The delivery is to be financed by Germany. However, the final technical, logistical and financial details still need to be clarified, German Defence Minister Boris Pistorius said after his talks with U.S. Defence Secretary Pete Hegseth, saying these “appear to be solvable for both of us, so we will get to work quickly,” and underlining Ukraine’s urgent need for additional air defence systems.
The Ukraine war and expanding global conflict showered a windfall on German arms companies like Rheinmetall and TKMS, with some startups like Helsing becoming the upstarts of the weapons industry, and other legacy companies like Heckler & Koch even experiencing a dramatic reversal of fortunes.
As the German Bundeswehr grapples with a shortage of 60,000 soldiers, Chancellor Freidrich Merz said, “We will probably … not be able to manage with the current voluntary system alone, but will need additional elements of compulsory military service.”
The Bundeswehr had a strength of 181,150 soldiers at the end of 2024, falling short of previous recruiting targets. NATO member states are to be assigned new national targets for their military capabilities, including weaponry, that are expected to be increased by around 30%.
Germany’s Federal Court of Audit warned that a ‘signal of unlimited willingness to incur debt’ could lead prices in defence industry to soar, with incentives for industry to charge higher prices for the same services due to ‘almost unlimited availability of financial resources and increased demand.’
As NATO races to supply Ukraine before Trump takes office, Europe is struggling to touch two percent of its GDP on defence expenditure while Russia plans to spend more than 32 percent of its national budget on its military.
The strategy paper that is said to be an evolving, ‘living document,’ includes ‘detailed plans’ for eventualities that range from defending Germany to deterring Russian manoeuvres on NATO’s eastern flank and anticipates that Germany might have to become a ‘hub for tens or hundreds of thousands of troops’ that have to be transported east, besides logistics for war materiel.
In the September survey, Defence Minister Boris Pistorius’ (SPD) proposal to increase defence spending to 3% to 3.5% of the gross domestic product received 50% approval, while 15% said that was too low.
Russia’s war on Ukraine has prompted Germany to revisit its defence posture, which increasingly suffered from a lack of investment since the end of the Cold War as imminent threats appeared to diminish. The legislation must now pass through Germany’s two houses of parliament. It could come into force in May of next year.
German Defence Minister Boris Pistorius said that the Bundeswehr needs around €58 billion ($63 billion) in 2025 to quickly close capability gaps. “As things stand, we will be allocated around €52 billion”, he said, adding, “That means we will be short of almost €6 billion next year.”
The order is for a turnkey factory that will become a ‘Ukrainian Centre of Excellence for Ammunition’ to be operated by a Rheinmetall joint venture with a Ukrainian state-owned company, that will begin production within 24 months to manufacture hundreds of thousands of rounds of artillery ammunition per year.
“The Russian army increases its number of tanks by 1,000 to 1,500 additional units every year. The five largest European NATO member states together have just half of that in their inventory,” said Germany’s chief of defence Carsten Breuer.
Scholz’s coalition has faced criticism over the small increase in the 2025 budget for defence. “In 2017, we still spent €37 billion ($42 billion) on defence. Now, with the use of the special fund, the Bundeswehr‘s budget is €75 billion. That’s more or less a doubling,” Scholz said.
Economic researchers and partners in the ruling coalition led by Chancellor Olaf Scholz have warned of immense economic costs and legal difficulties that could result from plans for military conscription proposed by Defence Minister Boris Pistorius in June in an attempt to boost the numbers of the German armed forces.
German military spending is set to increase by only EUR 1.2 billion (USD 1.3 billion) under the terms of the preliminary 2025 national budget agreed on Friday, far below the demands of Defence Minister Boris Pistorius.
