Executive Summary
After his victory in the German National Elections, Chancellor-elect Friedrich Merz expressed strong support for increased European defence integration, particularly in light of Trump’s recent comments on Ukraine peace negotiations. Merz is currently negotiating the formation of a coalition government, with early reports indicating that large-scale defence spending is being considered. However, due to domestic opposition from his own party as well as fringe political movements, including Die Linke and the Alternative for Germany (AfD), there is uncertainty about how this proposal will be fully implemented.
Key Points
- On February 24th, Chancellor-elect Merz described the need for an “independent European defence capability”. He argued the Trump administration “did not care much for the fate of Europe”.
- Bloomberg reporting suggests that the Chancellor-elect was negotiating with the SPD on a €200 billion European defence spending package. Merz has confirmed that the two parties are in preliminary talks, however, refused to “confirm or deny” this particular sum.
- To meet NATO targets, the Bundeswehr needs a budget of €80 billion to cover it until 2028, although it currently only receives €50 billion. .
- Fringe parties were electorally successful in the recent February 2025 Elections, with the far-right AfD becoming the second largest party at 20.8% of the vote share, whilst the far-left Die Linke received 8.8%
Analysis
The €200 Billion figure currently speculated by the press, will likely be reduced down closer to the €80 billion NATO target, due to domestic pressure in the Bundestag. Fiscally Conservative elements, within Merz’s own Christian Democrat Union (CDU), and the Christian Socialist Union (CSU) block, will likely seek to reduce the spending commitment, due to concerns it will significantly increase the national debt and taxes. Far-left and right parties, including Die Linke and the AfD, will very likely oppose increases in security proposed in the Bundestag, likely arguing that increased militarisation would detract from social spending, whilst increasing tensions with Russia.
Merz’s rhetorical emphasis on Trump likely indicates defence policy will be reactively planned in response to ongoing developments in Ukraine, Russia and America. Defence policy proposals will very likely need to be drafted from scratch in response to events, slowing the implementation of defence funding. This slow implementation of defence policy, will likely reduce the impact of Defence policy as it likely provides adversaries an opportunity to prepare financial and political countermeasures.
Policy Implications
Recommended Policies:
- Germany should prioritize enhancing intelligence-gathering capabilities to better identify and address potential defence policy gaps, ensuring swift implementation when needed.
- European NATO allies should avoid overly relying on an increase in German defence spending when planning their own defence initiatives.
Allies should plan under the assumption that Germany will not significantly raise defence spending until legislation is passed in the Bundestag.
Multilateral organizations, including NATO and the EU, will likely need to explore alternative funding solutions to fill potential gaps in German defence spending..