Scholz says Germany needs 'massive' investment, especially in defence; Greece doubles defence spending

Scholz says Germany needs 'massive' investment, especially in defence; Greece doubles defence spending
by AFP Staff Writers
Berlin (AFP) Dec 16, 2024

Embattled Chancellor Olaf Scholz on Monday said Germany needs "massive" investment, especially in defence, as he prepared for a confidence vote expected to pave the way to snap elections.

"It is high time to invest powerfully and decisively in Germany," Scholz said in a speech to parliament ahead of the vote, which he has called after the collapse of his coalition last month.

"Today a highly armed nuclear power is waging war in Europe just two hours' flight from here," he said in reference to Russia's war in Ukraine. "We must invest massively in our security and defence."

The German armed forces had been "in a deplorable state" until his announcement of a special 100-billion-euro ($105 billion) defence fund after Russia's 2022 full-scale invasion of Ukraine, he added.

Scholz's government, a three-way coalition between his Social Democrats (SPD), the Greens and the pro-business FDP, had been plagued by deep discord on spending in Europe's largest economy.

Scholz ended the stalemate in November by sacking finance minister Christian Lindner, from the FDP, leading to the collapse of the coalition.

Scholz on Monday called for a reform of Germany's so-called debt brake, which limits state borrowing to 0.35 percent of GDP -- a constitutional rule that had been fiercely defended by Lindner.

Scholz said that reforming the debt brake would decide "the question of whether and how our country will invest: powerfully and decisively or in a fussy and despondent manner".

"Everything else depends on this question: our security, our future prosperity, the competitiveness of our economy, good work and education, and, last but not least, social cohesion in the country," he said.

Greece adopts budget almost doubling defence spend
Athens (AFP) Dec 15, 2024 - Greece will almost double its defence spending after parliament approved the 2025 state budget Sunday with a roll-call vote, traditionally regarded as a vote of confidence in the government.

With 159 out of a total of 299 votes cast, the State budget for the fiscal year 2025 was ratified while the defence expenditure was approved by a larger majority.

Spending for the defence ministry will rise to 6.1 billion euros ($6.5 billion) from 3.6 billion euros, due to the increase in equipment deliveries in 2025.

"Compared to 2019, by 2025, spending on health will have increased by 74 percent and spending on defence by 73 percent, underlining the government's priorities", Minister of Economy and Finance Kostis Hatzidakis had said late November on submitting the budget to parliament.

Major opposition parties, PASOK and SYRIZA as well as the Hellenic Solution party, had said before the vote that they would approve the increased defence spending.

Nikos Dendias, the defence minister, told parliament Saturday that the spending is essential because of the challenges the country faces, especially from historic rival Turkey.

"Is this spending too much? Whoever is positioning themselves on this needs to explain on what criteria they are considering. Is the country threatened? And where is the main threat to the country coming from?" he said, noting that Turkey spends 26.8 billion euros on armaments.

Greece spends around three percent of its annual economic output on defence, higher than most EU states, mainly because of long-running tension with Turkey.

Greek armed forces had a 20-billion-euro shortfall during the country's decade-long debt crisis, Dendias said in November, when he announced a shake up of defence forces to sideline older weapons in favour of drones after lessons drawn from Ukraine's war against Russia.

- Defence dome -

Among the main changes in the radical overhaul is the creation of an anti-air and anti-drone defence dome covering the whole of Greece.

"Greece today is charting its own roadmap in terms of stability and growth in an international environment of instability," Prime Minister Kyriakos Mitsotakis said Sunday, hailing the backing of opposition groups.

Mitsotakis drew a parallel with the difficulties the governments of "big countries" such as France and Germany in particular and also Italy were now facing in seeking majority support for their own budgets amid political or economic turmoil.

The Greek prime minister also announced five measures to rectify the operation of banks for the benefit of citizens.

Among them are the end of charges for many banking transactions, including bill payments, as well as the contribution of EUR100 million to a programme for the construction of new schools by the four largest Greek banks.

Hatzidakis said during his closing speech on Sunday that what the government is seeking is "to have a healthy banking system on the one hand and on the other hand a banking system that actually works for the economy and society -- without making citizens feel excluded from it, or more importantly, victims of it."

Greece's financial crisis saw an EU bailout conditional on severe austerity measures and structural reforms and policies, with Hatzidakis saying Greek citizens paid for the survival of the banks out their pockets.