Federal government’s armament strategy: more market or more state

In September, the government will decide on a new defense strategy. The traffic light coalition agrees on the goal, but not on how.

Naval ship in the Warnow shipyard Rostock-Warnemünde Photo: Margit Wild/ imago

Berlin taz | Given the current threat situation, Germany must become capable of defending itself as quickly as possible. This could be included in the new security and defense industry strategy (SVI), which the federal government plans to discuss in the cabinet in September, and this is what it says in the draft, which has now been leaked to Politico.

At least when the coordination process between the ministries of economics, defense, finance and foreign affairs is completed. There are some disagreements about how arms production can be made more efficient. One of the main issues is continuing to support Ukraine militarily – the draft speaks of a “sharply increased need”.

The government factions are also putting pressure on the issue. In June, the FDP parliamentary group presented a position paper, and in July the SPD parliamentary group followed suit with a 10-point paper. Although the goal is the same, the approaches are completely different. The Liberals are primarily thinking of supporting industry through things like better access to credit, simplified approvals, export facilitation and better supplies of raw materials.

The SPD takes a different tone: the guiding principle should be “not market mechanisms, but security interests, values ​​and norms.” It calls for “cooperative control of industrial policy,” protection of key technologies and state participation in arms companies.

Credit access industry

German industry generally welcomes a new armaments strategy as a “long overdue step”. “We hope that the new strategy paper will lead to a real strengthening of our industry in Germany,” says Hans C. Atzpodien, General Manager of the Federal Association of the German Security and Defense Industry (BDSV).

Above all, however, there is a need for “a signal in the direction of a steady increase in the defense budget.” This is important “so that companies can see a business case for building up additional capacity.” If the Bundeswehr's special funds are used up, there is a risk of a “gap.” “Without the prospect of corresponding orders, no one will invest in new defense production facilities.”

Money is also an issue when it comes to maintaining key technologies. The fact that certain areas are essential for Germany – the draft mentions naval shipbuilding, armored vehicles, sensor technology, for example – is undisputed by the government and industry. “Maintaining key technologies for reasons of sovereignty always means commitment and a burden for the companies concerned,” says Atzpodien.

That is why “appropriate support” is needed here too; he is thinking of research funding, but also assistance with arms exports. The industry is also pushing for easier access to loans and is demanding faster building permits: namely, as is the case with the construction of LNG terminals or hydrogen plants.

Researchers warn against a weakening of control rules

When it comes to arms exports, the industry wants “comparable competitive conditions” and “common standards” in European arms cooperation, says Atzpodien – which means nothing other than that any stricter arms export restrictions must be removed. Germany should not “put itself on the sidelines with an even more restrictive policy”, which would endanger European arms cooperation with partners such as France and Great Britain, he warns.

Simone Wisotzki from the Leibniz Institute for Peace and Conflict Research (PRIF), however, warns that arms control rules are now being watered down in order to boost European arms production. “Exports to problematic third countries must not take place.” The draft strategy does not even mention the arms export control law, although the traffic light coalition promised this in its coalition agreement. “This worries us greatly,” says the arms control expert, and warns with a view to the expiring term of the government: “Time is running out.”

The civil clauses that prohibit military research at universities could be watered down. According to the draft, the federal government will at least talk to the universities about this. Ulrich Kühn from the Institute for Peace Research and Security Policy at the University of Hamburg (IFSH) also believes that a discussion is necessary. However, we warn that it must be left to the individual universities to decide on this. No case should be indirectly linked to the cancellation of research funding. “We need a broad dialogue about what speaks for and what against it.”

Draft provides for possibility for state participation

Finally, another point could fail due to money: more state participation in defense companies, which is provided for as an option in the draft. This already exists, for example, with radar manufacturer Hensoldt, where the federal government has had a blocking minority of 25.1 percent since 2020. On the one hand, the industry is generally skeptical about state intervention.

“On the other hand, the state could better support companies in which it has a stake, for example by promoting research and supporting arms exports,” says Atzpodien. Then “we could certainly discuss this in a positive light.”

The finance minister is likely to be skeptical, however: State participation in stock corporations with a market capitalization in the billions would be extremely expensive. When asked about the government's plans, Armin Papperger, head of Rheinmetall, which has a market capitalization of 20.9 billion euros, was open to the state acquiring shares in his arms manufacturer: “That will definitely stabilize the share price.”