Moritz Schularick, president of the Kiel Institute for the World Economy (IfW), has sharply criticized Defense Minister Boris Pistorius (SPD) for current expenditure practices, simultaneously calling for the establishment of a central coordinator for military procurement within the Chancellery. Schularick told the “Süddeutsche Zeitung” that rather than strategically investing the €700 billion allocated for the modernization of the German Armed Forces by 2030 into future weapon systems, Pistorius is directing a significant portion of the money toward outdated technologies such as tanks and frigates. He warns that this large, largely credit-financed program, which could also boost economic growth if managed correctly, risks largely squandering its potential.
Since Russia’s invasion of Ukraine in February 2022, Schularick has focused on how Germany can achieve defense readiness while simultaneously overcoming its growth crisis, repeatedly critiquing Pistorius in this context. Highlighting Germany’s strengths, he noted that the country possesses vast capital, extensive industrial know-how, and still maintains high-modern technologies in certain sectors. However, the country lacks hundreds of thousands of people willing to staff tanks and drive to the front lines. Therefore, he argues that instead of relying on more soldiers, more manned vehicles, or more barracks, efforts must-whenever possible-be focused on AI, robotics, drones, and satellite technology.
From the perspective of the economist, however, a single, notably “slow” ministry is ill-equipped to handle the reorganization of German and European defense strategy. Schularick stated, “Instead of bringing together the smartest minds in the country, we are approaching the Zeitenwende (turning point) with the same civil servants who have been sitting in their departments and divisions for decades.” While acknowledging that capable individuals exist within the bureaucracy, he asserts that institutionally, the process is merely “doing the same thing as always, only with much more money.” He instead calls for a figure “equipped with political power who can unite industry, start-ups, and ministries, clear away friction, and concentrate everything on a single goal.” He suggested potential candidates for such a coordinator in the Chancellery, such as former Telekom CEO René Obermann or former Airbus chief Tom Enders.
Schularick maintains that both the Federal Government and the industrial sector must completely change their approach to arms procurement. He emphasizes that simply spending a lot of money to replenish the Bundeswehr’s stock is insufficient. Instead, he argues that planning must begin by considering the economic processes necessary to ensure that required military systems can truly be reproduced quickly and in sufficient quantity if conflict arises. Thus, the focus should not be on ordering small batches of highly complex, bespoke tanks or 200 anti-aircraft missiles, but on building up production capacity. “In other words: we are no longer ordering the individual device, but the entire factory, which can then produce 2,000 instead of 200 missiles per year in an emergency,” Schularick explains. Recognizing that maintaining such a manufacturing capability during peacetime may not be economically viable for a private company, the state must provide a subsidy. The IfW chief noted that this model already exists in other areas: “Since Corona, for example, we have been supporting businesses across Europe that can rapidly produce large quantities of vaccines in the event of a new pandemic.”
