Germany’s €100 billion special fund to boost the country’s defence capability will not be affected by an emergency budget freeze, Euractiv reports.
The defence ministry issued such a statement on Thursday after uncertainty caused by a court ruling that ruled some of Germany’s spending commitments unconstitutional. The German Defence Ministry said in a final statement published Thursday afternoon, pointing to coordination with the finance ministry:
“The precautionary extension of the budget freeze to […] the Bundeswehr special fund (Sondervermögen Bundeswehr) was lifted. This ensures that the financing of projects not exclusively covered by the Bundeswehr special fund is also guaranteed.”
The announcement was an encouraging step following a controversial statement by the ministry and media reports claiming that spending from the special defence fund had been suspended, jeopardising the future state of Germany’s armed forces.
Last week, the country’s Constitutional Court ruled that the reallocation of the COVID-19 support fund to finance the green transition was unconstitutional. The ruling infuriated Germany’s coalition as it called into question its budget planning.
In an emergency move, Finance Minister Christian Lindner (FDP/Renewal) put future spending commitments on hold amid uncertainty over which items could be accounted for after the ruling.
Some of the Bundeswehr’s expenditure items were partly financed from alternative sources and could be affected, even though the freeze in principle did not affect the special defence fund.
Scholz announced the fund last year after the outbreak of the war in Ukraine and the self-proclaimed “Zeitenwende” (turn of the times), which demanded that Germany reinvest in its armed forces after years of underinvestment.
The special fund is also key to meeting NATO’s commitment to spend 2% of GDP on defence, to which Berlin has signed up.
Thursday’s statement indicates nervousness in the German camp as defence officials seek to preserve Germany’s reputation as a reliable partner.
Earlier in the day, even before the release of the final statement, which asserted that all projects would be safe, the ministry rushed to comment on media reports about the dubious future of the special fund. The earlier statement read:
“The Federal Ministry of Defence has restricted until further notice financing authorisations for [projects planned from the special fund whose financing is not covered exclusively by the special fund]. (…) This offers the [defence ministry] the opportunity to submit applications to the [finance ministry] to secure alternative funding for these projects.”
