The Bundestag, Germany’s lower house of parliament, authorized the establishment of the 100 billion euro ($107.2 billion) special defense fund established by Chancellor Olaf Scholz in reaction to Russia’s invasion of Ukraine on Friday.
The money will be used to supplement Germany’s annual defense budget of roughly 50 billion euros over several years in order to assist rebuild the military, which has been neglected for years since the end of the Cold War.
The administration chose to change the constitution to establish the fund so that it would be immune from Germany’s so-called debt brake, which imposes economic restriction. To get the two-thirds parliamentary majority needed for a constitutional reform, it needed support from both the opposition conservatives and the ruling coalition.
The fund should allow Germany to reach NATO’s goal of spending 2% of GDP on defense each year, making it the world’s third-largest military spender behind the United States and China. On Friday, the Kremlin accused Germany of “remilitarization” as it raised military spending, claiming that this heightened security dangers.
The Bundestag also approved a budget that anticipates 139 billion euros in additional debt this year, the second-highest amount in Germany’s history, to protect Europe’s largest economy from the consequences of the Ukraine crisis.
For the third year in a row, the budget needed parliament to grant an exception from Germany’s debt brake, with the extra debt to be used to cover help for people and businesses dealing with high energy prices, as well as support for Ukrainian refugees and Kyiv.
According to government sources, Finance Minister Christian Lindner wants to return to the brake next year, allowing the Cabinet to spend no more than 15 billion to 17 billion euros in new debt.
Separately, the Bundestag approved boosting Germany’s minimum wage from 9.82 euros per hour to 12 euros per hour on Friday, fulfilling one of Scholz’s primary electoral promises.