Germany's likely next leader wins parliament's backing for huge defense and infrastructure spending

BERLIN (AP) — Germany's would-be next chancellor, Friedrich Merz, won lawmakers' approval Tuesday for ambitious plans to loosen the nation's strict debt rules for higher defense spending as doubts mount about the strength of the trans-Atlantic alliance, and to set up an enormous fund for investment in its creaking infrastructure.

Merz passed a major test as the outgoing parliament voted 513-207 in its final meeting to approve the plans.

The decision helps smooth the way for a governing coalition of Merz's center-right Union bloc and the center-left Social Democrats of outgoing Chancellor Olaf Scholz after he won last month's election. But he still faces plenty of work to seal a deal in ongoing talks.

Easing off the brake

The plans needed a two-thirds majority of at least 489 votes in parliament's lower house, the Bundestag, because they involve changes to Germany's strict self-imposed borrowing rules — the so-called "debt brake," which allows new borrowing worth only 0.35% of annual gross domestic product and is anchored in the constitution. That forced the prospective coalition partners into negotiations with the environmentalist Greens to get enough votes.

The package will exempt from the debt rules spending on defense and security, including intelligence agencies and assistance to Ukraine, worth more than 1% of GDP. It also foresees a 500 billion-euro ($544 billion) fund, financed by borrowing, to pour funding into Germany's infrastructure over the next 12 years and help restore the stagnant economy — Europe's biggest — to growth.

At the Greens’ insistence, 100 billion euros from the investment fund will go into climate-related spending.

‘Whatever it takes’

The plans amounted to an about-turn for Merz, whose party had spoken out against running up new debt before the election without entirely closing the door to future changes to the “debt brake.” The Social Democrats and Greens had argued for a reform of the borrowing rules — arguing that Germany, whose debt load is relatively low, has room to borrow more.

Recent weeks have brought new urgency to efforts to further strengthen Germany's long-neglected military. The outgoing government created a special 100 billion-euro fund to modernize it, which also helped Berlin meet the current NATO target of spending 2% of GDP on defense. But that pot will be used up in 2027, and doubts have grown recently about the Trump administration's commitment to European allies.

Merz said earlier this month that Germany and Europe must quickly strengthen their defense capability and that "'whatever it takes' must also go for our defense now."

On Tuesday, he pointed to the danger from Russian President Vladimir “Putin’s war of aggression against Europe — it is a war against Europe and not just a war against Ukraine’s territorial integrity.” He pointed to suspected Russian sabotage and disinformation in Europe.

Merz said the prospective German government’s move should be “the first step toward a new European defense community,” which could include countries outside the European Union such as Britain and Norway.

The Social Democrats’ co-leader, Lars Klingbeil, said that “Europe stands today next to an aggressive Russia on one side and an unpredictable United States of America on the other side.” He said he favors doing everything to maintain “indispensable” trans-Atlantic cooperation, but “we must now do our homework in Europe — we must become stronger, we must take care of our own security.”

Merz acknowledged that many are struggling to digest the wider spending plans but argued that “they open prospects for our country that, in the times we are living in, are urgently needed.”

One more hurdle

The package was brought to the old parliament — not the newly elected one, which will hold its first session March 25, in which parties that were unlikely to agree have just over one-third of the seats. The far-right, anti-immigration Alternative for Germany portrays itself as a staunch defender of the "debt brake," while the Left Party opposes it but is skeptical about military spending.

“A politician’s greatest asset is credibility and with this embarrassing action, dear Mr. Merz, you have already squandered yours completely,” Alternative for Germany co-leader Tino Chrupalla said. “Voters feel cheated by you, and rightly.”

Ahead of Tuesday’s vote, Germany’s highest court rejected several bids to block the meeting of the outgoing parliament.

The package faces another hurdle Friday in parliament’s upper house, which represents Germany’s 16 state governments. They are also set to be given more freedom to borrow money.

A two-thirds majority will also be needed in the upper house. That initially was uncertain because the parties behind the plans control only 41 of the 69 upper-house votes. But on Monday, the conservative-led governing coalition in Bavaria, which has six votes, also agreed to support the package.