1. Original plan

For 2001 Germany's basic defense expenditures (federal budget plan No 14: without military pensions etc.) had been set at 46.9 Billion DM (or about 24.1 Billion Euro). According to an agreement, reached by the Federal Chancellor, the Minister of Finance and the Minister of Defense in June 2001, the defense budget proper (plan No 14) was to be reduced to 46.2 Billion DM (23.7 Billion Euro) by 2002 and then kept steady - in nominal terms - until the year 2006.

Depending on the GDP deflator this course of development implies more or less drastic disarmament. Likewise - depending on Germany's economic growth - the defense sector's share in the GDP would more or less shrink.

Zero nominal growth of the defense budget has been conceived of as a flank support to the Federal Government's current austerity policy. It is intended to "consolidate" the Federal Budget to such an extent that by 2006/7 no more credits have to be sought - and the old debt can be paid back from then onwards.

2. Recent changes

After the summer break of 2001 the Bundestag (lower chamber of Parliament) convened to allocate additional 160 Million DM (82 Million Euro) to the Federal Armed Forces. This amount is meant to mainly cover the operations bill of a small contingent of Bundeswehr soldiers sent to Macedonia as part of an international peace-supporting mission. As this mission has been prolonged until the middle of 2002, the forces will receive more money. They are supposed to get only up to 20 Million DM (10.3 Million Euro), however, as no more than the soldiers' extra pay is to be covered. Further decisions have not been made on this matter.

These additional payments are not intended to go on forever. And they are small fry compared to yet another addition to the defense budget. After September 11, namely, the Federal Government made resources available for what has been called an "anti-terror package" amounting to 3 Billion DM (1.54 Billion Euro) - half of which was supposed to go to the MoD.

Interestingly, the allocation of the resulting 1.5 Billion DM to the forces was made for an indefinite period of time. In other words, from 2002 onwards they will annually get this additional (money term) amount.

As impressive as this augmentation may appear to the German - probably not the American - observer, it still does not imply that the trend towards disarmament is being reversed. Depending on the GDP deflator to be assumed, the defense budget will lose 10 percent, or more, of its buying power until 2006.

3. What for?

When the additional amount of 1.5 Billion DM annually was given to the Bundeswehr the Federal Cabinet reached an understanding that this money should not be spent to support the military reforms currently underway, but solely and specifically used for anti-terror activities.

In the meantime the MoD planners have produced several lists of items to be procured for the extra money in 2002 (of which by the end of December 2001 no authorized version had yet appeared). These lists contain equipment for Germany's special forces which can - indeed - be seen in an anti-terror role. But they also comprise desiderata with an only remote connection to the prime purpose - such as missiles for beyond-visual-range air combat which had a relatively low ranking in the forces' general prioritization of procurement. In other words, the MoD planners are trying to use the extra money to repair the perceived damage done to their original concept by austerity-driven prioritization.

Such attempts may turn out to be largely futile, however. Since Germany has sent force elements to indirectly support the U.S.A. in its recent war effort, and since up to 1200 German ground troops have been earmarked to participate in an international mission for supporting the peace in Afghanistan, it has become clear that in 2002 460 Million DM (236 Million Euro) have to be taken from the anti-terror package (300 Million DM at least from the MoD's share) to help cover the expenses. And, according to an agreement reached by the Federal Cabinet, further 300 Million DM (154 Million Euro) are to be collected from the other ministries' ordinary budgets.

These allocations may be continued into 2003. It should be quite clear, however, that measures of this nature and scope are totally insufficient to solve the self-inflicted fiscal crisis of the Bundeswehr. If the government's austerity course has to be taken as a given, the Federal Forces must shrink significantly to regain financial flexibility.

Citation: Lutz Unterseher, German Defense Spending: Insufficient Adjustment, Study Group on Alternative Security Policy. Berlin, Germany, February 2002
http://www.comw.org/pda/0202gerdef.html

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