Collective Collapse or Resilience?

One year after the start of the COVID-19 pandemic in Europe, this report provides a comparative assessment of its impact on the foreign and defense policies and spending levels of ten different European countries. It not only aims at assessing the immediate impact of the pandemic on the defense posture of each country but more importantly at mapping in which areas the pandemic did or might prove disruptive for European defense priorities, whether directly or indirectly. Although uncertainty remains about the long-term effects of the current crisis, the different case studies highlight that, contrary to the most pessimistic scenarios, the pandemic has so far had a relatively modest impact on defense and security policies.

Monitored European countries have so far shown resilience in their individual and collective responses to the crisis. If anything, changes brought by the pandemic are less striking than the continuity observed in most cases when it comes to foreign and defense policies, from stated levels of ambition to defense spending plans. It is, however, unclear how enduring this resilience can prove in the longer-term in the face of disruptive developments such as new variants of the virus, sweeping domestic political developments in Europe, radical changes in the US commitment to European security, or an intensified strategic competition in Europe’s neighborhood and beyond it.

Please note: The following chapter on Germany originally appeared in Ifri's Focus stratégique, No. 103, in February 2021.  The online version of the text does not contain footnotes. To see the citations, please download the PDF version here.

Germany- Analyzing a moving target

Any analysis of COVID-19 effects on German defense can only be a snapshot of an evolving situation. When this analysis was written, the pandemic was still ongoing and new restrictions had been imposed. Its duration, its economic, social and political consequences, but also the way national governments, the EU and international actors react will define its long-term impact.

As it stands now, while COVID-19 dominates political decision- making in Germany, it has not changed the strategic direction of German defense policy. Thus, while the government is taking decisions with high frequency to cope with COVID-19, it has not yet fundamentally changed policies, and seems to be planning to return to pre-corona policies in many areas, including defense. How profoundly the pandemic has influenced defense policy can hence only be answered in a long-term perspective. The next generation of strategic documents will show whether COVID-19 altered the threat assessment. Likewise, the public budgets in the coming years will reveal the extent of financial cuts in the defense domain, with repercussions on various areas, such as procurement.

In general, the German defense policy agenda is driven by three main topics: the dysfunctional procurement system; potential adaptation of the capability profile (the document that translates the political guidelines of the 2016 White Paper on Security and Defense into capabilities), and the financial impact of the pandemic.

National priorities

Little change

Germany’s security policy values, interests and strategic priorities are identified in the 2016 Federal Government’s White Paper on Security Policy and the Future of the Bundeswehr. This is the framework for the missions and tasks of the German armed forces, the Bundeswehr. The overarching objective for the armed forces is to establish operational and alliance-capable armed forces. Multi-nationality and integration remain the defining factors. Since the Russian annexation of Crimea in 2014 and the subsequent NATO decisions, the primary focus of the Bundeswehr is on collective defense. Further tasks include international crisis management, homeland security, and subsidiary support services in Germany. The tasks of the Bundeswehr have grown in quality and quantity but are not yet entirely reflected in capability development.

Despite overall continuity, three pandemic-induced developments need to be mentioned. First, the Bundeswehr is playing an unprecedented role in supporting public entities during the pandemic, such as by helping with contact tracing and public logistics. The demand is growing and, since late 2020, the Bundeswehr has also been supporting the vaccination campaign with both medical personnel and logistical support. This visible and substantial role, including setting up a dedicated structure and personnel for COVID-19 relief services, revealed several structural problems in the military (such as an ill-adapted command structure and lack of stockpiling). Pressure to address those problems might arise. Yet, this concerns the inner functioning of the Bundeswehr, not its role in internal security. Given that the use of armed forces in internal security contingencies is a highly contentious issue, both politically and legally, especially in German society, it is unlikely that the tasks and priorities of the Bundeswehr will change.

Second, debates have started in government and among the public as to what extent the pandemic required an adaptation of German planning documents. This concerns mainly the implementation of objectives, and not so much the above-mentioned long-term strategic goals. For example, as in many other countries, pandemics and so called “Heimatschutz” (best translated as homeland protection) featured in the 2016 White Book, but were not, or only marginally, translated into capabilities, plans or training. The same applies to resilience.

Third, debates about the necessity to develop a stronger focus on homeland protection, resilience, preparedness and prevention are growing. Like many European countries, Germany realized how dependent it was for critical goods, such as personal protection equipment (PPE), on certain non-European countries, mainly China. Yet, many of the tasks required for prevention or resilience policies are not within the remit of the armed forces.

These debates might continue in 2021, but they are unlikely to generate structural change.

