Bundeswehr’s funding gap: A 100 billion euro challenge

Underfunded Bundeswehr: Defense industry identifies massive shortfall.

Despite a slight increase in the defense budget and a special fund of 100 billion euros, the German Armed Forces (Bundeswehr) remain severely underfunded, according to Hans Christoph Atzpodien, the Chief Executive of the Federal Association of the German Security and Defense Industry. Atzpodien identifies a “gap” of “another 100 billion euros” that urgently needs to be filled due to the changed security situation in Europe.

Current funding and NATO commitments

“The Bundeswehr is expected to have a budget of around 53 billion euros in the coming years,” Atzpodien told the RedaktionsNetzwerk Deutschland (RND). He explained that to reach NATO’s two-percent goal, portions from the special fund will be added on top of this budget for the current and next two years. However, after 2026, the funds will decrease again.

The two-percent goal refers to NATO’s target for member countries to spend 2% of their GDP on defense. Germany has consistently fallen short of this target, which has been a point of contention within the alliance.

“This gap, which we have quantified at an additional 100 billion euros based on the Bundeswehr’s needs up to and including 2028, must be filled,” Atzpodien emphasized. This statement underscores the significant financial challenges facing Germany’s military modernization efforts.

Progress and persistent challenges

Atzpodien acknowledged that “an enormous amount has happened” since Russia’s invasion of Ukraine on February 24, 2022. The conflict has dramatically altered the security landscape in Europe, prompting many countries, including Germany, to reassess their defense capabilities and spending.

He also noted that with the new Defense Minister Boris Pistorius (SPD), the awarding of contracts has “gained significantly more momentum.” Pistorius, who took office in January 2023, has been vocal about the need to strengthen the Bundeswehr and has pushed for increased defense spending.

However, Atzpodien pointed out that despite the special fund of 100 billion euros, there are still limitations. “The Bundeswehr still has to practice scarcity management in many areas, which is unlikely to change in 2025,” he said. This situation hampers the defense industry’s ability to ramp up production and meet the military’s needs.

“Without these limitations, there would be significantly more impetus for our industry. At the moment, companies are still operating with the handbrake on because they know that the budget funds are what they are,” Atzpodien explained.

Political challenges and public awareness

The chief executive emphasized that the problem is “more political” in nature. He highlighted the dramatically changed security situation in Europe and cited statements from the Defense Minister and the Inspector General of the Bundeswehr, General Carsten Breuer, who repeatedly stress that Germany must be “fully capable of deterrence” within five years at the latest.

Atzpodien expressed concern about the lack of public awareness regarding the financial implications of this goal. “My impression is that citizens are not being told clearly enough what follows from this, including in terms of fiscal policy. Otherwise, we would have more planning security,” he said.

This statement underscores the need for greater public dialogue and understanding of Germany’s defense requirements in the face of evolving geopolitical challenges. It also highlights the delicate balance between military modernization, fiscal responsibility, and public support that policymakers must navigate in addressing the Bundeswehr’s funding gap.