German defence industry decries diminishing defence spending

Once again Germany is on the path to miss NATO-wide spending expectations and even undershoot its own, lower target, warns the local defense industry.

The assessment by the BDSV industry association comes after details emerged this week about the government’s newest spending blueprint. While a rise of €2 billion (U.S. $2.3 billion) is planned for 2020 (to €45 billion, or 1.37 percent of gross domestic product) defense spending is planned to drop in the ensuing years, down to 1.25 percent of GDP in 2023.

BDSV chief Hans Christoph Atzpodien called the projections “disappointing,” especially in light of equipment problems plaguing the armed forces. He also warned that Germany could lose its standing on the world stage. The budget would have “negative effects … on Germany’s role in the European Union’s defense-cooperation policy and in NATO,” Atzpodien wrote in a statement.

All NATO allies have pledged to boost defense spending toward 2 percent by 2024, mostly in reaction to a resurgent Russia. Germany has never tried to reach that level, which would translate into tens of billions of dollars extra within just a few years. But Defence Ministry chief Ursula von der Leyen had told allies that her country would at least set 1.5 percent as a target.

Chancellor Angela Merkel said she had no intention of overruling her finance minister on defense spending, noting that differences between the Defence and Finance ministries would be resolved collaboratively.

Merkel said actual annual defense spending traditionally has been higher than the planning figures presented this time of the year, which marks the beginning of the budget-crafting cycle.

The chancellor also played up the importance of non-military funds devoted to crisis prevention and humanitarian aid, which Germany has increased. Besides, she noted, “We have no ambition to be a world power. … We want to be an important actor.”

According to the BDSV statement, defense companies fear to feel the pinch in two ways: For one, a soft military budget means less spending on domestic defense programs. In addition, the government is also allowing fewer arms exports to other countries, i.e. exports to Saudi Arabia, which has been blacklisted until the end of March.