A rather reactive German security policy to continue

Germany’s security policy is thus likely to show a high degree of continuity, despite the pandemic. While a contingency similar to the current crisis – a pandemic involving a SARS-type virus – was on the radar of the civil crisis- response community, it did not make it into the wider circles of policy- making or contingency planning, either in the Bundeswehr or elsewhere. Interestingly, there is no debate so far about reshuffling the general security approach. This might be due to two reasons:

• Ongoing crisis management still dominates current decision-making. One of the biggest immediate risks of the unfolding pandemic is the economic consequences; from a policy perspective, the defense realm seems less at issue. COVID-19 is perceived as a unique event, not a structural change. Economic recovery during and post-pandemic is likely to become the political priority. This focus risks lowering national attention on international violent conflicts, but also the willingness and capacity of national governments to act. It might pave the way for a more inward-looking German security policy.
• The institutional responsibilities in the government and the federal state are unlikely to change – but this would be a pre-condition for altering the response to a pandemic and enable effective prevention. Given that the use of armed forces for internal security contingencies is highly contentious, the tasks and priorities of the Bundeswehr are unlikely to change.

Instead of a massive restructuring of the agenda, it is more realistic to expect the security policy to remain passive or reactive. This inclination for little engagement might, however, be increasingly driven by material constraints (such as lack of funding) rather than by a conscious retrenchment policy. The effect on the 2021 budget is limited (see section 6), but the subsequent years are expected to see bigger change.

Strategic priorities and threat perceptions are thus unlikely to change as a consequence of the pandemic. Once COVID-19 issues decrease in urgency and importance, there will be more space on the political agenda for “classic” security topics. Moreover, the new US administration is expected to put the German government under pressure to position itself on transatlantic security and defense, and its contributions.

A drastic change of the current German direction, for example towards greater international commitment, is unlikely given the current government constellation and the approaching election campaign. More likely is a renewed rhetorical commitment to greater military responsibility, which Germany is unlikely to live up to practically in terms of operations or external commitments. The real game-changer with regard to foreign commitment would be a government change resulting from the September 2021 elections.

In a longer-term perspective, financial constraints and the ongoing problems in the national procurement process might lead Germany to lower its level of ambition. The COVID-19 economic consequences are likely to drive a reconsideration of military strategy. Yet, a formal process is only likely to take place under a new government, from September 2021 onwards.

Changes in the roles and centrality of allies and cooperation

Little change in the role and value of European defense cooperation

Germany’s view on defense cooperation is ambivalent: it can be both a means and an objective. For decades, after World War II (WWII), integration was the key goal of German foreign policy. It was the way out of its role as the pariah country that launched WWII, and an entry ticket into the family of Western countries. When Germany achieved full sovereignty in 1990, foreign policy remained on autopilot based on that understanding.

Cooperation today is something between an objective in itself and a means to achieve other goals. Some actors, especially in the German EU community, see it as an instrument to deepen European integration. Yet, the question of military efficiency (as distinct from integration) is rarely taken into account, and not always understood. Politically, Germany has emphasized its EU commitment, particularly since it was holding the EU presidency in the second semester of 2020. Those cooperation projects that are delivering take place on a mini-lateral level, such as between Germany and the Netherlands in relation to land forces, or Germany and Norway in relation to submarines. Other projects, such as the Franco-German Future Combat Air System (FCAS), are still in early phases and their potential remains to be seen.

So far, the crisis has hardly affected defense cooperation. It has, however, triggered partly contradictory actions: a rhetorical demand for more Europe/EU in managing the pandemic, while the initial phase of the pandemic was characterized by primarily national and inward-looking reactions.

This debate about intensifying defense cooperation may only start once the financial and political pressure grows. So far, no preventive approach is being openly discussed. There is a concern that, if not Germany, allies at least may be severely hit by the economic repercussions of the pandemic, and closer cooperation might be a way to cope with cuts in defense budgets.

NATO remains the central defense framework

The pandemic has not changed the German government’s conviction that NATO is the most important structure for organizing and guaranteeing Euro-Atlantic defense, and a crucial pillar of the transatlantic order linking the United States and Canada with Europe. According to the 2016 White Paper on Germany’s security policy and the future of the Bundeswehr, Germany’s security is best served by “a strong NATO and a Europe capable of action” (p. 8). Therefore, “alliance solidarity [...] is part of the German reason of state”. There is no reason why the pandemic would affect this central conviction, particularly after the US election and the hope for a transatlantic reset under President Joe Biden. In addition, after initial difficulties, the Alliance improved its role in supporting allies in fighting the pandemic, further demonstrating its utility.

Defense spending

Sharp economic downturn in 2020, but timid positive outlooks for 2021

Macroeconomic plans point towards a new “black zero” in public spending in coming years. While the government is willing – under the current exceptional circumstances of COVID-19 – to increase public debt, it aims to keep this as an exception and discontinue it in the future. The debt ratio should even be lowered further.

As a result of the partial closure of economic and social life to fight the pandemic, the German economy suffered a sharp downturn in the first half of 2020. In its interim projection of September 2020, the German government expected GDP to fall by 5.8% (adjusted for prices) in the current year. The growth forecasts of national and international institutions for 2020 are currently (up to September 15, 2020) in a range of -7.8% to -4.7% in real terms.

