Berlin boosts military spending to combat Putin’s ‘war of aggression’

Chancellor Olaf Scholz presents radical rethink of German foreign and energy policy

German chancellor Olaf Scholz drew a standing ovation from the Bundestag on Sunday for unveiling a €100 billion defence fund to boost military spending and halt what he called Vladimir Putin's dream of a "Russian empire" in Europe.

Days after Russia's invasion of Ukraine, and as nearly 500,000 people marched for peace in Berlin, Mr Scholz presented Germany's most radical rethink of foreign and energy policy in living memory.

“In cold blood, Putin has started a war of aggression,” he said. “This new reality requires a clear response. We have given it. What has to happen for peace in Europe, will happen.”

He predicted that “Putin’s war” would end in “catastrophe” for the Russian leader but that Berlin remained open for “as much diplomacy as possible, without being naive”.

As claims of German naiveté towards Russia had piled up in recent days, the chancellor's 30-minute address moved to silence his critics and end years of tortuous debates.

After years of falling short of the Nato minimum for military spending, currently at around 1.5 per cent of its gross domestic product, Mr Scholz presented plans for the €100 billion fund, anchored in the constitution. While that fund would revitalise Germany's underfunded armed forces, he vowed in addition that Berlin would "from now on – year for year – invest two per cent of gross domestic product in our defence".

He also insisted that Berlin would support its eastern Nato neighbours and stick “without ifs or buts to its alliance obligations”.

In another pivot, Germany announced at the weekend it would release to Ukraine petrol and weapons, including 500 surface-to-air stinger missiles and 1,000 German-made anti-tank weapons, held in Estonia and Netherlands, which require Berlin's permission before being passed on.

As Germany moved on Sunday to close its air space to Russian aircraft and boost its participation in a Nato mission in Slovakia, the Scholz administration also dropped its opposition to excluding major Russian banks from Swift, the system used global financial transactions.

These shifts follow a decision last week to halt the permit process for Nord Stream 2, the undersea gas pipeline carrying Russian gas to Germany.

In his five-point address the chancellor urged German politicians to adopt a new approach to the EU, “not just to ask what’s in it for Germany ... but to ask what is the best decision for the union?”

Surprise

Foreign minister Annalena Baerbock said Berlin's shift was a response to changed circumstances in Europe. "We cannot leave Ukraine defenceless against an aggressor who is bringing death and destruction to this country," she said.

The scale of Sunday’s announcements took Bundestag MPs – and foreign policy experts – by surprise. The shadow of 20th century fascism has, for decades, throttled official appetites for military spending and made a taboo of supplying lethal weapons to countries attacked by Nazi Germany.

“Truly astonishing” was how Constanze Stelzenmüller, foreign policy analyst with Washington’s Brookings Institution, described Sunday’s shift. “It breaks my heart, still, that it took so much horror and suffering for Germany to step up to the challenge,” she said.

In a lively parliamentary debate, opposition leader Friedrich Merz, head of the Christian Democratic Union (CDU), welcomed the new proposals but criticised Putin apologists in Mr Scholz's SPD. "To describe these people as Lenin did, as useful idiots, is perhaps the kindest description," said Mr Merz.

Financing Germany's military and energy transitions now falls to finance minister Christian Lindner. He said Europe had awoken from its "self-satisfied dream" and that Germany was prepared to shoulder the cost of military spending – and sanctions – "because this is the cost of freedom".

As well as financing extra military spending, he promised to bankroll Germany’s shift away from Russian gas – more than half its total gas imports – towards “renewable energy which is now freedom energy”.

Germany’s economic ministry is working to expedite the construction of two liquified gas terminals on the north coast and a faster roll-out of renewable energy.

The largely pro-Russian Left Party delivered its own historic political correction, saying Mr Putin’s war “has no justification”.

Only the far-right Alternative für Deutschland (AfD) went on the attack, with party co-leader Tino Chruppala telling Mr Scholz: "Sadly, with your speech you have re-activated the cold war."