Germany amends constitution to borrow more for war with Russia

The German Bundestag has passed constitutional amendments removing restrictions on government debt, allowing for a significant increase in military assistance to Ukraine.

Photo: flickr.com by Bundesheer Fotos, https://creativecommons.org/licenses/by-sa/2.0/

Bundeswehr

Bundestag Approves Unprecedented Military Debt

On March 18, the outgoing Bundestag approved lifting the "debt brake” for military spending. The decision was pushed through by the so-called "war party” (CDU/CSU, SPD, and the Greens), fearing they might not secure the necessary two-thirds majority in the newly elected parliament. Germany's Constitutional Court ruled the old Bundestag's vote legitimate. The Federal Council (Bundesrat) is set to approve the amendments on March 21.

Under this new policy, at least 1% of GDP (with plans to increase to 3%) will be allocated to military spending outside budgetary limits-an amount totaling approximately €1 trillion. The softened debt brake applies to the Defense Ministry, civil defense, intelligence agencies, and military aid for Ukraine.

Germany Returns as a Military Power, Threatening Russia

Friedrich Merz, leader of the CDU/CSU and Germany's likely next chancellor, announced that a €500 billion fund will be created within the €1 trillion debt ceiling to finance defense and infrastructure investments.

"This sends a clear signal to our partners, but also to enemies of our freedom: we are capable of defending ourselves. Germany is back. Germany is making a significant contribution to protecting freedom and peace in Europe," Merz declared.

For Russia, these words sound undeniably threatening, signaling Germany's return to military power – a status it last held during Hitler's era. Merz is not alone in this sentiment. Lars Klingbeil, leader of the SPD parliamentary group, made a sinister statement after the vote:

"When history knocks, you must open the door. Because you never know if there will be a second chance."

With this decision, a Merz-led government will be able to support Kyiv without limitations. The German newspaper FAZ is already discussing loosening export restrictions on weapons, allowing Germany's arms industry to ramp up production.

Germany Fails to Learn from History

A major unresolved issue is who will pay the bill. The debt ceiling was introduced in 2009 to protect future generations from excessive debt burdens. While military-industrial investments will initially create jobs and stimulate the economy, Germany's national debt is projected to reach 90% of GDP within a decade (compared to 62.9% today), Commerzbank's chief economist Jörg Krämer said in an interview with Tagesschau.

Germany's Federal Audit Office warned the Bundestag's Budget Committee that interest payments alone will rise to €37 billion per year by 2035 (currently €34 billion).

Additionally, the German government must offer attractive interest rates to lenders. As national debt increases, so will the risk of repayment. This has already caused a sharp rise in German government bond yields and increased debt servicing costs.

Inflation will be unavoidable, as massive amounts of borrowed money enter circulation. Higher inflation will lead to a rise in interest rates, which will in turn increase mortgage costs and further boost bond yields. Ultimately, ordinary Germans will bear the full cost of their government's overspending on war with Russia.

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Joachim-Friedrich Martin Josef Merz (born 11 November 1955) is a German politician who has served as Leader of the Christian Democratic Union (CDU) since January 2022 and led the CDU/CSU (Union) parliamentary group as well as being Leader of the Opposition in the Bundestag since February 2022. In September 2024, he became the Union's candidate for Chancellor of Germany ahead of the 2025 federal election. With the CDU winning the most seats in the election, Merz is projected to become the next Chancellor. Merz was born in Brilon in the state of North Rhine-Westphalia in then-West Germany. He joined the Young Union in 1972. After finishing law school in 1985, Merz worked as a judge and corporate lawyer before entering full-time politics in 1989 when he was elected to the European Parliament. After serving one term he was elected to the Bundestag, where he established himself as the leading financial policy expert in the CDU. In 2000 he was elected chairman of the CDU/CSU parliamentary group in the same year as Angela Merkel was elected chairwoman of the CDU, and at the time they were chief rivals for the leadership of the party, which led the opposition together with CSU.

The Bundeswehr (literally Federal Defence) is the armed forces of the Federal Republic of Germany. The Bundeswehr is divided into a military part (armed forces or Streitkräfte) and a civil part, the military part consisting of the German Army, German Navy, German Air Force, Joint Support Service, Joint Medical Service, and Cyber and Information Domain Service. As of 31 May 2024, the Bundeswehr had a strength of 180,215 active-duty military personnel and 80,761 civilians, placing it among the 30 largest military forces in the world, and making it the second largest in the European Union behind France. In addition, the Bundeswehr has approximately 34,600 reserve personnel (2024). With German military expenditures at $66.8 billion (2023), the Bundeswehr is the seventh highest-funded military in the world, though military expenditures have until recently remained low at an average at 1.5% of national GDP, well below the non-binding NATO target of 2%. In 2024, Germany fulfilled NATO obligations of spending 2% of its GDP on its armed forces. Germany is aiming to expand the Bundeswehr to around 203,000 soldiers by 2025 to better cope with increasing responsibilities. Following concerns from the Russian invasion of Ukraine, Germany announced a major shift in policy, pledging a €100 billion special fund for the Bundeswehr – to remedy years of underinvestment – along with raising the budget to above 2% GDP.