Why does Germany have such a rather small defense budget?

Question

This article deals with Germany’s Armed Forces status in the context of Trump's decision to reduce US troops stationed in Germany.

Besides the main topic, the article also mentions that Germany spends less than the targeted goal of 2% of GDP. This 2% goal by 2024 was agreed during the 2014 Wales Summit of the North Atlantic Treaty Organization (NATO):

By 2019, however, only seven of the alliance’s 29 members (now 30, with the entry of North Macedonia this year), had either met or exceeded the two-percent target. Greece, at 2.24 percent, was furthest along. Germany came in at 1.36 percent.

I am wondering why Germany has not increased it's defense spending, despite having a budget surplus.

Question: Why does Germany have such a rather small defense budget? (significantly below the target value of 2% of GDP)?

Answer 1

The 2% goal for defense spending of all NATO countries originates from the Wales Summit of 2014. However, the people who made that commitment are heads of governments, many of which don't actually have the authority to make budgeting decisions. This includes the German Chancellor. The Bundestag (German parliament) which actually has that authority never committed to that goal.

So the decision whether to increase military spending or not is a decision to be made by the parliament and the parties in it.

A survey from 2018 shows an interesting picture. A plurality of the German population has a slight preference for increasing military spending (43%: increase, 40%: keep as is, 14%: decrease). But if you look at the results by party preference ("nach Parteiwählerschaft"), then you see that there are only two parties where the majority of voters actually support more military spending: the FDP and the AFD, and neither is part of the current government coalition. The followers of the governing parties CDU and SPD lean towards keeping the status quo. So if you assume that the parties try their best to reflect the opinions of the voters they represent, then that explains their behavior on this issue.

Further, national defense does not play a very important role in German political discourse. I looked up surveys about which political issues are currently relevant for German voters, and I could not find a single one which even lists defense. So politicians have a lot of other issues to spend money on, one of them being a reduction of the government debt, which actually is a relevant point according to some surveys.

Answer 2

• Absolute and relative amounts
  Germany has come much closer to the 2% goal due to the COVID crisis -- the GDP went down, the defense budget stayed the same, so the percentage went up. Similarly, good years reduced the percentage without any defense cuts.
• Rejection of war as a means of policy.
  Germany has spent 40 years at the frontline of the Cold War, a war that would have destroyed Germany if fighting had ever broken out, no matter who would have won in the end. Before that, it started, fought, and lost WWII. Many Germans who are now in decisionmaking positions grew up understanding that nothing good would come out of fighting. More so for the SPD (English summary of the party platform) and Greens (German), less so for the CDU (German).
• Rejection of a dominant military position within the EU.
  Germany spends marginally more than France, marginally less than the UK. If Germany had a dominant military position in the EU as well as a dominant economic position, that would unbalance the EU. Commonly other European nations bring up WWII whenever they want to bash Germany instead of directly coming to the issue.
• Complacency
  After the breakdown of the Soviet Union, German officials assessed that at least a year of "strategic warning" would pass before any significant military force could reach Germany. Since then Russia has become more aggressive and treaty responsibilites have shifted eastwards.
• The idea that German troops could be welcome is only slowly taking hold.
  Deployments like the Enhanced Forward Presence are a new experience for Germany.

Answer 3

The main factor has to be the fear of public debt and symbolic importance of balanced budgets (schwarze Null) in the German political discourse. The notion that the state should avoid building up debt and strive towards a balanced budget every single year plays an oversize role in the way the German media and public judge many issues. That's not the case in most other countries (or in international academic economic analysis) and it constrains the German government spending choices. Germany is not exceptionally efficient or frugal compared to its peers, it spends roughly the same amount of money on things like healthcare and it faces some demographic challenges so there are not many ways to save money. Limiting military spending is one.

Furthermore, since the fall of the USSR, Germany feels very safe and has had other priorities than defense. In absolute terms and as a proportion of GDP, defense spending fell precisely around the time of the reunification when the country was facing the huge costs of this endeavor and the most immediate threat to its security seemed to have disappeared. It's only last year that an uptick in spending brought it closer to France and the UK in absolute terms (and still quite a bit behind in both spending relative to GDP and operational capabilities). Many commentators in the US or Europe worry about a resurgent Russia but Germany is often seen as somewhat ambivalent in this respect. Given its recent history, the country also has a cautious attitude towards military intervention abroad. While it has been involved in some coalition operations, this has been controversial and typically limited in scope compared to the UK, France or even Italy, Poland or the Netherlands.

For all these reasons, Germany hasn't made independent military capabilities a priority and seems content to pay lip service to NATO spending objectives or European defense collaboration in Africa or the Middle East while counting on US military presence as a deterrent and letting other countries conduct operations elsewhere.

Answer 4

Two reasons. First, because there's simply no internal pressure to massively increase defense spending (over 50% in 10 years) in Germany - other answers cover that part in detail and from different angles. Also, for historical reasons the other European NATO powers do not apply external pressure to make Germany take the top spot when it comes to military spending in Europe - which would put Germany ahead of Russia, and significantly ahead of France and the UK.

Second, the "2% agreement" has sometimes been misrepresented. Here's what it actually says:

Wales Summit Declaration

Issued by the Heads of State and Government participating in the meeting of the North Atlantic Council in Wales

[...]

14. We agree to reverse the trend of declining defence budgets [...] Allies currently meeting the NATO guideline to spend a minimum of 2% of their Gross Domestic Product (GDP) on defence will aim to continue to do so. [...] Allies whose current proportion of GDP spent on defence is below this level will:

• halt any decline in defence expenditure;
• aim to increase defence expenditure in real terms as GDP grows;
• aim to move towards the 2% guideline within a decade with a view to meeting their NATO Capability Targets and filling NATO's capability shortfalls.

This is not a negotiated, ratified, signed multinational agreement like e.g. the Paris Agreement. Instead it's a declaration, to aim to move towards the 2% guideline within a decade, made by the Heads of State and Government participating in the meeting of the North Atlantic Council in Wales - who do not have the authority to decide on defense spending. This declaration of a commitment by Heads of State to aim to move towards a guideline was made against the backdrop of armed aggression by Russia near the NATO border (Russia is mentioned 44 times in the declaration).

Nevertheless, Germany did increase defense spending relative to GDP, and in value between 2014 and 2018 (and seems to follow that trend in 2019) - although it would be speculation to claim the increase was due to the NATO declaration since there were other relevant factors in play, such as the Russian aggression the NATO declaration refers to.

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Alternative, shorter answer:

I am wondering why Germany has not increased it's defense spending

It has, significantly. From 1.183% in 2014 to 1.39% in 2019, apparently.

Why does Germany have such a rather small defense budget? (significantly below the target value of 2% of GDP)?

"Small defense budget" is an unusual description of "7th highest defense budget in the world". "Germany's Target value of 2%" is a mistranslation of "Germany's Head's of States's declaration of commitment to aim to move towards a guideline of 2%".

Answer 5

For historical reasons I won't go into here, Germany and its neighbours are very wary indeed of "big military" in Teutonic hands.

For the last 70 years German schools (at least in the West), the press and public bodies have tried to make Germans more pacifist than they were before. They have succeeded to a great extent. So any increase in defence spending is met with the usual protests from the usual people. The mills of god grind rather slow here, with all this resistance, but the budget is being increased.

Having said that, Germans are pretty pragmatic as a rule, and we are all aware of Mordor seething in the East, probably much more so than our transatlantic cousins. In a pinch, we can and will defend ourselves, whatever the cost, and we trust NATO are our allies in this. Is this trust justified?

Answer 6

Germany spends a lot on defense

Situation in absolute values:

Germany is among the countries with the highest absolute defense spending with 49.3 billion US dollars (2019; Source: SIPRI). It is surpassed by the United States, China, India and Russia. Each of these countries is much larger and has major geopolitical ambitions. Then there is Saudi Arabia, which is currently at war (in Yemen), and finally France. Contrary to France Germany doesn't have any DOM-TOMs to defend, no aircraft carriers operating far from its coastline, no force de frappe to carry nuclear weapons, no former colonies, in which it is still active. (Germany is engaged in Mali alongside French troops.)

Germany spends more on defense than the United Kingdom, Japan (even though its GDP and population are much larger) or Brazil.

Situation in relative values:

In relative numbers, the situation looks different. It spends about 1.3 % of GDP (from other sources 1.38 %). This is far from 2 per cent and one may wonder, if and how Germany intends to reach 2 %. Yet, Germany has increased its spending by 15 per cent between 2010 and 2019. While Germany doesn't appear to be on track for the 2 % target, it has increased its defense budget more than other countries for example, the United States and the United Kingdom (both -15 %), France (+3,5 %), Italy (-11 %), Spain (-7 %), the Netherlands (+12 %), Belgium (-7 %), Denmark (+8 %), Greece (-23 %).

This means that Germany is far from being the single country lagging behind. Some of the above countries are in the same situation as Germany. (Of course, the US continue to spend far more than 2 per cent. France and the UK are below 2 %, but much closer than Germany. Greek spending is well above 2 per cent.)

Countries that increased their spending more than Germany:

There are a few NATO countries which have increased their spending faster than Germany, mostly those which feel most threatened by Russia and/or losing NATO protection:

• Canada: +27 %
  Now about equal to Germany; challenged by Russia in the Arctic.
• Norway: +30 %
  About 1.7 %; strained relations with Russia over the Arctic Sea.
• Poland: +51 %
  Target value reached; strained relations with Russia with which it has a land border.
• Romania: +154 %
  Now 2 %. There have been Russian threats to dissuade Romania from allowing US missiles to be stationed in the country; future of Moldava.
• Turkey: +86 %
  Spending far above 2 per cent; fighting against Kurdish secessionists in its own country, Iraq and Syria, supporting factions in Syria against the Assad government, fighting Haftar and his supporters in Libya, tensions with NATO partner Greece about maritime borders, Cyprus, drilling for oil/gas.

Should Germany spend more on defense?

Germany might have the means to spend more on defense, but it is not certain that this would promote its security. One could argue that Europe is spending more than enough to defend itself from Russia with no other potential threat visible. Russia spends 65 billion US dollars, while France, Germany and the UK alone spend about 150 billion US dollars (about 50 bn $ each). The additional joint spending by Italy, Turkey and Spain almost equals the Russian one. Furthermore, the Europeans' available manpower is also much larger.

Thus, Germany may feel that the current military budget is already sufficient for deterrence. By contrast, there is a feeling that it is not wise to outspend France and the UK, even if some French politicians also clamor for Germany to spend more. Maintaining the political equilibrium and keeping NATO stable looks more important than augmenting the number of weapon systems.

Answer 7

The single reason is that Germany lost World War II as stated in o.m.'s answer, but the conclusion is a different one. It's not something the Germans wanted, it's what the Allied forces wanted (on the contrary, every defense minister that I can recall during the last 3 decades would get an instant boner at the mere thought of sending more troops to places like Afghanistan or Mali, and leaving them there for presence during decades).

Allied forces tried very hard to keep Germany down after both World Wars, and to never let it rise again. The "Made in Germany" discrimination which turned out being an unexpectedly successful brand was one such thing, the restrictions civil aviation which caused the development of gliders were another, and the mock constitution with a Schildbürger-Federalism and a mock army were the most prominent features of this process.

The German army is not expected to have any significant power, and it is not expected to fight. In fact, it may not even do that in almost every case. Or could, for that matter, lacking helicopters that can fly (note the plural wording, they actually had one functional helicopter last year), panzers that can drive when there is sand or water nearby (good job they sold them to the Saudis), or rifles that will shoot straight at distances over 200 meters. At least not when there is sun, or rain, or weather of some kind.

What Germany is expected to do is to pay. Forever. The fact that they don't have a functional army is another argument why they need to pay those that do (and who protect them). It's only fair!

The same reasoning went with Trump's demand (and Bush's demand before that) back then. Since the USA are so kind as to boldly figth Evil, and play World Police to keep it safe for everybody, they will need a little money and some little extras (e.g. buy non-EU-compliant US soybeans and chicken which is radiated, poisonous, genetically-modified and whatnot, and buy more US goods in general).