The New Germany: huge Army to Counter Russia and Immigration-Restrictive Measures

The Christian Democratic Union (CDU) and the Social Democratic Party (SPD) have reached an agreement to form a coalition government, weeks after the February 23, 2025, parliamentary elections.  Analysts describe the results as a significant shift in the German political landscape.  The far-right Alternative for Germany (AfD) party emerged as the runner-up, securing 20.8% of the vote.  The CDU, in alliance with the Christian Social Union of Bavaria (CSU), received 28.6%, the SPD garnered 16.4%, the Greens secured 11.6%, and the Left Party obtained 8.8%.  Crucially, the Alliance of Sara Wagenknecht and the Free Democratic Party (FDP) failed to meet the 5% threshold for parliamentary representation and were thus excluded.

The agreement followed extensive negotiations between the CDU and SPD, the top two and third-place finishers, respectively.  A ministerial seat distribution has been agreed upon.  Now, a vote among party members is expected to ratify the coalition’s composition and program, paving the way for Friedrich Merz (69) to be elected Chancellor of Germany.  The hope is that this process will conclude in the first week of May 2025.

Tackling the Economic Downturn

One of the incoming coalition government’s top priorities will be revitalizing Germany’s economy, Europe’s largest, which is currently experiencing slow growth, stagnation, and a noticeable decline.  Merz has pledged to reduce corporate taxes, aiming for a rate below 25% instead of the current 30%, to stimulate investment in development and innovation projects.  This, according to the European Tax Foundation, could increase investment by 1.4%, boost GDP by 1%, and raise average wages by 0.8%.

Merz has also emphasized the need to lower energy prices to support the industrial sector.  Energy costs have soared in Germany due to the EU’s sanctions on Russia after the Russian attack on Ukraine in February 2022, forcing Berlin to abandon cheap Russian gas.  This has placed a significant burden on businesses, and the previous government had to cover part of the energy costs for companies and households for a year to cushion the blow.  The country was forced to import gas at significantly higher prices from alternative sources in the U.S., Europe, and the Middle East.

The new coalition government has agreed to overhaul the Bürgergeld (citizen’s money) social assistance program, affecting over 5.4 million recipients, transforming it into a new system called Grundsicherung (basic insurance).  Crucially, this new system will not apply to war and crisis refugees, primarily Ukrainians (more than 1.3 million), who have sought refuge in Germany (with some arriving from neighboring safe countries).  These refugees had previously benefited from the generous Bürgergeld program, which cost approximately €50 billion in 2024.

The government also plans to support municipalities struggling with debt and deficits, stemming largely from the influx of refugees.  A €250 million annual allocation will be made to support municipal care efforts. This funding will be further supplemented if states take on the responsibility of providing municipalities with new loans to address budget shortfalls, allowing them to implement development programs and complete infrastructure modernization projects.

Deutsche Bank projections indicate significant infrastructure investment needs.  The country requires €30 billion in 2026, €60 billion in 2027, and €40 billion in 2028 to address damaged and aging infrastructure.

The German economy continues to struggle with significant stagnation.  The Ifo Institute for Economic Research forecasts a growth rate of just 0.4% for 2025, the lowest among industrialized nations.  For 2026 and 2027, growth is projected at between 1% and 1.3%,  significantly below the average growth rate of other industrialized countries that have historically sought to emulate German industry and technological advancements.  Germany’s economy contracted by 0.2% in 2024, marking the second consecutive year of contraction and its longest recessionary period in two decades.

Several factors contribute to this economic malaise.  High taxes on industry and innovation, bureaucratic hurdles, and a decline in the attractiveness of Germany as a location for skilled workers (who are drawn to countries offering better incentives) are key concerns.  Deteriorating public services and inadequate infrastructure (roads, bridges, utilities, buildings) also pose significant challenges, requiring substantial investment for maintenance and rehabilitation.  Previous governments’ substantial spending on non-productive initiatives, such as extensive environmental programs and the large-scale reception of refugees, and later the substantial military buildup, are also cited as contributing factors.

