of the most eye-catching announcements by Chancellor Olaf Scholz was a one-off spending spree of €100 billion ($112bn) to modernise the military in face of the Russian threat.

Mr Scholz said the money would be used for “necessary investments and armament projects” after years of underfunding and logistical problems that have plagued the postwar German military.

It came at what he called a “watershed moment” for Europe after Russia’s invasion of Ukraine, which prompted Germany to lift a ban on weapons exports and impose tough sanctions on Moscow after years of equivocation towards the Kremlin.

Mr Scholz said the “utmost priority” was to build the next generation of tanks and combat aircraft in Europe rather than relying on imports from overseas.

Germany has Eurofighter Typhoon jets on order until at least 2030 but Mr Scholz said planning was already under way, in co-ordination with France, for what comes next.

Until then, Germany plans to upgrade the Eurofighter with so-called electronic warfare capabilities, which increase a pilot’s situational awareness by allowing planes to sense electromagnetic signals around them.

The manufacturers, a consortium made up of plane maker Airbus, Britain’s BAE Systems and Italy’s Leonardo, say the system can also confuse enemy planes by transmitting waveforms that suggest the Eurofighter is elsewhere.

Along with Spain, France and Italy, Germany last week separately signed a contract with Airbus for a fleet of Eurodrone unmanned vehicles, which are mainly designed for surveillance and reconnaissance.

Germany is also “pushing ahead” on the purchase of armed Heron drones from Israel, said Mr Scholz, and looking to buy replacements for what he called outdated Tornado jets.

The Tornados, nuclear-capable jets which date back to the Cold War, need to be replaced by 2030 and Germany has said European manufacture may not be possible on this front.

One option is for Germany to buy American F-35 jets, which Mr Scholz said could be used as carrier aircraft. Some US-operated F-35s are already stationed at bases in Germany.

Mr Scholz also announced plans to strengthen resilience against cyber-attacks and attacks on Germany’s critical infrastructure.

“We need a well-equipped and high-performance army. Putin’s terrible war of aggression against Ukraine has made that clear in a dramatic way,” said Defence Minister Christine Lambrecht.

The €100bn bonus will allow Germany to “take on our appropriate role in the alliance as a reliable and capable ally,” she said.

Claudia Major, an analyst at the German Institute for International and Security Affairs, said the policies announced on Sunday amounted to a "revolution in German defence policy".

Until Russia's invasion, Germany had raised eyebrows by refusing to export weapons to Ukraine, instead insisting it was playing its part by shoring up Nato's Baltic defences.

After this year’s spending spree, Germany will commit to spending more than 2 per cent of gross domestic product on its military. Its failure to meet that Nato target in previous years drew the ire of former US president Donald Trump.

The lack of funding contributed to equipment shortages in the run-up to Germany’s leadership of a Nato readiness force in 2019.

A parliamentary report that year found that items including boots, vests, helmets and night vision equipment were too scarce to properly equip the German military.

Another setback came when the six-year renovation of the Gorch Fock, a naval training vessel, cost 13 times more than expected.

These problems proved politically embarrassing for Ursula von der Leyen, the current European Commission president who was Germany’s defence minister at the time. Her own former coalition partners accused her of leaving the army in a “shabby state” when she moved to Brussels.

Awkward coalition politics forced then-chancellor Angela Merkel to abstain on Ms von der Leyen’s nomination to the European Commission, despite the former defence minister being seen as a political protégé.

Her successor as defence minister, Annegret Kramp-Karrenbauer, said last week that Germany was guilty of a "historical failure" by failing to deter Russian President Vladimir Putin.