Germany cuts on defence spending again

Berlin had already announced that it will fall significantly short of NATO’s defence spending goals, annoying the United States. It now risks provoking Washington further by failing to reach even its own reduced defence spending target.

Background

Germany is a country in Central and Western Europe, lying between the Baltic and North Seas to the north, and the Alps to the south. It borders Denmark to the north, Poland and the Czech Republic to the east, Austria and Switzerland to the south, France to the southwest, and Luxembourg, Belgium and the Netherlands to the west.

Germany's military, the Bundeswehr, is organised into Heer (Army and special forces KSK), Marine (Navy), Luftwaffe (Air Force), Bundeswehr Joint Medical Service and Joint Support Service branches. In absolute terms, German military expenditure is the 9th highest in the world. In 2015, military spending was at €32.9 billion, about 1.2% of the country's GDP, well below the NATO target of 2%.

As of 31 January 2019, the Bundeswehr has a strength of 181,512 active soldiers, placing it among the 30 largest military forces in the world and making it the second largest in the European Union behind France in terms of personnel. In addition, the Bundeswehr has approximately 27,900 reserve personnel (2017). With German military expenditures at €43.2 billion, the Bundeswehr is among the top ten best-funded forces in the world, even if in terms of share of German GDP, military expenditures remain average at 1.23% and below the NATO target of 2%.

Germany aims to expand the Bundeswehr to around 203,000 soldiers by 2025 to better cope with increasing responsibilities.

Analysis

Chancellor Angela Merkel’s government had a falling-out with the Trump administration last year when it said that, despite signing a commitment to work toward spending 2 percent of gross domestic product on defence by 2024, its target would instead be 1.5 percent.

Now, projected spending levels are expected to fall below even that lower path in a three-year budget plan due to be announced on Wednesday, portending another confrontation with Washington.

The timing could not be worse, with NATO preparing to celebrate its 70th anniversary in Washington in April 2019.

Mr. Trump’s resentment toward European allies he perceives to be coasting on America’s security guarantee is well known, and recent reports that Washington is considering billing allies for hosting American troops has further shaken the alliance.

Even in Europe, some diplomats in neighbouring countries privately complain that Germany’s failure to meet its commitments is putting not just its own relationship with Washington on the line, but that of the whole Continent.

Ms. Merkel insisted on Tuesday that her government could still hit the 1.5 percent target in budgets down the road. But few still believe her — least of all Mr. Trump’s ambassador in Berlin.

In recent months, the tone has become openly hostile, especially between the United States and Germany, Europe’s largest economy.

Mr. Grenell has demanded that Berlin scrap Nord Stream 2, a planned gas pipeline from Russia, or risk possible sanctions for the companies involved; stop German companies from doing business in Iran, or risk restrictions on doing business in the United States; and ban a Chinese company from building a new communications network, or risk losing access to some intelligence sharing.

The threats have not gone down well in Berlin, with one German politician this week even demanding Mr. Grenell’s immediate expulsion for interfering in Germany’s sovereign affairs, although that is unlikely to happen.

Even some of Mr. Trump’s fiercest critics say that Germany’s failure to live up to its NATO spending commitments has given a hollow ring to the country’s vocal defence of the international order.

Counterpoint

Germany had earlier committed to moving toward the 2 percent target long before Mr. Trump’s election, shortly after Russia annexed part of Ukraine. German officials point out that in absolute terms, German military spending has increased for five straight years, up 36 percent, and that Germany is NATO’s second-biggest contributor of funds and troops. They say that a fair measurement of a country’s contribution to NATO should take account of wider factors, including foreign aid spending and the rate of economic growth.

Given the size of Germany’s economy and years of consistently high economic growth, 2 percent of GDP, some also argue, was a fast-moving target and one hard to meet in a short period of time.

Assessment

Our assessment is that Germany’s rapidly growing economy has prevented a smooth, gradual and proportional increase in its defence spending. We believe that as the EU’s largest economy and primary driving force, Berlin has to ramp up it's spending if it wants to continue exerting a sizeable hard power beyond its borders. 

 

Image Courtesy: Bundeswehr-Fotos (https://commons.wikimedia.org/wiki/File:Leopard_2_A5_der_Bundeswehr.jpg), „Leopard 2 A5 der Bundeswehr“, https://creativecommons.org/licenses/by/2.0/legalcode