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In a landmark decision, German lawmakers have voted to significantly increase spending on defense and infrastructure, a move that could reshape European security policies. The vote, held on Tuesday, saw a two-thirds majority in the Bundestag supporting the initiative.

Key Decision to Exclude Debt Restrictions

The new law excludes defense and security spending from Germany’s strict debt limits and establishes a €500 billion ($547 billion; £420 billion) infrastructure fund. This shift marks a major step for Germany, a country that has long been cautious about taking on debt.

Germany’s Bundesrat, the upper house of parliament, still needs to approve the measure with a two-thirds majority. That crucial vote is scheduled for Friday.

Historic Move Amid Global Tensions

Friedrich Merz, the architect of this initiative and Germany’s incoming chancellor, addressed the Bundestag, stating that the country had been living under a “false sense of security” for over a decade. “The step we are taking today is the first major move toward a new European defense alliance,” Merz emphasized, adding that this effort includes nations outside the European Union.

European Commission President Ursula von der Leyen praised the decision as “excellent news.” During a press conference with Danish Prime Minister Mette Frederiksen, she stated that the move sends “a very clear message to Europe that Germany is committed to massive defense investments.” Frederiksen echoed her sentiments, calling the decision “fantastic news for all Europeans.”

Overcoming Historical Hesitation

For decades, Germany has approached defense spending with caution, influenced by historical factors and the global debt crisis of 2009. Despite concerns over a tight vote, lawmakers ultimately supported the measure with 513 votes in favor and 207 against, comfortably exceeding the required two-thirds majority.

This decision allows any defense spending exceeding 1% of Germany’s GDP to bypass borrowing limits, a significant change from the previous debt cap of 0.35% of GDP. The move aims to modernize Germany’s underfunded military at a time of heightened global instability.

Boosting Infrastructure and Climate Initiatives

Beyond defense, the approved plan also unlocks €500 billion for infrastructure projects aimed at repairing roads, bridges, and supporting climate-related initiatives. The Green Party strongly backed this aspect of the plan, pushing for sustainable development.

Merz’s Political Victory and Urgent Action

Merz’s CDU party won Germany’s general election last month, quickly proposing these measures. In an interview on Sunday, he highlighted worries over the United States reducing its defense role in Europe and former President Trump’s interactions with Russian President Vladimir Putin. “The situation has worsened in recent weeks, which is why we must act fast,” Merz told public broadcaster ARD.

This decision is a significant political victory for Merz, who will soon gain access to hundreds of billions of euros for investment. Some observers have called it a “fiscal bazooka.”

Implications for Ukraine and Future Governance

The vote also holds importance for Ukraine, as the approved defense budget allows exemptions for aid to countries facing attacks that violate international law. Outgoing Chancellor Olaf Scholz is expected to allocate €3 billion in aid to Ukraine as early as next week.

Merz skillfully pushed the vote through the outgoing Bundestag, taking advantage of the current parliamentary makeup to ensure success before the new session begins on March 25. However, his party, the CDU, has not yet finalized a coalition agreement to govern Germany, with negotiations likely to extend until Easter.

The far-right AFD and far-left Linke, both of which performed well in February’s election, continue to oppose the new plans.