German defense contractors may receive up to half of Berlin’s €100 billion ($109 billion) military modernization fund, according to Susanne Wiegand, CEO of Renk Group, a German tank-parts manufacturer. Wiegand criticized the German government’s lack of strategic vision for the defense industry and expressed skepticism that much of the fund would be allocated to the domestic industry. She believes that Germany has no political compass when it comes to the defense industry.
The German modernization fund was established in May last year following negotiations within the ruling coalition. It was seen as a significant response to modern challenges and an opportunity for Germany to contribute to European security as the largest economy in the European Union. However, Germany has consistently failed to meet NATO’s recommended benchmark of spending at least 2% of GDP on defense.
Wiegand highlighted a shift in the attitude towards the defense industry in Germany, particularly in terms of transparency. Previously, the industry’s problems were kept hidden from the public, and top management was expected to maintain a low profile. However, Wiegand believes that many underlying issues, such as the slow military procurement policy, persist.
Amid the ongoing Ukraine conflict, some German arms producers, including Rheinmetall, the former employer of Wiegand, are benefiting from increased orders. Rheinmetall, which manufactures Leopard 2 tanks and other weapon systems, reported a 27% rise in earnings in 2022 and expects double-digit growth in the coming years. Renk, which supplies transmissions for tanks like the Leopard, as well as other European-made tanks, has received orders worth €3.9 billion ($4.2 billion).
Approximately 70% of Renk’s products are sold to the military. However, Wiegand’s statement suggests that the German defense industry may not get a significant share of the government’s military modernization fund, resulting in potential challenges for the industry’s growth and development.
In recent years, the defense industry has become increasingly important, with geopolitical tensions and conflicts around the world driving the demand for advanced military technologies and equipment. While some German defense contractors are experiencing growth, the lack of strategic vision from the government could hinder the sector’s overall progress.
There is a growing concern that Germany’s defense spending falls short of meeting NATO’s expectations. This raises questions about the country’s commitment to European security and its readiness to support its NATO allies. The allocation of the military modernization fund will undoubtedly be a crucial factor in determining the future of Germany’s defense industry and its ability to compete with international counterparts.
It remains to be seen whether the German government will address the concerns raised by Wiegand and take steps to prioritize the country’s defense industry. With the evolving global security landscape, a comprehensive and strategic approach to defense is crucial for maintaining national security and contributing to collective security efforts within Europe.