The Bundestag has given the go-ahead for the launch of a special fund to strengthen the Federal Armed Forces. Federal Chancellor Olaf Scholz previously stressed in his budget speech on Wednesday that the special fund was “the right response to the new situation in which we find ourselves”. Scholz thanked all those involved for the constructive negotiations across party lines.

Why is a special fund for the Federal Armed Forces necessary?

Russia’s attack on Ukraine is in violation of international law, shaking the foundations of peace in Europe and marking a turning point in European security policy. In order to reliably protect freedom and democracy in Germany and among our alliance partners, we need an efficient, well-equipped Federal Armed Forces. To enable swift investments to be made, the Federal Government has launched a one-off special fund amounting to 100 billion euros.

What is the purpose of the special fund?

The special fund is earmarked for the purpose of maintaining the Federal Armed Forces’ existing capabilities and allowing the necessary investments to be made in our defence and alliance capabilities. It will help procure the necessary equipment for the Federal Armed Forces more quickly than would normally be possible in the usual annual budget cycle. In addition to the defence budget, Federal Armed Forces projects are to be financed from this fund in close consultation with the Bundestag. “Our goal is to ensure an efficient and progressive Federal Armed Forces that is equipped to fulfil its core mission of national and alliance defence,” said Federal Chancellor Scholz.

What will the money be spent on?

A substantial part of the fund will be used to purchase large-scale equipment – as specifically set out in the economic plan that underlies the special fund. The largest expenditure item in the coming years will be air force procurements at 33.4 billion euros. Other projects are to include the development and purchase of the Eurofighter ECR and the purchase of F-35s as the successor to the Tornado. According to the economic plan, 16.6 billion euros will go to the “land” sector, while the “sea” sector will receive 8.8 billion euros. 20.8 billion euros can be used for procurements in the “command capability and digitalisation” category.

See here for details of acquisitions already planned for the Federal Armed Forces.

How is the special fund being financed?

The special fund will have its own one-off credit authorisation for the sum of 100 billion euros. It will receive no allocation from the federal budget and will be administered separately. The special fund will be available over the course of several years and can be drawn on as needed. “This fund enables us to equip our armed forces so they are capable of carrying out their core mission to the full – namely to defend our country and our allies. We are ensuring that the Federal Armed Forces are fully operational,” stressed Defence Minister Christine Lambrecht.

Why does the Basic Law need to be amended?

The amendment of Article 87a of the Basic Law creates the constitutional basis for the establishment of the fund. This gives the Federal Government the power to set up a special fund with its own one-off credit authorisation of up to 100 billion euros in order to strengthen Germany’s alliance and defence capability. The one-off authorisation is exempted from the credit limit that normally applies under constitutional debt regulations. The amendment to the Basic Law constitutionally ensures that the special fund is earmarked for the purpose of strengthening alliance and defence capabilities. The fund itself is to be established by ordinary federal law. Both procedures have been approved by the Bundestag.

What impact will the special fund have on the NATO quota?

The additional investments from the special fund enable the Federal Government to invest a total of two percent of GDP in defence, thereby meeting NATO requirements. “Our aim here is not just to keep our promise to our friends and allies,” said Federal Chancellor Scholz in his government statement after the Russian war of aggression began, “we’re doing this for ourselves and for our own security, too”.