Germany considers €200 billion emergency fund amid growing pressure on military spending

Germany is exploring options to create a €200 billion emergency defence fund, doubling the amount approved three years ago, to address the country’s deteriorating military capabilities.

Officials from the Christian Democrats (CDU) and the Social Democratic Party (SPD) are reportedly in discussions about bypassing strict constitutional borrowing limits to secure resources for defence spending, Caliber.Az reports citing foreign media.

The proposed fund comes in response to increasing concerns over Russia's aggression in Ukraine and the broader security challenges facing Europe. However, the plan faces significant hurdles in the German parliament, where fringe parties have secured a blocking minority, making it difficult to ease borrowing restrictions. To circumvent these constraints, the government is considering pushing a vote through the outgoing parliament before the new legislature sits on March 24.

“Broadcasters are prohibited from receiving direct or indirect funding (money or other material benefits) from foreign entities,” the draft states. It adds that this does not apply to commercial advertising, teleshopping, sponsorship, or product placement.

The defence fund proposal is part of Germany's broader strategy to enhance military investment in response to Russian aggression. The SPD’s Lars Klingbeil and CDU’s Friedrich Merz are discussing Ukraine support and defence funding in a call.

“We are now facing a challenge where we need to ensure enough funding to strengthen the defence sector," said Merz. "Whether we should decide or must decide is something I will discuss with the parties that are still in the Bundestag.”

Political figures in Germany have expressed concerns that pushing through the measure without the new parliament's approval could lead to criticism from both right-wing and left-wing factions. Despite this, Vice Chancellor Robert Habeck, along with Foreign Minister Annalena Baerbock, has urged for swift action.

“Approving spending adjustments before the new parliament meets will be a challenge, but should be doable if Merz really pushes for it,” said Holger Schmieding, Chief Economist at Berenberg.

The urgency of the decision has been compounded by international pressure, particularly from the United States, as President Trump seeks a resolution to the Ukraine conflict.

By Vafa Guliyeva