Tightening Asylum and Immigration Policy

The new government coalition has agreed to significantly tighten immigration and asylum policies.  Mertz stated that the incoming government will end Germany’s domestic refugee reception program and the UN resettlement program.  They plan large-scale deportations, primarily to Syria and Afghanistan, and a campaign encouraging voluntary repatriation of asylum seekers.  The government also intends to increase pressure on these countries to take back their rejected asylum seekers.  Furthermore, the family reunification program for those with limited two-year residency permits (secondary protection) will be suspended.  This program, initiated by Angela Merkel in 2015, was continued by the previous government, which issued only 120,000 reunification visas in 2024.

The government will also repatriate refugees from neighboring countries and designate additional countries as “safe countries of origin,” meaning asylum claims from those countries will be rejected. Analysts interpret these measures as a deliberate effort by Merz and the CDU to curb immigration by creating stricter conditions and discouraging asylum applications.  Mertz stated the government aims to reduce the annual number of asylum seekers to below 100,000, citing the strain on German resources and infrastructure.  Germany saw approximately 230,000 asylum applications in 2024, a decrease of roughly 100,000 compared to 2023.

The new government believes reforming the social welfare program to deny incoming refugees previous benefits and switch from cash to in-kind assistance will deter asylum seekers from coming to Germany, preventing further strain on the social security system, designed to aid German citizens unable to work.  This new system will also hinder refugees’ ability to send money to their families and to the smuggling networks that facilitated their travel to Germany and Central Europe.

Defence

Following the fall of the Berlin Wall and German reunification, the country significantly reduced its military spending, maintaining a small, under-equipped army whose primary role was border protection and national defence.  Initially, German law prohibited the deployment of troops outside the country; this restriction was later amended to allow participation in UN peacekeeping missions, such as the deployment to Afghanistan after 2002.

The German armed forces (Bundeswehr) faced chronic issues with underfunding, inadequate weaponry, and shortages of trained personnel.  Consequently, Germany relied heavily on its NATO allies for strategic defence.  However, this situation shifted after 2014 when NATO members committed to spending 2% of GDP annually on defence.  Despite various obstacles, this commitment was not fully realised by Germany.  The 2022 Russian invasion of Ukraine prompted the German parliament to establish a €100 billion sovereign fund to bolster the Bundeswehr’s capabilities through modernisation, equipment upgrades, and personnel training.  This initiative was accompanied by the continued allocation of a significant annual defence budget.

In 2024, Germany’s defence budget reached €52 billion, with €20 billion drawn from the sovereign fund.  Experts estimate the fund could be depleted by 2027.  Studies highlight the need for NATO members to dedicate 3.6% of their GDP to defence to maintain adequate military strength and deterrence.

Sources estimate that Germany’s 2024 GDP of €4.3 trillion, if allocated 3.6% to defense, would provide €150 billion.  This substantial amount would enable a comprehensive modernization and expansion of the German army, a significant upgrade compared to the €52 billion allocated at the 2% GDP rate.  The lower figure would necessitate substantial borrowing to cover military aid to allies (especially Ukraine) and the costs of equipping and upgrading the German armed forces.

Germany has already provided €28 billion in military aid to Ukraine since the 2022 invasion, second only to the US.  Following Donald Trump’s presidency, the US position shifted towards encouraging European countries to shoulder more of the financial burden for Ukraine’s defense and to bolster their own military capabilities to deter potential Russian aggression.  The US urged Europe to become more self-reliant in defense and less reliant on American support.

The new German government plans to implement a voluntary military service model within the Bundeswehr.  This will involve establishing more organizations for military registration, surveillance, and developing the necessary logistical and administrative infrastructure.  Furthermore, a National Security Council is planned to facilitate faster and more efficient decision-making during national crises, such as wars or natural disasters.  This council aims to overcome bureaucratic hurdles that can slow down Germany’s response to unforeseen events.

Debts

The previous German coalition government fell apart due to disagreements over how to address a projected €25 billion budget deficit in 2025.  The Liberal Democratic Party (FDP) opposed borrowing to cover the shortfall, advocating for spending cuts in social programs instead.  This disagreement led to the collapse of the coalition in November 2024.

