The military balance between weapons procurement, infrastructure, and security of supply is completely off
Xpert Pre-Release
Language selection 📢
Published on: October 1, 2025 / Updated on: October 1, 2025 – Author: Konrad Wolfenstein
The military balance between weapons procurement, infrastructure, and security of supply is completely off
Germany's most expensive mistake? The Bundeswehr is rearming, but its infrastructure is crumbling
The German Armed Forces' 100 billion euro special fund: Between weapons procurement and neglected dual-use logistics
Following the Russian invasion of Ukraine in February 2022, German policymakers reacted with an unprecedented shift in defense policy. The special Bundeswehr fund, amounting to €100 billion and enshrined in Article 87a of the Basic Law, was intended to address decades of underfunding of the armed forces and restore Germany's ability to fulfill its alliance obligations and defend itself. This debt-financed instrument operates outside the regular debt brake and is earmarked for financing significant equipment projects, particularly complex, multi-year initiatives.
The financing is provided through additional borrowing by the Federal Ministry of Finance, with the special fund being managed separately from the federal budget. This structure was intended to bring policymakers closer to the NATO target of two percent of gross domestic product for defense spending without violating regular budgetary rules. Repayment of the loans is to begin within a reasonable timeframe after the borrowing authorizations have been fully utilized, and no later than January 1, 2031.
Suitable for:
Focus on military procurement and weapon systems
The analysis of the available data clearly shows that the majority of the special fund is used for weapons systems and military procurement. By the end of 2024, virtually all 100 billion euros were already committed to contracts with the defense industry. The largest financial volumes are allocated to air defense, at approximately 40.9 billion euros, followed by land and sea defense.
Among the most expensive individual projects are the replacement of Tornado fighter jets with F-35 aircraft for nuclear sharing, heavy transport helicopters to replace the aging CH-53 helicopters, and the air defense system to close the significant gap in ground-based air defense. The regular 2026 defense budget allocates approximately €12.67 billion for the procurement of ammunition alone, with a further €2.13 billion earmarked from special funds.
Military procurement dominates the budget, with a total expenditure of €47.88 billion for 2026, of which €22.37 billion comes from budget line 14 and €25.51 billion from the special fund. This underscores the clear prioritization of weapons systems and combat-enhancing equipment. Other significant items include €2.4 billion for soldiers' personal equipment, combat clothing, helmets, backpacks, and night-vision devices.
The low level of logistics infrastructure and security of supply
In contrast to the massive investments in weapons systems, the share allocated to logistical infrastructure and supply security is significantly lower. Analysis of budget structures shows that infrastructure investments traditionally account for between 3.4 and 4.2 percent of defense spending. Even with the special fund, this share remains low. Only €11.31 billion is earmarked for housing soldiers and the operation and maintenance of barracks and facilities in 2026.
The logistical infrastructure, essential for ensuring a functioning security of supply, is primarily addressed within the framework of the special fund through so-called fast-track projects. These special infrastructure measures focus primarily on the integration of new weapon systems, such as the F-35 fighter jet, at NATO's Büchel Air Base. For these fast-track projects, the Federal Office for Infrastructure, Environmental Protection and Services of the German Armed Forces has been granted an additional 60 temporary positions.
The limited consideration given to infrastructure investments is also reflected in the personnel structure. Over a third of the regular defense budget is allocated to personnel costs, another 15 percent to accommodation, and 12-15 percent to federal administration, while military procurement tends to account for only 10-15 percent of regular expenditures. The special fund shifts this balance in favor of procurement without adequately addressing the structural infrastructure deficits.
Dual-use logistics as a neglected strategic option
The concept of dual-use logistics, which intelligently networks civilian and military infrastructures, is hardly considered in the German Armed Forces' special fund. Yet such an approach could significantly improve the efficiency of both the supply security of the population and military logistics. Dual-use infrastructures enable the flexible use of transport routes, storage facilities, and digital logistics platforms for both purposes.
German seaports are now specifically requesting funds from the defense budget under a dual-use approach. The Central Association of German Seaport Operators estimates the need at three billion euros to upgrade the ports as military hubs for NATO deployment scenarios. These investments would benefit both the civilian economy and defense by modernizing heavy-load areas, quays, and railway infrastructure.
The new €500 billion special fund for infrastructure and climate neutrality theoretically offers opportunities for dual-use approaches. However, these two special funds are not yet systematically linked, even though a coordinated approach would enable significant synergies. Transport infrastructure will receive €21.3 billion from the infrastructure special fund for 2026, which, with intelligent planning, could also serve military needs.
