Key Takeaways:
Germany's first military strategy since 1945 commits Berlin to 3.5 percent of GDP on defense by 2035 as its top general warns Russia is probing NATO defenses daily.
Germany's first military strategy since World War II commits Berlin to 3.5 percent of GDP on defense by 2035, as its top general warns Russia is probing NATO air defenses daily with hybrid attacks.
"Hybrid attacks are taking place every day in NATO countries," said Gen. Carsten Breuer, Germany's chief of defence, in an interview with the Wall Street Journal. "Russia is testing us and looking at how we respond."
Defense spending has climbed to more than €108 billion in 2026, about 2.4 percent of GDP, from €32 billion and 1 percent of GDP in 2014. The strategy, published in April, sets a three-phase build-up: maximum readiness by 2029, capability growth to roughly 2035, and technological superiority by 2039. It targets 460,000 combat-ready troops — 260,000 active and 200,000 reserve.
The plan responds to Washington's pivot toward the Indo-Pacific, which Breuer called America's "first strategic priority," while Russia remains Berlin's primary threat. The shift carries direct market implications: European defense contractors including Rheinmetall, Hensoldt, and BAE Systems stand to benefit from sustained procurement demand.
The strategy, signed by Breuer and titled "Responsibility for Europe," marks the steepest step in a decade-long evolution rather than a clean break. The 2016 White Paper already flagged a more assertive Russia after its 2014 incursion into Ukraine, and Chancellor Olaf Scholz's 2022 Zeitenwende address set the tone for rearmament. What is new is the explicit architecture running from strategy to a needs-based capability plan, plus a constitutional amendment exempting defense outlays above 1 percent of GDP from Germany's debt brake.
The personnel picture illustrates the gap between ambition and execution. Despite years of declared growth targets, the active force has hovered around 180,000 troops and at times shrunk, while the average age has risen. Reaching 260,000 active personnel requires a larger intake and a leaner officer corps; the new service model rests on volunteering supplemented by compulsory registration. A substantial share of new recruits have left within their first six months of duty.
Procurement is the second test. Germany's acquisition system, built for peacetime deliberation, has been reformed since 2022 with higher approval thresholds and simplified competition rules, yet risk aversion and "gold standard" requirements continue to slow delivery. As Guntram Wolff of Bruegel has argued, Germany's difficulty is no longer fiscal willingness but slow, fragmented implementation. Berlin has pledged €30 billion by 2030 on space assets and signed a deal with the U.S. to produce Tomahawk missiles.
The strategy's substance derives largely from NATO's defense planning process, including the expanded capability targets agreed at the 2025 Hague summit. Germany aims to provide the "strategic glue" aligning Baltic, Nordic, and eastern front-line states with the rest of Europe. In a sign of the changing order, Poland and Germany signed a military cooperation agreement in June — notable given Poland's history of invasion and occupation by Germany.
The last time European defense spending rose this sharply was after Russia's 2014 annexation of Crimea, when NATO members pledged to move toward 2 percent of GDP; the current push toward 3.5 percent is a step change. The threat is tangible: German police recently disarmed an explosive-laden drone found near a Ukrainian cargo plane at an airport in the country's east, and a Russian cruise missile crashed in eastern Poland in July. Breuer, a leading candidate to chair NATO's military committee in September, argues Germany must relieve the United States of the burden of European defense. Washington has welcomed the plan, with Undersecretary of War Elbridge Colby calling it "historic, highly laudable."
The strategy cannot legislate its own durability. It commits Germany to a trajectory running to 2039, across at least three federal elections, and assumes a population willing to serve and invest. Support for higher defense spending has held since 2022, but willingness to serve remains the weakest link. For allies, the question is whether Berlin delivers on its claim to lead — or, as one assessment put it, is "ready for war, or just ready to spend."
This article is for informational purposes only and does not constitute investment advice.
