Scholz’s Sondervermögen: A German Strategic Revival

CSPS Fellow Brandon Grosch assesses the significance of Germany’s pledge to increase defense spending.

In late March, German Chancellor Olaf Scholz announced a Sondervermögen (“special fund”) meant to pour 100 billion Euros, or 112 billion USD, into the Bundeswehr for procurement and training, along with a commitment for Germany to meet and exceed NATO’s two-percent GDP military spending requirement. The intent of this move is to shift German military doctrine from gradually increased contributions to NATO’s out-of-area operations back towards the territorial defense priorities of the late 20th century. Since the end of the Cold War, the Federal Republic of Germany has shied away from committing to increased defense expenditures and has consistently failed to meet NATO’s two-percent spending mandate every year since 1991, meaning that the Sondervermögen will be the most dramatic uptick in German military spending since World War II.

100 billion Euros is roughly double what Germany spent on the Bundeswehr in 2019, and such a sharp increase in spending will make the Federal Republic the third-largest defense spender in the world, behind the United States and the People’s Republic of China. However, the Stockholm International Peace Research Institute suggests that the fund may dry up by 2025, potentially rushing the Bundeswehr’s rehabilitation. While funding has been a problem for the Bundeswehr, the money in the Sondervermögen will not solve the underlying issues plaguing German defense policy. However, it could represent the beginning of a tectonic shift in German political culture that may correct long-standing shortcomings in German security strategy.

Since the end of the Cold War, German strategic culture has stagnated. NATO’s 1990s eastward expansion into Poland, Hungary, and the Czech Republic made Germany no longer the frontline battleground in a potential war between the West and the Soviet Bloc. This newfound security, together with German distaste for military action and the increased exercise of its economic and diplomatic strengths in the 21st century, have all contributed to a frustrating lack of German particiation in international crises and European security integration. In every other aspect of the international democratic order, Germany is a leader and an essential voice in the global community. It is the largest single economy in Europe and the fourth largest in the world. In the security realm though, Germany has not reached its potential.

This lack of a coherent German security strategy stems partially from its domestic politics. Traditionally, Angela Merkel’s moderate conservative Christian Democratic Union party (CDU/CSU) represented the bloc in the Bundestag (the German legislature) willing to increase defense spending and integrate Germany with the European security framework, while its coalition partner, the moderate liberal Social Democratic Party (SPD), opposed such changes with the general support of other left-leaning parties like the Greens/Alliance 90, the Free Democratic Party (FDP), and the Left Party. It is important that the Sondervermögen was announced by a Chancellor from the SPD, and cabinet members from the Greens and the FDP have shown support for the proposal, with CDU support in principle. A CDU-led government may not have been able to bring together the political support of those traditionally dovish parties. The German public even approves greater efforts to support Ukraine than Germany has already taken since the outbreak of war there.

Chancellor Scholz, then, may represent the introduction of a new, domestically supported style of German leadership that prioritizes the strategic strengthening of Europe while leveraging the economic and political tools of diplomacy that the Federal Republic has developed since reunification such as its part-ownership in the World Bank, push for a permanent seat on the UN Security Council, and leadership in the EU and other multilateral diplomatic organizations. Prior to the Russian invasion of Ukraine, German conflict mitigation strategy in Eastern Europe amounted to promoting somewhat anemic economic interdependence with Russia, including European dependence on Russian energy production and Russian dependence on European capital investment and financial markets. Détente with Eastern Europe and Russia has always been a staple in German foreign policy since Willy Brandt’s Ostpolitik of the 1970s, and this new 21st century version of the policy pursues economic interdependence as the primary vehicle for that détente.

Interdependency introduced vulnerabilities to both European and Russian security in the hopes that the risk of losing those economic ties would constitute an economic deterrent to Russian aggression in Eastern Europe. Partial economic integration has unfortunately proven ineffective as the Russian Federation has continued to wage war in Chechnya, Georgia, the Crimean Peninsula, Syria, and now the whole of Ukraine.  Since the invasion of Ukraine, the German government has had to hastily shift its tactics. Along with the announcement of the Sondervermögen, Scholz has ended the German-Russian partnership on the Nord Stream 2 gas pipeline, supported sweeping sanctions against Russia, and even belatedly supported suspending Russian SWIFT payments. He also indicated that Germany would be pursuing F-35 procurement under NATO’s nuclear-sharing doctrine, which allows any non-nuclear alliance member to store nuclear weapons within their borders and allows access to platforms capable of delivering those weapons, such as the F-16 and F-35. Scholz also announced his intentions for redoubling the German commitment to the European Future Combat Air System project, which aims to develop a natively European network of next-generation air defense and air combat capabilities, including a 6th generation air superiority fighter and improved Unmanned Combat Aerial Vehicle (UCAV) capabilities.

As NATO warfighting equipment pours into Western Ukraine, German leaders must regroup and find a new security framework that does not solely rely on the preventative power of economic integration. The Sondervermögen may simply be a temporary fund for the Bundeswehr to modernize and expand over the next few years, but it represents an unprecedented German willingness to commit to collective European security in a way it has not since the collapse of the Soviet Union. It remains to be seen whether Germany will rise to a position of leadership in global security in the same way it has in the global economy, but the Scholz government appears prepared to make those steps in the interest of maintaining European stability.

Brandon Grosch is a full-time graduate student in the Schar School’s International Security program. He holds two B.A. degrees in History and International Studies from Towson University. His research interests include strategic air power, NATO alliance politics, and European security and economic issues. After graduation he hopes to pursue a career in foreign policy.

Photo can be found here.