As of: February 19, 2024, 11:37 a.m
By: Amy Walker
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At the Munich Security Conference, Chancellor Olaf Scholz (SPD) spoke out in favor of more spending on armaments - even after the special fund expires.
Does the government have to make cuts to its social budget?
Munich – As soon as the 2024 federal budget has finally been decided, the traffic light coalition continues with the next debate about money.
This time it's about the question of defense spending, which - if Germany wants to keep its obligations as a NATO member - will sooner or later have to be financed from the regular budget.
Many investments are currently being financed from the 100 billion special fund, which will expire in 2028.
After that, as Chancellor Olaf Scholz (SPD) said at the Munich Security Conference, Germany must continue to provide high defense spending from the general budget.
“Germany is investing two percent of its gross domestic product in defense this year and in the coming years, in the 1920s, the 1930s and beyond,” said Scholz on Saturday at the Siko.
Higher defense spending leads to even more austerity
“My goal is that after the special fund expires, we finance the expenses for the Bundeswehr from the general budget,” Scholz told the
Süddeutsche Zeitung
at the weekend.
“If we spend two percent of economic output on defense to maintain our security, to ensure peace, democracy, the rule of law and our prosperity, I am convinced that most people will understand that,” continued Scholz.
In order to make these household expenses, you ultimately have to save elsewhere.
As Der
Spiegel
has calculated, this would correspond to spending of almost 108 billion euros in 2028.
The federal government is currently spending 52 billion euros on defense.
The Chancellor is thus reopening a distribution debate.
Because if you want to double defense spending and at the same time comply with the debt brake, you have to save money somewhere else.
The federal government's largest budget is still the social budget, with almost 40 percent of government spending going to it.
The largest item there is pension insurance; in 2024 the federal government plans to put 127.3 billion into pensions.
Another 47 billion euros go to social benefits.
Chancellor Olaf Scholz (SPD) speaks during the 60th Munich Security Conference (MSC).
© Felix Hörhager/dpa
The SPD and the Greens are correspondingly alarmed by the Chancellor's statements and continue to insist on suspending the debt brake.
SPD politician Adis Ahmetovic tells Spiegel: “In order to fulfill this task
(strengthening the Bundeswehr, editor’s note)
and at the same time guarantee social cohesion in our country with all the necessary investments, suspending the debt brake is becoming increasingly inevitable.” .
According to the magazine, SPD MP Ralf Stegner also warned against playing off internal and external security against each other.
“That is why either a special fund for the modernization of our country or at least a reform of the debt brake is necessary.”
And the deputy Green MP, Agnieszka Brugger, said: “I can only urgently warn against another devastating debate on cuts.” And further: “I see zero scope if we protect prosperity, our security and the consensus in society in this “Don’t want to endanger yourself in difficult times.”
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Lindner wants to make investments in the defense industry easier
Meanwhile, Finance Minister Christian Lindner (FDP) announced at the Siko that he wanted to make investments in the defense industry easier.
“We will reduce regulatory hurdles in the EU and Germany,” Lindner told the
Reuters
news agency .
A “second turning point” is necessary so that the arms industry receives the investments that are necessary given the security situation in Europe.
Chancellor Olaf Scholz and Defense Minister Boris Pistorius (both SPD) also emphasized that capacity needs to be expanded.
The arms company Rheinmetall announced in Munich that it wants to produce artillery ammunition in Ukraine.
“Although the state is a client and customer of the security and defense industry, the companies still need private investments and financing,” the FDP leader told
Reuters
.
“Therefore, a second turning point is necessary that improves the reputation and framework conditions for the industry.” On the sidelines of the conference, there were discussions with representatives of the financial sector and the security industry, according to the Ministry of Finance.
The background to this is that, on the one hand, there are restrictions on a number of insurance funds or development banks not being allowed to invest in the military sector.
In addition, some investors are also concerned about a loss of image and public criticism if they invest in defense companies.
At the same time, however, the industry's capital requirements are increasing due to the sharp increase in demand for new weapons and ammunition.
Chancellor Scholz had already warned that weapons would have to be manufactured on an industrial scale in Germany in the future.
“At the same time, there is a clear message that the federal government stands behind this sector.
Banks, insurance companies and funds should no longer shy away from commitments because they fear for their public image,” said Lindner.
Scholz had already committed to long-term contracts with defense companies so that they could build new factories for weapons and ammunition.
With a view to the Russian rearmament that has been going on for years, the Chancellor alluded to the fact that the West is economically stronger and now has to show this.
Even if Russia spends all the revenue from its raw material sales, the country will not be able to reach the numbers that the Europeans could collectively spend on defense.
“Simply because our economic system is successful,” said Scholz.
With material from Reuters