FT learns of new German Chancellor preparing 'double bazooka' for defence

Germany could channel hundreds of billions of euros into the defense sector. The future chancellor called for a very rapid strengthening of Germany's and Europe's defense capabilities. He could also unfreeze €3 billion in aid to Ukraine Friedrich Merz

The future Chancellor of Germany, the leader of the Christian Democratic Union (CDU) Friedrich Merz, is studying the possibility of allocating up to €800 billion to finance the armed forces and defense of the country, writes the Financial Times (FT), citing sources.

The money is to be raised in the form of new government borrowing for two separate off-budget funds over a period of ten years. Another source told the newspaper that the amount in question was €500 billion. According to the sources, various options are being considered.

As the FT notes, this plan would be a major departure from the “debt brake” enshrined in the country’s Constitution since 2009 – a mechanism that limits government borrowing and keeps the structural deficit at 0.35% of GDP.

"In view of the growing threat, it is clear to us that Europe - and together with Europe the Federal Republic of Germany - must now make a very big effort, very quickly, to strengthen the defense capability of our country and the European continent," Merz said ( quoted by AP).

The CDU/CSU (Christian Social Union) bloc won the German elections on February 23. The right-wing Alternative for Germany party came in second. The Social Democratic Party of Germany (SPD) of the current Chancellor Olaf Scholz came in third. Since cooperation with right-wing parties is prohibited for German politicians, the CDU/CSU will form a coalition with the SPD. Defense financing is also being discussed with the SPD.

Economics professor Armin Steinbach called the proposal to fund defense with hundreds of billions a “double bazooka,” a term used to describe Scholz’s economic efforts during the covid-19 pandemic .

Le Monde writes that Merz also plans to discuss with Scholz the unblocking of €3 billion in aid to Ukraine, which the Chancellor had previously frozen. On March 4, BLOOMBERG and Fox News reported that the United States , which Kiev relies on especially, had suspended military aid to Ukraine.

RUSSIA condemns the West's provision of support to Kiev.

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