100 billion euros investments: who will benefit from the upgrade of the Bundeswehr

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An old Bundeswehr tornado:

the renewal of the air force fleet is one of the most urgent projects

Photo: A3446 Patrick Seeger/ dpa

Federal Chancellor Olaf Scholz spoke on Sunday of a turning point in German foreign and security policy.

The Bundeswehr will receive 100 billion euros from a special fund.

The money for this is to be provided with the outstanding budget for 2022, and high debts are likely to be necessary.

The federal government has therefore postponed the presentation of the federal budget by one week to March 16, 2022.

With the billions invested, the federal government has achieved the NATO goal of investing at least 2 percent of economic output in defense spending two years earlier than previously planned.

Most recently, Germany was here at 1.55 percent.

What is fundamentally changing in the Bundeswehr?

After the end of the Cold War, the Bundeswehr was massively downsized.

In recent years, international missions in crisis areas outside the alliance have therefore been among the main operations.

But that time seems to be over, after the withdrawal of the troops from Afghanistan, the withdrawal from Mali could now follow.

Instead, the Bundeswehr is now – significantly influenced by the Russian approach – before a fundamental strategic reorientation, in which the defense of Germany and the NATO countries are moving more to the fore.

In order to be able to cope with these tasks within the alliance, however, the Bundeswehr needs better equipment.

What should the 100 billion euros be used for?

First of all, the often criticized underfunding of the Bundeswehr should be ended.

However, no official information has yet been given on specific procurement projects.

But apparently there are problems with the Bundeswehr in the areas of vehicles, ships, aircraft as well as ammunition and spare parts.

A large part of the sum that has now been made available could flow into the new Luftwaffe fleet.

In addition, there are new heavy transport helicopters and upcoming further developments in the Eurofighter or in surface-to-air defense.

But supposedly small things like radios, cold protection suits or hearing protection have to be renewed or procured and the digitization of the Bundeswehr has to be promoted.

And last but not least, the armed drones, which are controversial in politics, are under discussion.

Which companies will benefit in Germany?

The well-known German armaments companies are also among the main beneficiaries.

According to a media report , the

company offered the federal government a comprehensive delivery of armaments such as helicopters, tanks and ammunition on Monday.

According to Rheinmetall, there are also orders from other NATO countries, especially from Eastern Europe.

Companies like

a provider of innovative technologies from defense electronics to cyber security, should also fill the order books with the billions to be invested.

Hensoldt could also benefit from new orders for the Eurofighter and the Pegasus reconnaissance system.

With its "Thyssenkrupp Marine Systems" division,

should also be among the beneficiaries.

The focus of the division ranges from the manufacture of conventional submarines and naval vessels to the development of surface and underwater technologies.

There are also companies with many customers in security and defense technology, such as the

technology group .

Which European companies will benefit?

As a Franco-German company,

will certainly be among the winners of the NATO rearmament in Europe.

In addition to civil aviation, Airbus is also an armaments group that manufactures, among other things, military aircraft such as the Eurofighter, commercial launch vehicles and guided missiles.

In addition, there are communication technology and defense systems.

In Europe, above all, armaments companies with a broad base such as the British company

and the French

will benefit.

Which companies could benefit outside of Europe?

One of the most important points in the NATO concept of "nuclear sharing" is that Germany should transport American nuclear weapons in an emergency.

The tornadoes would then have to fulfill this task.

A considerable part of the cash injection should therefore flow into this area, which is to be modernized.

However, until their own new fighter jets have been developed with the European allies, F-35 jets from the US manufacturer

could be purchased on an interim basis.

How are the stock markets reacting?

Defense company shares rose sharply on the stock exchange on Monday.

After the announcement of the federal government's decision to invest an additional 100 billion euros in the Bundeswehr, Rheinmetall gained almost 24 percent, Hensoldt shares soared by 40 percent, and Thyssenkrupp shares rose by almost 9 percent.

European armaments companies such as Thales and BAE Systems also posted price gains on a generally weak stock market day.

Defense industry as a new future industry?

The reaction of investors who have so far ruled out exposure to defense companies for ESG reasons is unclear.

Before Russia's attack on Ukraine, arms companies were considered companies in which many sovereign wealth or pension funds no longer invested.

However, if a new "West vs. East" block is formed, improving the equipment of one's own armed forces becomes a question of survival.

It is therefore unclear whether investors will once again include the long-avoided companies in their list of investment targets.