Germany’s existing debt-restraint system, based on Article 115 of the constitution, limits borrowing to 0.35% of GDP, with exceptions for emergencies and economic crises.  Chancellor Merkel tightened these restrictions in 2009, following the 2008 financial crisis.  While the previous government stayed within these bounds, it did activate emergency borrowing provisions during the COVID-19 pandemic and the Russian gas crisis, which significantly impacted energy costs and negatively affected businesses and lower-income households.

The German economy has faced significant challenges, leading to a persistent budget deficit.  These challenges began in 2015 with the refugee crisis, triggered by Angela Merkel’s decision to accept over a million Syrian refugees, followed by family reunification programs that brought in hundreds of thousands more.  The influx of refugees continued through 2024 (approximately 5 million in total, including 1.3 million Ukrainians), straining social services, healthcare, education, transportation, and the job market, and costing the government hundreds of billions of euros since 2015.  Further burdens include substantial military and financial aid to Ukraine, the Bundeswehr’s modernization, infrastructure repairs, and the Green Party’s environmentally focused policies (which included transitioning away from fossil fuels and embracing renewable energy, digitalization, and attracting skilled workers), all of which exceeded tax revenue.

Consequently, on March 18, 2025, the German parliament approved constitutional amendments (ratified by the Bundesrat on March 21) to Article 109, 115, and 143. These amendments enabled a substantial increase in borrowing for defense spending, infrastructure investments, and environmental protection.  The increase in borrowing from the previous 0.35% of GDP to 1% is intended to cover the widening budget deficit, specifically for the defense sector, civil protection, intelligence agencies, cybersecurity, and environmental protection.  The amendments also establish a sovereign wealth fund of €500 billion over 12 years for defense, modernization, and infrastructure, with €100 billion specifically allocated to environmental and climate projects and renewable energy development, a condition set by the Green Party for their support.

Former Chancellor Olaf Scholz defended the government’s decision to increase borrowing by citing the borrowing practices of other economically advanced countries.  He argued that the US national debt exceeds 120% of its GDP, while Italy, France, Canada, and Japan all have national debts exceeding 100% of their GDP.  Scholz contrasted this with Germany, whose debt currently stands below 60% of GDP.

To complement the increased borrowing capacity, the incoming German government plans austerity measures, including reducing federal government employment by 8% over four years (excluding security and military positions).  They also intend to cut €4 billion in funding for international organizations and programs.

Combating the Alternative Party (AfD)

According to the latest national poll conducted on April 15th, the Alternative for Germany (AfD) party has risen to second place with 24.2% of the vote, trailing only the Christian Democratic Union/Christian Social Union (CDU/CSU) which garnered 25.4%.  This poll shows significant gains for the AfD just two months after the last parliamentary elections, positioning it as the top party in eastern Germany (former East Germany) and the second most popular nationwide.  The AfD’s platform centers on issues such as immigration costs, declining living standards for German workers, rising crime rates, excessive military spending on the war in Ukraine, and government support for refugees and the unemployed, contrasting these with what they perceive as burdens on the middle class and small businesses through high taxes.

To counter the AfD’s arguments and address the issues they raise, the incoming government has pledged to abolish the controversial “heating law” and replace it with a new energy law that is more open to various technologies and more flexible and simpler.  Furthermore, a price cap will be introduced for energy-intensive industries, aiming to boost their competitiveness.  The existing 48% retirement pension will remain guaranteed through 2031, funded through the federal budget.  The government also plans to expand the parental leave retirement system, adding three pension points per child, regardless of the child’s birth year.  This expansion, too, will be financed through tax revenue.

Traditional parties continue to build what they call a firewall (Brandmauer) around the Alternative for Germany (AfD) party, isolating and restricting it, consistently refusing to form coalitions with it for central and local government positions in the eastern states where it won first place. Despite ideological differences and varying perspectives among these parties, they are completely united in isolating the AfD and keeping it out of power and responsibility. Consequently, the Christian Democratic Union (CDU) does not hesitate to form coalition governments with parties like the Social Democrats, the Greens, and the Left, excluding the AfD. This approach is a double-edged sword, as it angers conservative CDU voters who reject any cooperation or alliance with the Greens and the Left, preferring to give their party an opportunity to either form a coalition government with the AfD or hold it accountable for the challenges.

