MSC Memo: How much should Germany spend on security and defense?

"The German government should define as its goal to spend three percent of GDP on foreign policy (including crisis prevention and diplomacy), development aid, and defense."

German Chancellor Angela Merkel addressing the participants at the Munich Security Conference 2017 (Photo: MSC/Kuhlmann).

At the end of the 1980s, the Federal Republic of Germany spent about a quarter of the federal budget on foreign and security policy broadly defined; today, spending on diplomacy, defense, and development only adds up to about 15 percent of the budget. Is this appropriate given the changing international security environment? Or put differently: Can we afford not to afford a better-financed foreign and security policy?

NATO partners have committed themselves at the Wales Summit, reaffirmed in Warsaw in 2016, to the two percent goal: two percent of GDP for defense. For Germany, Chancellor Merkel has expressed her support for this effort. But is the two-percent-goal a sufficiently comprehensive objective, given the current challenges to European security and defense?

The German government should define as its goal to spend three percent of GDP on foreign policy (including crisis prevention and diplomacy), development aid, and defense. Currently, German defense spending accounts for about 1.2 percent of GDP. The government has already promised a continuous increase. In addition, Germany has committed itself to spend 0.7 percent of GDP for official development assistance (ODA). After spending only about 0.3 percent for many years, this number has increased to 0,52 percent in 2015.

Moreover, due to Germany’s high degree of international interconnectedness, our country needs a capable and professional diplomatic machinery. Since 1993, the Federal Foreign Office had to reduce its staff by up to 1.5 percent per year for about two decades. Of course, this cannot be undone suddenly. But we have to invest more in diplomacy again.

Government endorsement of the three-percent goal would signal that a comprehensive view of security would serve as the basis of our budgetary discussions.  To be clear: This does not mean that we should water down or eliminate the NATO commitment to spend 2 percent of our GDP on defense. A more comprehensive set of criteria would, however, help to broaden our view and highlight the German contribution to comprehensive security. No doubt: the military is a central, but not the only instrument. We need more money for the military but also for diplomacy and development assistance.

Some critics will argue that increased spending on Germany’s international challenges is inappropriate because there are more important domestic challenges, not least inequality and poverty. Others will say that the hidden goal of the increase is a new great power role for Germany. Such criticism misses the point. Germany’s budgetary situation is stable. What is not stable is Germany’s international environment, including European integration and the transatlantic partnership. Future generation will not be able to enjoy a balanced budget (“die schwarze Null”) if the foundations of peace and wealth erode even further. And those who want to invest in foreign policy to preserve these foundations do not necessarily have to cut spending on social issues. Finally, let us admit that the extraordinarily positive conditions of the past quarter century have come to an end. Today, we are looking at multiple challenges, new risks, and a dysfunctional system of global governance. In this dangerous environment, our spending levels to deal with foreign and security policy are insufficient – and, compared to earlier periods of instability, clearly below average. Spending three percent of GDP on defense, diplomacy and development is therefore an important and overdue investment into our future.

13 March 2017, by MSC