The outlook for 2021, based on data available in late 2020, is timidly positive. Despite the less dynamic catching-up process, economic output is likely to increase strongly again on average over the coming year. In its interim projection, the German government expects price-adjusted GDP to grow by 4.4% in 2021. However, the pre-crisis level is not expected to be reached until the first half of 2022. For 2021, the growth forecasts of national and international institutions (September 15, 2020) range from 3.2% to 6.4% in real terms.

Defense spending plans for 2020 and beyond

In 2020, defense spending was only indirectly affected by the pandemic, due to a stimulus package and the plan of the Ministry of Defense (MoD) to keep key suppliers alive by spending money flexibly as soon as possible. Given the current outlook for the defense budget, the government is anticipating a downturn in the budget in the coming years, which also means a lack of sustainability of procurement projects in the future.

In the federal budget for 2021, as adopted on December 11, 2020, the MoD’s detailed plan estimates expenditure of over €46.93 billion, which means that the expenditure planned for 2021 is around €1.3 billion higher than the current financial plan. In the financial plan up to 2024, this spending level will be maintained. However, the figures decrease slightly for planned spending in 2023 and 2024 (see both Table 1 and Figure 1).

In addition, the economic stimulus package will provide some €3.73 billion in additional funds up to 2024 (including some €1.2 billion in 2021), which will be used to invest in military procurement and digitalization and in a center for research into digitalization and technology.

This bonus, however, cannot compensate for the structural challenge that the government already anticipates. With the final stage of the budgetary process, it becomes clearer that more and more key procurement projects are at financial risk. The final choice is likely to involve criteria such as the maturity of the project, industrial policy and military needs. What is changing is that Germany intends to go back to normal in 2021 with regard to fiscal politics. Primarily, this means the return of the Schuldenbremse – the debt break that entered the constitution in 2009, whereby the government must maintain a balance between income and expenditure, without opting for new loans and, thus, increasing public debt.

A payback of the debts incurred during the crisis is envisaged to start in 2021 – the election year. Hence, the governmental budget anticipates this and lowers spending in several areas.

Figure 1: German annual defense budget and mid-term planning

This becomes even more visible in the mid-term planning for defense investments, in both relative and absolute terms: the ratio between overall budget and procurement (that is, all the investments that would generate new equipment) is expected to shrink – and so is the overall amount of investments (see Table 1 below).

The absolute decline in investment spending has implications for financial planning at the MoD: it is not allowed to take new projects/growing procurements into consideration if, foreseeably, no budget is available. This also means that, although defense spending de facto has increased every year since 2016 (see Figure 1), it does not allow the ministry to enter long-term planning and sustainable capability generation. In general, many projects are under-resourced; i.e. the budget planned for them is too low to pay all bills if 100% of the foreseen work in the fiscal year is to be completed. For 2021, key procurement projects are said to be at risk, having already been postponed or cancelled – e.g. the Tactical Air Defense System (TLVS) and the Heavy Lift Helicopter.

Defense procurement is not considered to be a substantial part of the spending efforts to recover from the crisis. This would be the case if the defense economy were a major pillar of German GDP – which is not the case. German defense industries contribute less than 1% to GDP, where other real economy sectors such as car manufacturing still contribute about 6%. As it stands, there are not enough significant empirical examples to show that defense spending contributes to the overall technological and industrial base in Germany.

Germany has shown a strange ambivalence since 2016. There is no public or official consensus on the level of defense spending. Although various polls in recent years have shown that around 50% of interviewees were in favor of spending more on defense, this support has not translated into the political mainstream. At the same time, Germany has experienced a significant increase in actual spending from year to year since 2016. As a result, it currently has one of the highest defense budgets in Europe, together with France and the United Kingdom (UK).

Relatively stable domestic politics, including in defense – Depending on further pandemic development

Despite the massive impact of COVID-19, we did not enter a single-issue world. It is indeed difficult to isolate the COVID-19 factor: what is uniquely pandemic-driven, and what is the result of other influences, such as the changing US leadership, is not easy to determine. Looking into the future, the consequences of the election of Joe Biden and those of the German elections scheduled for 2021 will be crucial intervening variables.

Whether the COVID crisis reshapes domestic politics and affects the elections in 2021 will, to a large extent, depend upon the crisis management still to come. As it stands now, structural change is unlikely.

As is often the case, crises are times of executive politics: parliament, especially the opposition, has difficulty in gaining visibility. Hence, there may be a growing appetite for parliament to challenge the government’s agenda, and particularly for the opposition to play up controversial issues, such as defense spending or procurement decisions in Germany. The autumn 2021 elections will hence be a key determinant for current German politics. However, many decisions are likely to be taken from a tactical point of view: How can potential candidates position themselves for these elections or party nomination, with the latter still upcoming in the Conservative and Green parties?