Germany’s two biggest political parties, the conservatives and the Social Democrats (SPD), met on Tuesday to discuss forming a coalition government.
Reuters reported that hopes for boosting Germany’s struggling economy are rising, especially with talks of borrowing nearly a trillion euros to improve the military and fix infrastructure.
Friedrich Merz, the conservative leader who won the recent election, wants to finalize a coalition deal with the SPD, even though they lost under Chancellor Olaf Scholz.
According to Reuters, both parties are also considering passing special borrowing plans before the current parliament dissolves. This would allow them to secure extra funding as soon as possible.
The urgency to spend more on Europe’s defense has increased after U.S. President Donald Trump cut military aid to Ukraine following a disagreement with Ukrainian President Volodymyr Zelenskiy last week. Reuters noted that this move has worried European leaders, making them realize they must take responsibility for their own security.
People familiar with the discussions told Reuters that German leaders are considering two massive funds—€400 billion ($420 billion) to strengthen Germany’s underfunded military and €500 billion to fix roads, bridges, and other public infrastructure. If approved, this total €900 billion package would be equal to 20% of Germany’s entire economy.
Manuela Schwesig, a top SPD politician, told Reuters that Germany must now support Ukraine more than ever while also making sure its own military—the Bundeswehr—is strong.
At the same time, she emphasized that Germany needs money to fix its economy and other national problems.
Markus Soeder, an ally of Merz and Bavaria’s premier, called the coalition talks “a very, very important day,” but Reuters said he did not give details.
Meanwhile, European leaders are preparing for a major EU summit on defense spending this Thursday. The European Commission has proposed a separate €150 billion joint borrowing plan to help EU countries improve their military. This is part of an €800 billion financing plan to make Europe stronger.
Analysts told Reuters that Germany’s borrowing plans could lead to a “flood” of German bonds, meaning the country will issue a large number of government-backed loans to investors. This could be the biggest military spending increase since the Cold War.
With the world facing increasing tensions, Reuters highlighted that Germany and the rest of Europe are being forced to act quickly.
The question now is whether they can move fast enough and with the determination needed to protect themselves in an increasingly uncertain world.
Credit: Reuters