During his first stint as Germany’s minister of defence, Boris Pistorius had to battle to secure money for overhauling the country’s long-neglected armed forces.
But after the new government this week granted him a staggering €650bn for the next five years, his main challenge will be spending it.
Pistorius must grapple with a procurement bureaucracy that once took seven years to select a new main assault rifle and more than a decade to procure a helmet for helicopter pilots. He will have to oversee an enormous ramp-up by an arms industry already struggling with capacity.
And billions must go towards tasks such as upgrading barracks, some of which are in “disastrous” shape with crumbling plaster and mould, according to the armed forces watchdog.
Pistorius said this week the country could “finally procure what we need” after Berlin announced that Germany’s defence budget would reach a whopping €162bn by 2029 when support for Ukraine is included — a 70 per cent increase on this year.
But he warned: “All of this presupposes that industrial production capacity can now be ramped up quickly, scaled up and adapted to our needs and our orders.”
The plans put Germany on track to meet Nato’s new target of spending 3.5 per cent of GDP on core defence by 2029 — six years ahead of the western military alliance’s newly agreed deadline.
Spurred by President Donald Trump’s threat to pull US security guarantees from the continent, European nations have agreed to invest more in their own armies after enjoying a “peace dividend” since the end of the cold war. They are also seeking to deter aggression from Russian President Vladimir Putin — as his full-scale invasion of Ukraine, the largest armed conflict on European soil since the second world war, grinds on into its fourth year.
German military planners must spend tens of billions on air defence systems, long-range weapons, armoured vehicles and cyber warfare to meet their new Nato commitments. They also want to develop satellite systems to boost Europe’s intelligence, surveillance and reconnaissance capabilities amid concern about reliance on Washington.
“Europeans are racing to fill the gap but it’s a big ask,” said Ben Schreer, of the International Institute for Strategic Studies. “It will take time and cost a lot of money.”
Personnel costs will also balloon as Berlin seeks to expand the size of its professional armed forces from about 180,000 troops to 260,000 by the mid-2030s: a tall order for a military that is already struggling to fill vacancies.
Many experts believe that Germany, which plans to introduce voluntary military service, will ultimately have to adopt a compulsory model — something that the Munich-based Ifo Institute has estimated would cost the government €3.2bn a year.
Germany has already made progress in overhauling the Bundeswehr since the war in Ukraine began in 2022, when then-chancellor Olaf Scholz unveiled a €100bn special fund for equipping the military. The head of the army warned at that time that his troops were “more or less empty-handed”.
Spending on an entirely new scale has been made possible by new chancellor Friedrich Merz’s decision to allow unlimited borrowing to re-establish Germany as Europe’s strongest conventional army. The country will borrow €380bn between now and 2029 to pay for the splurge.
But spending such large sums will create huge challenges for Germany’s defence procurement system.
The vast Bundeswehr procurement office in Koblenz, which has 11,800 employees, was notorious in the past for fastidiously following national and EU regulations, and drawing up complicated customs requirements.
The finance ministry in Berlin was another barrier to fast purchases, where officials with no military expertise debated how many submarines the German navy really needed.
Pistorius has already had some success in changing the culture, calling for speed instead of what he has called “gold-plated solutions”. Germany has used the €100bn fund to order a string of big-ticket items, including F-35 fighter jets, Chinook helicopters and an Arrow 3 air defence system from Israel.
Yet frustrations remain. “Sometimes just drawing up a contract can take an entire year,” said one senior official.
Even once products are ordered, suppliers can be slow to deliver amid huge industry bottlenecks. “When you order a Patriot [air defence] system today they say: thank you for your order, you will receive it in 2028,” said the senior official in reference to the US air defence system.
German defence companies are excited at the vast sums coming their way. But they are also nervous about the challenge of dramatically expanding production.
“When you look at the numbers that are currently circulating in Berlin, it’s almost something to be afraid of,” said an executive at a mid-sized German weapons maker.
Analysts warn of the dangers of poor procurement decisions and waste, and of price gouging by producers amid rocketing demand.
“The more rapidly we need to get money out of the door, the more there is the risk that it just goes to the easiest, most expensive but also potentially outdated technology,” said Guntram Wolff, a senior fellow at the Brussels-based economic think-tank Bruegel.
By focusing on its own national priorities, Germany was missing the opportunity to develop pan-European solutions, he said. Merz remains resistant to joint EU borrowing that would help smaller countries boost their military expenditure.
“Old” industry players such as the artillery and ammunition producer Rheinmetall and upstarts such as the artificial intelligence developer and drone maker Helsing are at odds on the lessons from the conflict in Ukraine, and how the spoils of the defence budget should be shared.
Rheinmetall chief executive Armin Papperger — whose company has received €42bn of the €100bn fund according to German public broadcaster ZDF — has said “conventional war is back”. But Helsing co-founder Gundbert Scherf has said: “We’re still counting tanks, ships and planes. That’s the wrong mindset.”
Claudia Major, senior vice-president at the German Marshall Fund, said that it was a false dichotomy. “In the end, we need to get the right mix, the mix adapted to Nato’s way of fighting — and we need to get it quickly.”
