German Chancellor Olaf Scholz’s announcement in late February that his government was set to give the defense budget a massive boost has commentators delving into the story to explain its significance. Decades of overcautious defense policy, some said, were overturned in a single speech on a bright Sunday morning in the German parliament. A few hundred meters away at the same time, more than 100,000 Berliners were protesting against the Russian invasion of Ukraine.

Scholz has made a long-term commitment to increase defense spending to 2% of GDP, which would potentially increase the annual defense budget to around 70 billion euros ($77 billion). More eye-catching, however, was Scholz’s surprising windfall windfall of €100 billion to be spent on the armed forces.

Although below the 2% mark, Germany’s defense budget is not exactly small: according to the Stockholm International Peace Research Institute (SIPRI), Germany has the 7th best financed army in the world, with a budget higher than that of France. . And that’s not all: German military spending has increased over the past 10 years, from around 32.5 billion euros in 2011 to more than 50.3 billion euros this year.

An army to repair

But despite the extra money, the German army does not seem to be in good shape. Eva Högl, defense commissioner of the German parliament, painted a sad picture on March 15 when she presented her annual report on the army.

“I was very shocked by the soldiers’ reports of the material shortcomings of the three armed forces,” she wrote in the introduction to the report. “Not a single visit to the troops and not a single conversation with soldiers during which I was not told about certain deficits.”

Only 50% of some major equipment was operational, she said, adding that “everyday equipment” such as armored vests and winter jackets often had to be delivered later when soldiers were already on the ground. “This is unacceptable and needs improvement,” she wrote.

Despite all this, she contradicted the alarming verdict given by the Inspector of the Army, Lieutenant General Alfons Mais on his LinkedIn page in late February, when he said that the army he led was “more or less bare”.

That goes a bit far, Högl insisted: “I would say that was, of course, a very moving statement,” she told reporters on Tuesday. “General Mais has reported some problems, but the Bundeswehr is ready to act… The ‘cold start’ capability of the Bundeswehr needs to be significantly improved, but the Bundeswehr is ready.

Accused of inefficiency

But there is evidence that money alone cannot solve the Bundeswehr’s problems. In addition to all the documented shortcomings regarding tank and helicopter readiness, the Ministry of Defense has been accused of inefficiency for years: a former minister, current EU President Ursula von der Leyen, faced a parliamentary inquiry in 2019 into what became known as the ‘counseling affair’, when it emerged that his department, in the words of a witness, was ‘burning so much money it made you dizzy”.

The witness in question was Norbert Dippel, who until 2017 was the lead lawyer for the state-owned company Heeresinstandsetzungslogistik (HIL), which repairs German army tanks. The “money burning” comment concerned the German government’s efforts to privatize its high-speed business, awarding lucrative consultancy contracts without resorting to the necessary procedures.

According to a 2020 Transparency International (TI) report, titled “Influence of the defense industry in Germany”, privatizing these companies would mean that the government risked losing the technical expertise needed to make procurement decisions.

Dippel also spoke to the parliamentary committee about contracts for consultancies and lawyers – including a contract that was to last 30 years – at a cost of 1.6 billion euros.

In a statement to DW, the Ministry of Defense said that since the publication of Parliament’s report it had “promptly introduced a series of measures to ensure that comparable failures do not recur in the future”. These included strengthening specialist expertise within the ministry, new central regulations for hiring external consultants, and centralizing the award of contracts.

On Tuesday, Högl made it clear that she had said the new €100 billion windfall should be spent “wisely”. When asked what exactly that meant, she replied, “What doesn’t make sense is if we start developing something new now that the Bundeswehr can only benefit from in 2050.” she said. The problem, she said, was that the procurement process was “too cumbersome”.

This kind of talk sets off alarm bells for Dippel, because for him it seems that politicians want to speed up the process at the expense of public procurement law – ensuring fair competition and making economic assessments and comparisons of price. “The speed of the contemplated purchases, which has received a lot of media attention, carries the risk that regulations, which exist for a good reason, will be ignored, at least in part,” he told DW. “The structured procurement process aims to ensure that the most economically viable and qualitatively best product is purchased.”

The question is: what will happen to this new windfall? “Of course consultancies will sense the business opportunities when there is a pot of 100 billion euros to distribute. I don’t think it is unlikely that the political pressure to demonstrate success quickly will open again valves for consulting firms.”

Compromised compliance procedures

Speeding up proceedings always increases the risk of corruption, and bribes are not unheard of in the German military: in January this year, prosecutors in Osnabrück announced that after an investigation by three years they were filing suits against several people, including bribery charges against a cost auditor in the German Navy’s arsenal. Expenses related to the restoration of the training ship Gorch Fock, which rose from around 10 million euros to 135 million euros. Nearly 30 million euros of public money would have been lost, prosecutors said.

This may be an isolated case, but there is evidence that the German military is becoming increasingly vulnerable to inefficiency and corruption. Transparency International’s 2020 report suggested compliance procedures had been hollowed out within the Bundeswehr. “The lack of capacity and expertise is evident at several key points in the procurement process,” the report said. “Government staff are in a poor position to determine whether the costs are proportionate.”

TI found that the government, in transferring its expertise to the private sector, was increasingly dependent on manufacturers to tell them what is the best equipment to buy. The ability of staff to carry out independent assessments has been compromised. Citing one example, TI noted that in 2012, an independent review team within the Ministry of Defense that was meant to be a “safeguard against misguided purchasing decisions” was incorporated into the policy department of the ministry, ” the de facto solvent”.

Peter Conze, co-founder of TI and senior adviser for defense and security policy for Transparency Germany, doesn’t think corruption is endemic in the German military procurement process, but he acknowledged the problems uncovered by “the ‘business of the consultants’.

“Obviously too many private contracts were awarded, instead of competitive bidding with price comparisons,” he told DW. “They were too careless with contracts, they hired consultants too quickly and they used networks – they often used their own knowledge for contracts.”

If such problems persist, throwing money at the Bundeswehr may not automatically make it more effective.

Edited by: Rina Goldenberg

This article was developed after its initial publication on March 15, when Eva Högl made her remarks in parliament.

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