Issue Briefs
Germany’s New Defence Ambitions: A Turning Point for European Security?
By Laetitia von Schönburg
June 25, 2025 – Under Chancellor Friedrich Merz, Germany is embarking on a radical transformation of its defence policy, aiming to build the Bundeswehr (literally Federal Defence, Germany’s Armed Forces) into Europe’s most capable conventional military by 2031. This shift includes a massive increase in defence spending: 5% of GDP with 3.5% allocated directly to military investments, and an additional 1.5% dedicated to dual-use infrastructure like roads and bridges serving civilian and military needs. The Bundestag, Germany’s federal Parliament, has approved constitutional changes to relax fiscal constraints, allowing for the creation of a €500 billion modernization fund. This decision marks a historic break with decades of restrained military policy.
At the forefront of Europe’s rearmament
This pivot aligns with a broader European momentum toward rearmament, exemplified by the EU’s €150 billion SAFE program and the ambitious €800 billion Readiness 2030 strategy. Germany is positioning itself at the forefront of these efforts, spearheading the European Sky Shield Initiative and entering strategic deterrence discussions with France and the United Kingdom. At stake is not just Germany’s credibility but the future of EU strategic autonomy and NATO’s cohesion. Whether Germany can deliver on these sweeping promises will shape the next phase of European and transatlantic security.
The emergence of Friedrich Merz as Chancellor marks a pivotal break from Germany’s postwar caution in defence policy. Where previous governments emphasized diplomacy and limited engagement, Merz is pursuing a bold redefinition of Germany’s role in European and global security. His administration has introduced sweeping reforms that, if realized, will transform the Bundeswehr into the continent’s leading conventional force. This transformation includes a reimagining of Germany’s strategic doctrine and industrial base.
Five hundred billion Euro
Central to this plan is establishing the €500 billion investment fund mentioned above, an extraordinary new commitment to military modernization and infrastructure development. This move is not merely about rearmament; it represents a strategic redefinition of Germany’s national priorities in an era of rising geopolitical instability. Yet, despite the ambition, critical questions loom. Can Germany execute on this scale? Will its political system and industrial sector keep pace with its strategic vision? Berlin’s defence transformation is underway, but the road to delivery remains long, complex, and uncertain.
Germany’s new defence strategy rests on a bold financial commitment: dedicating 5% of GDP to defence-related investments. To unlock this level of spending, the
German parliament passed amendments to the country’s fiscal framework, suspending the constitutionally enshrined debt brake. This legal manoeuvre enables long-term borrowing to fund strategic investments through a dedicated €500 billion “Sondervermögen,” or special fund. This move represents a fundamental reorientation of Germany’s fiscal policy, prioritizing national security and strategic infrastructure over previous budgetary restraints.
Multi-sectors modernization
The stated objectives go beyond numbers. The government aims to modernize the Bundeswehr, expand logistical capabilities, and scale up industrial production to ensure Germany can sustain high defence readiness. However, these objectives will require a consistent and disciplined approach to procurement and an overhaul of defence bureaucracy and project delivery mechanisms. Germany’s defence posture is undergoing a doctrinal shift from peacekeeping and symbolic deployments toward deterrence and readiness.
This transformation is visible in the country’s procurement strategy. Advanced systems like the IRIS-T Block II missile, capable of countering complex aerial threats, are now central to its air defence architecture. The navy is being modernized by introducing Type F127 frigates, equipped with cutting-edge missile systems to replace aging vessels and secure maritime operations. Meanwhile, Germany’s intelligence capabilities are being upgraded by constructing new Type 424 fleet service ships, enhancing reconnaissance and electronic surveillance.
The Merz government is also investing heavily in cyber defence, AI-driven technologies, and the digital battlefield, positioning Germany at the frontier of next-generation warfare. Alongside these technological advancements, renewed efforts are being made to boost Bundeswehr readiness and improve recruitment and retention. Germany is shifting toward a force that is not only modern but mobile, scalable, and regionally deployable, one that can credibly respond to high-intensity threats across NATO’s eastern flank.
Germany will lead Europe
Germany’s transformation is unfolding in the context of a broader reawakening across the European Union. The SAFE initiative, a €150 billion defence fund, aims to catalyse joint procurement and stimulate Europe’s defence industry.
Readiness 2030, the successor to ReArm Europe, targets as much as €800 billion for strategic defence investments across infrastructure, cyber resilience, and advanced weapons. Berlin is the driving force behind the European Sky Shield Initiative, an ambitious plan to create a continent-wide air defence system. At the same time, Chancellor Merz has floated the idea of trilateral nuclear deterrence talks with France and the UK, breaking a long-standing German political taboo on nuclear weapons, signalling a new realism in Berlin’s strategic calculus. Yet Germany
remains careful in framing these efforts within the NATO framework. Merz’s government sees European strategic autonomy not as a replacement for NATO but as a complement, strengthening the continent’s capabilities while reinforcing transatlantic ties.
Multiple challenges ahead
Despite the bold vision, several risks threaten to derail Germany’s defence transformation. Domestically, Merz must navigate a complex political landscape. His coalition government is fragile, and the constitutional changes enabling the new defence spending could still face legal challenges in the courts or resistance from fiscally conservative factions.
On the industrial side, Europe’s defence production capacity today is rather modest on account of relatively small defence industries. Add to that supply chain vulnerabilities, workforce shortages, and long manufacturing timelines that could delay key projects. Even with increased funding, bottlenecks in production capacity and outmoded logistics could stymie rapid progress.
No unified European authority on defence matters
A lack of coherence across EU member states remains a significant obstacle at the strategic level. While joint funds and initiatives proliferate, the EU lacks a unified defence doctrine. Without tighter coordination, efforts risk being fragmented or duplicative. Beyond Europe, uncertainty regarding U.S. security priorities raises questions about the long-term reliability of NATO’s American pillar. A retreat by Washington would force Berlin and Brussels to accelerate their plans under far more pressure.
To ensure the credibility of its defence agenda, Germany must set clear and realistic procurement timelines backed by realistic and transparent benchmarks, and rigorous project management. Interoperability with NATO and EU partners should be prioritized from the outset, especially in communications, logistics, and battlefield coordination. Germany must also address industrial gaps by investing in defence workforce training and incentivizing domestic production.
Will Europe be able to integrate defence industries?
For the EU, the moment demands concrete steps toward integration. A common arms registry could streamline procurement, reduce duplication, and foster economies of scale. SAFE and Readiness 2030 should be deployed strategically, not simply as funding pools, but as levers for genuine autonomy in key capabilities. Allies like the UK, France, and the United States must engage proactively with Germany’s ambitions. This means supporting Berlin’s leadership while ensuring alignment with NATO doctrine. Trilateral dialogues, especially on nuclear deterrence and strategic coordination, could serve as a stabilizing force amid geopolitical uncertainty.
The road ahead
Germany’s ambitious defence reform marks a pivotal moment in shaping the future of European security. By committing significant financial resources and redefining its military doctrine, Germany seeks to enhance its defence capabilities, lead a collective European effort toward strategic autonomy, and reinforce NATO cohesion.
However, successfully realizing these goals depends on the country’s ability to navigate complex political, industrial, and bureaucratic landscapes. The coming years will be critical in determining whether Germany can fulfil its promises and solidify its role as a cornerstone of European defence.
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Laetitia von Schönburg is a researcher with the Global Policy Institute. She was born and raised in Germany. She holds a Comparative Literature and Culture degree from Royal Holloway University of London. Her academic background includes the Middle Eastern Studies Program at the University of Saint Joseph in Beirut and the History and Culture of Korea at Korea University in Seoul. |