Suitable for:
Administrative burden and structural challenges
The German Armed Forces (Bundeswehr) struggle with a disproportionately high administrative burden, which also impacts the special fund. The Federal Court of Auditors criticizes the Bundeswehr for having too many desk-bound soldiers and structural inefficiencies. This problem also affects the use of the special fund, as complex procurement procedures and bureaucratic hurdles slow down implementation.
Personnel costs for the German Armed Forces are rising steadily, reaching approximately €24.71 billion in 2026, an increase of €823 million compared to 2025. This trend demonstrates that, despite the special fund, the structural problems within the German Armed Forces remain unresolved. On the contrary, the imbalance between administrative costs and operational capabilities is worsening.
Fast-track projects require additional administrative structures and control components to perform key tasks for each project. Paradoxically, this leads to further expansion of administration, even though operational capabilities should actually be strengthened. The challenge lies in efficiently transforming available resources into real combat effectiveness and security of supply, instead of letting them disappear into bureaucratic structures.
Inflation significantly reduces real purchasing power
A major problem with the special fund lies in the erosion of real purchasing power due to inflation. Vice Admiral Carsten Stawitzki, Head of Equipment at the Ministry of Defense, pointed out that of the nominal 100 billion euros, only about 84 billion euros are actually available for procurement after deducting the 19 percent value-added tax. If inflation is also taken into account over the planned ten-year expenditure period, the real purchasing power is reduced to an estimated 60 to 65 billion euros.
This significant discrepancy between nominal and real purchasing power means that the originally planned procurement projects may not be fully realized or may require additional funding. This is particularly problematic for long-term projects that extend over several years and are affected by rising prices in the defense industry.
The problem of inflation is exacerbated by the high demand for arms across Europe. Many NATO countries are simultaneously increasing their military spending, leading to capacity bottlenecks at manufacturers and corresponding price increases. This particularly affects complex weapons systems and ammunition, where production capacities are limited and cannot be expanded in the short term.
Hub for security and defense - advice and information
Hub for security and defense - Image: Xpert.digital
The hub for security and defense offers well-founded advice and current information in order to effectively support companies and organizations in strengthening their role in European security and defense policy. In close connection to the SME Connect working group, he promotes small and medium -sized companies (SMEs) in particular that want to further expand their innovative strength and competitiveness in the field of defense. As a central point of contact, the hub creates a decisive bridge between SME and European defense strategy.
Suitable for:
Special funds without synergy: Why civilian infrastructure is lacking – the French model as a blueprint? How Germany could finance dual-use infrastructure
Lack of integration with civilian infrastructure planning
The separation between the special fund for the German Armed Forces and the special fund for infrastructure prevents a strategically sound integration of military and civilian infrastructure needs. While the special fund for infrastructure allocates 500 billion euros for transport infrastructure, digitalization, and energy supply, these investments remain largely decoupled from military requirements.
A coordinated approach could enable significant efficiency gains. For example, bridge renovations and road resurfacing could be planned to meet military load classes. Digital infrastructures could be designed from the outset to accommodate dual-use capabilities, and energy supply networks could incorporate resilience requirements for crisis situations.
The German Armed Forces' Operations Plan for Germany explicitly outlines the prerequisites for strengthening German infrastructure so that Germany can function as a military hub in the event of conflict. However, these requirements are not systematically incorporated into the planning of the special civilian infrastructure fund, even though both areas could benefit from each other.
Suitable for:
Security of supply as a secondary priority
Analysis of the use of funds shows that security of supply and crisis preparedness have lower priorities in the special fund. While fighter jets, tanks, and missiles consume the lion's share of the funds, investments in resilient supply chains and logistics networks remain limited. This is particularly problematic in light of the experiences of the COVID-19 pandemic and current supply chain crises.
Security of supply encompasses not only military logistics but also the safeguarding of critical infrastructure for the civilian population during times of crisis. High-bay container warehouses, digitized port and rail networks, and automated transshipment terminals could serve both the armed forces and disaster relief organizations. However, such dual-use investments are hardly considered in the current special fund.
While the German Armed Forces invest in medical equipment and modular, regenerative medical facilities, a comprehensive strategy for medical care in large-scale emergencies or the integration of civilian and military medical systems is largely lacking. This is a clear oversight given the increased threat level and the need for societal resilience.
