The News
Germany’s conservative Chancellor-in-waiting Friedrich Merz has reached a tentative deal with the Green party for a debt-funded spending package for defense and infrastructure.
“There will no longer be a lack of financial resources to defend freedom and peace on our continent,” Merz said, announcing the agreement. “Germany is back. Germany is making a major contribution to defending freedom and peace in Europe.”
The deal would exempt defense spending from the country’s strict limits on government borrowing and create a €500 billion fund to finance infrastructure projects over the next decade. Details of the agreement remain unclear, but Der Spiegel reported the Green party asked for €100 billion to be put aside for climate investments in exchange for supporting the proposal.
Merz has discussed approving as much as €200 billion in additional defense spending, and has vowed to ramp up investments in the German military dramatically to counter Russian aggression and shore up Europe’s defenses amid uncertainty about the US security guarantee in Europe.
The deal is expected to be voted on as early as Tuesday in the Bundestag, and will also have to be approved in the Bundesrat, which represents the country’s federal states.
The planned infrastructure spending could raise the country’s GDP by 2% per year for the next decade, a German economic institute said.