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Germany could miss even reduced NATO defense spending goal: document

BERLIN (Reuters) – 5 Feb 2019 – German Finance Minister Olaf Scholz has cast doubt over the government’s already watered-down pledge to NATO allies of spending 1.5 percent of economic output on defense by 2024, a Finance Ministry document obtained by Reuters showed on Monday.

Germany is under pressure from the United States and other NATO members to increase its military spending to 2 percent of gross domestic product, in line with a target agreed by NATO members in 2014 and reaffirmed in subsequent years. Military spending remains a source of great tension within Germany’s ruling coalition, with Chancellor Angela Merkel’s conservatives pushing for quicker increases in defense budgets but Scholz’s Social Democrats riding the brakes.

The government’s tax revenues are likely to rise less than expected in coming years due to a slowing economy which means that options for additional spending are exhausted, the 22-page ministry document said. The document, prepared for Scholz to present to cabinet members, said the finance ministry had earmarked 7.3 billion euros ($8.34 billion) for additional defense and development aid spending until 2022.

However, it would require much higher spending to get close to the already reduced defense goal of 1.5 percent of GDP by 2024 as Chancellor Angela Merkel promised NATO allies last year, according to a separate graphic in the document.

Defence Minister Ursula von der Leyen, a conservative, said during a visit to Latvia that negotiations about the 2020 budget had just begun, but stressed that the coalition partners had agreed to boost military spending to 1.5 percent of GDP.

She said the issue would be discussed during talks on the budget, which is due to be finalised in late March. “We have time until the end of March. Let us negotiate,” von der Leyen told reporters in Riga.

Military spending is expected to rise to 1.3 percent of GDP this year from just over 1.2 percent in 2018. Even stabilizing spending at the current level would require the government to shift money out of other programs which could prove politically tricky.

Reporting by Markus Wacket, Sabine Siebold and Andrea Shalal; Writing by Michael Nienaber; Editing by Hugh Lawson