German government approves massive defense spending package, unlocking aid to Ukraine

The upper house of the German parliament, the Bundesrat, has approved a large-scale financial package that lifts the "debt brake" for defense spending and allocates €500 billion for a special infrastructure fund.

According to DW and Rubryka, the vote in the Bundesrat was the final step for the bill's approval. It required 46 out of 69 votes, and 53 votes were cast in favor. This decision removes the main obstacle to providing an additional €3 billion in military aid to Ukraine in 2025.

The bill effectively suspends the "debt brake" rule for expenditures related to national defense. It allows future financing through loans for spending on the Bundeswehr, civil defense, population protection, intelligence services, the protection of information technology systems, and aid to countries attacked in violation of international law.

The new rules apply to all spending exceeding 1% of Germany's GDP, approximately €43 billion. CDU leader and likely future German Chancellor Friedrich described the significance of the measure with the phrase: "Whatever it takes."

The bill also relaxes the strict borrowing ban for the federal states, allowing them to take on new debt up to 0.35% of GDP in coordination with the federal government. The distribution of these funds will be governed by federal law.

Under the new law, €500 billion will be raised for infrastructure investment over the next 12 years:

• €100 billion will be allocated to the federal states for their own infrastructure,
• €300 billion will go to the federal government,
• €100 billion will be dedicated to climate protection initiatives.

The bill was prepared by the CDU/CSU bloc and the Social Democratic Party of Germany (SPD), which are currently negotiating the formation of a new government. To secure the bill's approval, the parties reached an agreement with the Union 90/Greens party. As part of the deal, €100 billion from the 500-billion-euro special fund will be allocated exclusively for climate protection projects. Additionally, the text of the German constitution now includes a clause committing Germany to achieve climate neutrality by 2045.

Since the new Bundestag, whose first session will be held on March 25, will no longer have a conservative, social democratic, and Green majority, the bill was passed by the outgoing Bundestag while it still had the necessary votes.

Reference

The Bundesrat is a separate legislative body in Germany that functions as the de facto upper house of the German parliament. It represents Germany's 16 federal states, each of which sends several representatives from their state governments. The Bundesrat has the authority to approve or reject any bills that affect the interests of the federal states.

As a reminder, the German government has agreed to allocate an additional €3 billion in military aid to Ukraine this year, contingent on the abolition of the "debt brake" for defense spending.

On March 17, the German government updated its list of military aid to Ukraine. The package includes three Gepard self-propelled anti-aircraft systems, missiles for the IRIS-T air defense system, and additional ammunition.