The AfD, meanwhile, is intensifying its media campaign, using social media to expose the policies of the traditional parties, which it claims are unconcerned with the interests of voters and disregard the voters’ decision to support the AfD, prioritizing their own staying in power even if it means aligning with parties with drastically differing ideologies, solely to exclude the AfD.  From this perspective, the AfD claims the traditional parties have lost their identity and no longer adhere to their programs and visions; instead, they are now weak and only concerned with maintaining power through alliances with their opponents. The AfD points to the CDU, claiming it is no longer a conservative party but has become left-leaning, preferring an alliance with the Greens and the Left over one with the AfD, which it argues should be prioritized due to the similarities between the parties’ voter bases and their first- and second-place finishes in recent elections, together holding over 51% of the vote, enough to form a local government.

The AfD has successfully chipped away at the CDU’s traditional voter base by emphasizing the party’s responsibility under Merkel for current problems, particularly the increased number of immigrants and the perceived rise in crime, hate crimes, Islamic extremism, and the number of Islamist extremists.  The AfD’s media machine has also highlighted the severe economic downturn, declining living standards, and the housing crisis, as well as the challenges faced by retirees due to low pensions. They claim that the government continues to house immigrants in hotels and modern facilities, providing them with assistance, even going so far as to secretly build modern apartments for them, excluding German citizens from renting or purchasing them.

The AfD claims the traditional parties remain incapable and unwilling to return approximately 300,000 asylum seekers whose applications were rejected.  They have succeeded in portraying themselves as victims, characterizing the traditional parties’ refusal to form coalitions with them as a consolidation of dictatorship and an oligarchy’s grip on power, and portraying themselves as a victim of a conspiracy orchestrated by these parties to implement plans for the “Islamization of Germany” and “comprehensive population exchange.”  In addition to issues of immigration, Islamic extremism, demonstrations by Salafists demanding the implementation of Sharia law, recent attacks in Mannheim and Zülliken perpetrated by Islamist extremists, and near-daily cases of rape and stabbing, the traditional parties’ continued support for Ukraine in its war against Russia is a contributing factor to the AfD’s growing popularity.  The AfD positions itself as a “peace party,” advocating for negotiations and a political solution and opposing the war and further arms shipments.

The traditional parties, in turn, maintain their position of isolating the AfD, citing alleged extremist tendencies and statements by their representatives that whitewash the crimes of the former Nazi regime as reasons for their exclusion.  The Federal Office for the Protection of the Constitution (domestic intelligence) has officially declared the AfD a subject of suspicion, amidst allegations of espionage on behalf of Russia by party officials and ongoing investigations into the sources of funding and donations flowing into the party.

In conclusion, it is clear that the coming Germany will adopt a new strategy, abandoning the previous model that has been solidified since the end of World War II, a nation reliant on economics, diplomacy, soft power, and peace promotion to solidify its role in Europe and the world. Now, Germany is opening a sovereign fund and resorting to extensive borrowing to build a powerful army, committing to protect all of Europe from Russian threats and ending its reliance on the American ally.  It is crucial to examine the implications of Germany’s move toward militarization and increased military spending on the economic and internal situations, the direction and programs of political parties, relations with neighboring countries, and the overall future direction and ideology of the nation.  The government’s announcement to reduce the number of refugees and change several laws to limit immigration represents a new approach to dealing with immigrants and redefining Germany as a country of emigration, thereby questioning the slogans of “openness,” “diversity,” and “diverse society.”

There is a trend to isolate the right-wing AfD by “disarming” it, i.e., by tightening the laws concerning refugees to make Germany a less attractive country for immigrants, and by improving the living standards of the hard-working German population to deter support for the AfD, reducing expenses on accommodating and integrating refugees into German society.  In the coming period, the state will also increase the size of its security, police, and intelligence agencies to monitor the activities of extremist organizations, track organized crime, and address escalating violence in specific, predominantly immigrant communities.

The question remains: Can the new Germany, which relies on militarization, security forces, and a hardline approach to refugees, maintain its image as an open, tolerant, and attractive society for investment, talent, and ideas?