Derek Scally: One hundred billion pennies drop in Germany

For German speakers, an epiphany is not the moment “the penny drops” but when someone “finally hears the shot”.

A week into Russia’s invasion of Ukraine, it was impossible for German politicians to ignore the millions of shots, bombs and grenades being exchanged just 800km away from Berlin.

On Sunday in the Bundestag, German MPs gave Chancellor Olaf Scholz – and themselves – a standing ovation for drawing conclusions from a new European reality they have spent years profitably trying to ignore.

Scholz took everyone by surprise – including his own coalition’s parliamentary parties – with his robust response to a Russian leader who had “demolished the European security order that has prevailed for almost half a century”.

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Germany was at a turning point, he said, a Zeitenwende: Berlin still stands for peace in Europe, and will “never accept the use of force as a political instrument”. But the time had come to move beyond naive diplomacy – “talking simply for the sake of talking” – and for action.

Two years ago, as the Covid-19 pandemic surged, Mr Scholz – the then finance minster – threw German budgetary caution to the wind with a debt-financed multibillion stimulus package he dubbed the “bazooka”.

Now, after three months as chancellor and facing war in Europe, Mr Scholz has reached for an actual bazooka, tossing Germany’s post-war culture of military, and fiscal, caution out the window.

With a €100 billion off-balance sheet special purpose fund the Social Democratic Party (SPD) chancellor has vowed to rebuild Germany’s armed forces.

On top of this one-off fund, Mr Scholz promised to raise Berlin’s military spending from about 1.5 per cent of gross domestic product to beyond the 2 per cent minimum required of all Nato members.

Similar revolutions are happening all over Europe. In the last days Sweden and Switzerland have cast their tradition as neutral countries to the wind and, respectively, offered Ukraine weapons and signed up for EU sanctions against Russia. President Vladimir Putin has, like never before, united the western world – against him.

Nowhere is the shift been more dramatic, though, than in Germany, where the Scholz Zeitenwende decision could enter the history books alongside fateful decisions of his two SPD predecessors as chancellor. Helmut Schmidt’s embrace of Nato mid-range missiles as a nuclear deterrent attracted huge pushback in 1979. Similar protest accompanied Gerhard Schröder’s historic decision 20 years later to allow German troops participate in the Nato-led war against Yugoslavia, the Bundeswehr’s first post-war foreign military mission.

As well as extra military spending, and support for EU sanctions, Berlin broke last weekend with post-war tradition to allow exports of German weapons for Ukraine’s defence.

As so often, though, the devil is in the detail. Senior sources in the SPD and Greens say they knew a special military fund was coming in the Scholz address, but they were taken completely off-guard by its scale.

Backbenchers were kept completely in the dark until the speech itself and, while opposition MPs stood to applaud the chancellor’s bold move, many SPD and Green parliamentarians – mindful of their pacifist traditions – remained seated, stunned at what they had just heard.

“Putin rearms Germany” was the mocking response of the left-wing Tageszeitung, giving a foretaste of looming political battles over military spending between the chancellor and his wrong-footed parliamentary supporters.

The conservative Frankfurter Allgemeine noted with amusement that the war – and Berlin’s response – had “collapsed” the house of cards German leftists had built around Russia, comprising “hopes, illusions and self-deceptions”.

But Germany’s centre-right have no less explaining to do: decades of energy deals with Moscow under the Kohl and Merkel administrations paired with a paring back of military equipment and personnel.

Some 25 years ago, Germany’s military had 2,100 main battle tanks, now it has 220; the country’s former head Nato general, asked last week on live television if Germany could defend itself, replied: “No.”

And not everyone is convinced that a one-off cash bonus – and a regular boost in annual spending – can turn things around quick enough.

At Monday’s government press conference, Mr Scholz’s spokesman referred to the €100 billion fund as “a huge wad of money” and “not a huge wad of money”, given it is less than two times Germany’s defence budget of €54 billion annually.

That figure is already an increase by half on the 2014 figure, under pressure from its Nato allies, but massive problems remain with bureaucracy and procurement procedures.

Germany’s search for a new standard-issue rifle has dragged on for seven years while, of four frigates the Bundeswehr ordered in 2019, none are ready for their first marine mission.

Even Germany’s promise to assist Ukraine with defence weapons is starting from a low base. After months of arguments and opposition, Germany on Saturday granted permission, in line with its arms export rules, for Estonia to pass on to Ukraine five – five – Howitzer artillery pieces from old East German inventory. Following a Dutch request, 400 grenade launchers of German origin are also on their way east.

Vladimir Putin’ attack on Ukraine has seen 100 billion pennies drop in Germany but, as in the euro crisis, Germany’s help now may come late for some – and too late for Ukraine.

• Derek Scally is Berlin correspondent