Suitable for:
Regional imbalances in resource allocation
The distribution of special fund resources leads to significant regional imbalances. While large defense production sites and military bases benefit from the investments, structurally weak regions often miss out. This is particularly problematic because these regions frequently host strategically important transit routes and logistics hubs that would be crucial for a functioning dual-use logistics system.
The focus on large-scale projects like F-35 fighter jets or the Arrow missile defense system leads to the neglect of smaller, but strategically important infrastructure projects. Local transshipment terminals, regional storage facilities, or the upgrading of highways for military transport receive significantly less attention than prestigious weapons systems.
These imbalances ultimately weaken the overall resilience of the system. A robust defense infrastructure requires decentralized components and regional redundancies, which are not sufficiently promoted by the current allocation of resources. Instead, dependencies on a few central locations are created, which can become weak points in a crisis.
Time pressure and lack of strategic planning
The special fund is under considerable time pressure, as the resources must be largely committed by the end of 2029. This time pressure leads to suboptimal decisions and prevents well-thought-out strategic planning. Instead of developing sustainable solutions that consider both military and civilian requirements, systems that are available in the short term are being procured.
The experiences of the first two years show that, despite the available funds, structural problems in procurement persist. Complex tendering procedures, lengthy approval processes, and capacity bottlenecks at manufacturers prevent the rapid and efficient use of funds. This leads to a preference for goods that are easier to procure, even when strategically more important alternatives are available.
The lack of integration between different planning levels exacerbates this problem. While the special fund for the German Armed Forces is being processed in isolation, other infrastructure programs are running in parallel, which could offer significant synergies with coordinated planning. These missed opportunities weaken both the efficiency of resource allocation and the strategic impact of the investments.
International comparisons and alternative approaches
Other European countries pursue more integrated approaches to defense financing. For example, France has invested around €13.9 billion in transport infrastructure over the past five years through private investors, in infrastructure that also meets military requirements, while Germany allocated just under €10 billion in the same period. This involvement of private actors not only provides additional capital but also expertise and more efficient project implementation.
The French model demonstrates how dual-use infrastructure can be systematically developed without the state having to bear all the costs alone. While the French state invests only about 46 euros per year per citizen in the rail network, the figure in Germany is 114 euros. These figures illustrate the potential of more efficient financing models and more integrated planning approaches.
Other NATO countries are experimenting with innovative financing mechanisms that combine public and private funds, taking into account both civilian and military requirements. Germany could learn from these experiences and adapt its special fund strategy accordingly to achieve a better cost-benefit ratio.
Structural reform needs
The use of the €100 billion special fund to date clearly shows that the majority of the funds are being allocated to traditional arms procurement and military equipment, while supply security, logistical infrastructure, and dual-use concepts remain underrepresented. This prioritization reflects a traditional understanding of defense that fails to address the modern challenges of hybrid threats and societal resilience.
For future defense investments, a stronger integration of military and civilian infrastructure needs would be desirable. The existing €500 billion special infrastructure fund offers opportunities for such dual-use approaches, which currently remain untapped. A coordinated approach could significantly improve both the efficiency of resource allocation and the strategic impact of investments.
The structural problems of the German Armed Forces, particularly the high administrative burden and bureaucratic hurdles, will not be resolved by the special fund, but in some cases exacerbated. Fundamental reforms are needed that go beyond simply increasing funding. Without such structural reforms, the successor solution after 2027, when the special fund is exhausted, risks exhibiting similar efficiency problems.
Advice - planning - implementation
Markus Becker
I would be happy to serve as your personal advisor.
Head of Business Development
Chairman SME Connect Defense Working Group
Advice - planning - implementation
Konrad Wolfenstein
I would be happy to serve as your personal advisor.
contact me at wolfenstein ∂ xpert.digital
Just call me on +49 7348 4088 965 (Munich) .
Your dual -use logistics expert
Dual -use logistics expert - Image: Xpert.digital
The global economy is currently experiencing a fundamental change, a broken epoch that shakes the cornerstones of global logistics. The era of hyper-globalization, which was characterized by the unshakable striving for maximum efficiency and the “just-in-time” principle, gives way to a new reality. This is characterized by profound structural breaks, geopolitical shifts and progressive economic political fragmentation. The planning of international markets and supply chains, which was once assumed as a matter of course, dissolves and is replaced by a phase of growing uncertainty.
Suitable for:
