Germany’s conservative Chancellor-in-waiting, Friedrich Merz, has reached a significant agreement with the Greens on a large-scale spending plan that will unlock hundreds of billions of euros for defense and infrastructure.
“Germany is back,” Merz declared to reporters in Berlin on Friday. “Germany is making its great contribution to the defense of freedom and peace in Europe.”
This agreement with the Greens paves the way for a crucial parliamentary vote that will effectively exempt defense spending from the country’s strict constitutional debt brake while also creating a €500 billion special fund dedicated to infrastructure projects outside of regular budgetary constraints.
The newly established deal could also result in substantial financial aid for Ukraine. Under the plan, defense expenditures exceeding 1 percent of Germany’s gross domestic product will no longer be subject to the country’s stringent debt brake, which imposes strict limits on structural budget deficits.
However, as per the latest draft, the exemption has been expanded to include aid for nations that have been unlawfully attacked under international law—one of the key stipulations demanded by the Greens.
This provision means that, assuming the plan secures parliamentary approval as expected, Germany will be able to borrow funds to provide billions in aid to Ukraine. Additionally, spending to combat cyber threats and support intelligence services will also be covered under the exemption, Merz confirmed.
Merz, the leader of the Christian Democratic Union (CDU) and the winner of Germany’s February 23 election, had already reached a prior agreement this month on the sweeping spending package with his likely coalition partner, the Social Democratic Party (SPD).
However, in order to secure the necessary constitutional amendments in parliament, he requires a two-thirds majority—making the support of the Greens, who had previously withheld their backing, essential.
Friday’s deal clears the way for the Bundestag to vote on the measures this Tuesday. Merz aims to have the constitutional amendments approved by March 25, which is when the newly elected parliament will officially convene.
Germany’s Friedrich Merz (Photo: AP)
The urgency stems from the fact that the far-right, pro-Kremlin Alternative for Germany (AfD) party and The Left party, which opposes military spending, would have the power to block constitutional changes—and, in turn, the massive spending package—once the new parliament is seated.
If these amendments are successfully passed, it would mark a historic departure from Germany’s longstanding fiscal conservatism, enabling massive spending increases to strengthen national defense and stimulate economic growth.
Germany’s debt brake was introduced in 2009 under former Chancellor Angela Merkel, during the European debt crisis, to enforce strict budget discipline.
However, given the serious challenges facing Germany and Europe today—including Russia’s advances in Ukraine, U.S. President Donald Trump’s wavering stance on aid for the Ukrainian military, Trump’s demands for higher defense spending within NATO, and Germany’s struggling economy—conservative leaders have shifted their position to allow for hundreds of billions of euros in new borrowing.
The agreement sends “a clear message to our partners and friends, but also to our opponents and the enemies of our freedom,” Merz stated. “We are capable of defending ourselves and we are now fully prepared to defend ourselves.”
The Greens ultimately agreed to Merz’s plan after securing assurances that a portion of the infrastructure spending would be directed toward climate initiatives. Specifically, €100 billion from the infrastructure fund will be allocated to achieving climate goals and facilitating the transition to renewable energy, according to the agreement.
Additionally, the deal increases borrowing capacity for Germany’s federal states, allowing them to finance key infrastructure and energy projects. Under this framework, state governments will gain access to €16 billion in additional funds, which can be used for modernizing local infrastructure, expanding district heating networks, and supporting clean energy initiatives.
This aspect of the deal represents a notable concession for Merz, who had previously criticized the Greens for prioritizing climate policies over economic growth during the election campaign. However, the Greens leveraged their position to ensure that environmental concerns were taken into account in the final agreement.
“We have made sure that the money being borrowed is truly invested in the future—into a modern economy, a functioning country, and climate protection,” Greens co-leader Katharina Dröge said on Friday.
