Chancellor Friedrich Merz’s cabinet is pumping record sums into defence, scrapping red tape and eyeing satellites, frigates and data-sharing schemes. Berlin does this in a bid to rebuild hard power and reassure EU partners that Berlin can anchor Europe’s security efforts.
The promised Zeitenwende is no longer a mere slogan. In March Berlin sent the Bundestag an €82.7bn core-defence budget for 2026, up from €62.4bn this year, and pledged a path to 3.5 per cent of GDP by 2029. Coupled with a €25.5bn top-up from the special fund, it marks the biggest real rise in military spending since the republic’s founding. Europe’s policymakers, anxious about America’s reliability and Russia’s aggression, now look to Germany to turn euros into usable force.
Money is only one part of the effort. A temporary 2022 law, renewed last month, waives swathes of budgetary, environmental and procurement red tape. It lets the defence ministry run pre-commercial competitions and ignore the usual rule that contracts must be split into lots. Supporters call it the first genuine debureaucratisation in decades; Greens and Leftists complain of a blank cheque. The bill obliges the government to present offset guidelines by September 2026, a demand Brussels views as a test of fair competition inside the single market.
Strengthening the home front
The political bargain remains fragile. The grand coalition and the far-right AfD endorsed the law, but Greens and Linke voted against. Trade unions fret that small suppliers will be squeezed, while student demonstrators in Berlin chant that public cash should go to classrooms, not cannons. The European Commission, keen to advance a genuine European Defence Industrial Strategy, worries that Germany’s spree could either crowd others out or—if it falters—sap wider momentum.
This week, the cabinet debated a new Economic Security Strategy that widens the net beyond barracks and shipyards. It formalises a club of spooks, police and cyber agencies, flanked by industrial lobbies, to swap threat data. Helena Melnikov, chief executive of the German Chamber of Industry and Commerce, backed the move but insisted on reciprocity. “Only then can they identify threats early and take targeted countermeasures.” That cuts to the heart of Europe’s push for ‘secure openness’: firms expect government briefings on sabotage and espionage if they are to harden supply chains.
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Holger Lösch, deputy head of the Federation of German Industries, put it bluntly: “Economic security is part of national security.” Brussels agrees. Its own Economic Security Strategy, unveiled last year, urges member states to screen outbound investment and control exports of sensitive tech, yet leaves execution to capitals. Berlin’s new plan may become a template. Officials say the next step is to reach Mittelstand firms that lack in-house spooks but dot the union’s defence value chain.
The speed matters. Under current laws, companies must already report cyber incidents; until now they got little back. The cabinet paper promises two-way “briefings, assessments and alerts”. EU mandarins hope that cross-border links follow. A common operational picture of industrial threats would knit Europe’s disparate security communities together — another shy step towards the ‘strategic autonomy’ Paris keeps demanding.
Eyes in the sky
Germany’s planners also look upwards. General Armin Fleischmann, head of the Bundeswehr’s Cyber and Information Domain, told a podcast that the force aims for “at least double-digit numbers of reconnaissance satellites and hopefully triple-digit numbers of Satcom satellites.” He believes warfare now pivots on data. “Information is currently the most important weapon and will remain so in the future,” he said. “Whoever sees, fires and hits first wins the battle.” The satellites will feed a ‘combat cloud’ linking sensors from land, sea, air, cyber and space.
Information is currently the most important weapon and will remain so in the future. — General Armin Fleischmann, Bundeswehr’s Cyber and Information Domain
Such ambition thrills EU commissioners crafting a space-defence package. A sovereign German constellation, complemented by commercial services, would give Europe redundancy against jamming and sabotage. It may also spur joint procurement: French and Italian space contractors already lobby for a union-wide secure network. Yet coordination is brittle. Berlin talks of creating its own AI accreditation authority for weapons systems, mirroring its cyber-security set-up. Brussels fears a patchwork of safety regimes.
AI is only part of the picture. The first building blocks—Spock 1’s synthetic-aperture radar and Uranos’s sensor fusion for the German-led brigade in Lithuania—show how national projects bleed into EU operations. If they succeed, planners hope to plug the feeds into PESCO, the union’s defence-co-operation scheme. Failure would harden suspicions that Germany prefers home-grown widgets to genuine pooling.
Stop-gap ships, stop-gap trust
For all the futuristic talk, Germany must still patrol seas today. Delays to the €10bn F126 frigates forced the defence ministry to seek alternative hulls. “The delivery of these frigates starting in late 2029 is also intended to ensure that NATO requirements for anti-submarine warfare are met in time,” the ministry said after MPs approved the interim purchase of Meko vessels. The stop-gap underlines a pattern: Berlin orders shiny kit, then scrambles when projects slip.
Economic security is part of national security. — Holger Lösch, Federation of German Industries
The two-track approach, officials argue, spreads risk. Critics retort that it duplicates costs and saps focus. Brussels, which counts on German ships for maritime missions from the Baltic to the Red Sea, just wants hulls in the water. Europe’s naval yards eye the reshuffle warily. Dutch, Spanish and Italian firms fear being elbowed out if Germany leans on domestic conglomerates to catch up.
Money may not be the constraint. A wishlist of 320 projects worth €377bn, published with the 2026 budget, spans drones, missile defence and a €9.5bn protected satellite network. Parliament’s budget committee has waved through 70 proposals over €25m apiece, including eight F127 air-defence frigates at €26bn and an option for 75 more Leopard 2A8 tanks. What matters is throughput — testing, certification and the capacity of industry to deliver when labour is tight.
Paying, protesting, persuading
The surge stirs unease. IG Metall marshalled aerospace workers in Manching to protest blockages in the Franco-German Future Combat Air System. Young activists marched through Berlin against conscription talk. Green and Left MPs demand social spending instead. Yet the broad coalition behind the procurement-simplification law held. EU lawyers note that the act suspends competitive-tender rules which Brussels treasures. Berlin insists the exemption is temporary; sceptics fear a precedent.
The delivery of these frigates starting in late 2029 is also intended to ensure that NATO requirements for anti-submarine warfare are met in time. — German defence ministry
For all the rancour, the trajectory is set. As one official puts it, the government has “radically simplified the legal framework”. Cash is flowing. Dozens of mega-projects queue for signatures. The question now is implementation. The commission will soon decide whether the new offset guidelines meet single-market principles. If SMEs feel locked out, the Bundestag may baulk at future appropriations.
Re-arming while integrating
Europe’s security depends on the outcome. A Germany that spends big but delivers late leaves holes NATO cannot plug. One that rebuilds adroitly acts as anchor for EU defence. The economic-security plan hints at a wider doctrine: blend commercial resilience with military power, wire sensors into clouds, and share data between state and business. Germany’s scale could turn these ideas from pilot to pan-European standard.
General Fleischmann’s creed—see first, shoot first, win—applies equally to policymakers. They have watched Russia’s invasion, Israel’s war and American politics. None bodes well. Germany is leaning in, but pressure mounts to show results before voters tire and allies doubt.
Whoever sees, fires and hits first wins the battle. — General Armin Fleischmann
What happens next will echo beyond Berlin’s barracks. If procurement stays clogged and satellites stay on the drawing board, calls for a stronger Brussels grip will grow. Should ships sail on time and AI pass muster, the union may trust subsidiarity. Either way, Europe is entering an age when budgets, fibre cables and shipyards matter as much as treaties. Germany’s wager is that it can rebuild fast enough.
