Merz and Greens Forge €1 Trillion Defense and Infrastructure Pact

Germany’s conservative Chancellor-in-waiting Friedrich Merz has reached a breakthrough with the Greens on a sweeping spending plan that could unleash hundreds of billions of euros for defense and infrastructure.

According to Politico sources, the details of the deal remain somewhat unclear, but a broad agreement on the package has been reached.

Earlier this month, Merz, leader of the Christian Democratic Union (CDU), struck a deal with the Social Democrats (SPD) to exempt defense spending from the strict constitutional debt brake.

According to AFP, Merz’s plan would exempt defense spending from debt rules once it exceeds 1% of GDP and create a €500 billion ($544 billion) infrastructure fund.

“The apparent deal with the Greens paves the way for up to €1 trillion ($1.088 trillion) in new spending for defense and infrastructure,” Politico’s report says.

According to AFP, while the proposals on a massive spending plan have garnered praise from German allies frustrated with previous inaction under outgoing Chancellor Olaf Scholz, they require a two-thirds majority in parliament due to the need to amend the constitutionally enshrined debt brake.

So, to pass the legislation in the Bundestag, Merz needed the support of the Greens, who had previously withheld their backing.

“The apparent agreement today paves the way for the measures to pass in the Bundestag on Tuesday,” as per Politico.

The deal marks a significant shift from decades of fiscal restraint in Berlin, aiming to boost defense spending amid growing security concerns in Europe about Russian aggression and to jumpstart Germany’s economy.

The Greens agreed to the plan after securing commitments to maintain climate-related spending, as per Politico, citing people familiar with the negotiations.

“In view of the alarming security situation in Europe and the mounting economic challenges, we cannot postpone far-reaching decisions any longer,” Merz told lawmakers on March 14.

He stressed that any delay in enhancing the country’s defense capabilities would be irresponsible.

“We must now take action to significantly increase our defence capabilities, and we must do so quickly,” Merz told MPs.