Military balance between arms procurement, infrastructure and security of supply is completely wrong
Germany's most expensive mistake? The Bundeswehr is rearming, but its infrastructure is crumbling.
The Bundeswehr's €100 billion special fund: Between weapons procurement and neglected dual-use logistics
Following the Russian invasion of Ukraine in February 2022, German policymakers responded with an unprecedented shift in defense policy. The Bundeswehr Special Fund, amounting to €100 billion, constitutionally enshrined in Article 87a of the Basic Law, was intended to remedy decades of underfunding of the armed forces and restore Germany's alliance and defense capabilities. This credit-financed instrument is outside the scope of the regular debt brake and is earmarked for the financing of significant equipment projects, especially complex multi-year measures.
Financing will be provided through additional borrowing by the Federal Ministry of Finance, with the special fund being managed separately from the federal budget. With this structure, policymakers aimed to get closer to the NATO target of two percent of gross domestic product for defense spending without breaching regular budget rules. Repayment of the borrowed funds is to take place within a reasonable period of time after the borrowing authorizations have been fully utilized, no later than January 1, 2031.
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Focus on military procurement and weapons systems
An 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, almost all of the €100 billion had already been tied up in contracts with the defense industry. The largest financial volumes flow into the air dimension, with approximately €40.9 billion, followed by the land and sea dimensions.
Among the most expensive individual projects are the replacement of Tornado fighter jets with F-35 aircraft for nuclear sharing, heavy transport helicopters as successors to the aging CH-53 helicopters, and the air defense system to close the large gap in ground-based air defense. Approximately €12.67 billion is planned for the procurement of ammunition in the 2026 regular defense budget, with an additional €2.13 billion from the special fund.
Military procurement dominates, with a total expenditure volume 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-strengthening equipment. Other significant items include soldiers' personal equipment, with €2.4 billion for combat clothing, combat helmets, backpacks, and night vision devices.
The low proportion of logistical infrastructure and security of supply
In contrast to the massive investments in weapons systems, the share for logistical infrastructure and security of supply is significantly lower. An 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 soldier accommodation and the operation and maintenance of barracks and facilities in 2026.
The logistical infrastructure, which is essential for a functioning security of supply, is primarily addressed within the special fund through so-called fast-track projects. These special infrastructure measures primarily focus on the integration of new weapons systems, such as the F-35 fighter jet, at NATO's Büchel airfield. For these fast-track projects, the Federal Office of Infrastructure, Environmental Protection and Services of the Bundeswehr has been granted an additional 60 temporary positions.
The limited consideration of infrastructure investments is also reflected in the personnel structure. Over a third of the regular defense budget is allocated to personnel expenses, another 15 percent to accommodation, and 12-15 percent to Bundeswehr administration, while military procurement tends to account for only 10-15 percent of regular expenditures. The special fund shifts this emphasis 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 connects civilian and military infrastructures, receives little consideration in the Bundeswehr Special Fund. Such an approach could significantly improve both the security of supply for the population and military logistics efficiency. Dual-use infrastructures enable the flexible use of transport routes, storage areas, and digital logistics platforms for both purposes.
German seaports are now specifically requesting funds from the defense budget based on 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-duty areas, quay walls, 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, although a coordinated approach would enable significant synergy effects. Transport infrastructure will receive €21.3 billion from the infrastructure special fund for 2026, which, with intelligent planning, could also serve military requirements.
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Administrative burden and structural challenges
The Bundeswehr struggles with a disproportionately high administrative burden, which also affects the special fund. The Federal Audit Office criticizes the Bundeswehr for having too many desk-bound soldiers and structural inefficiencies. This problem also impacts the use of the special fund, as complex procurement procedures and bureaucratic hurdles slow down implementation.
The Bundeswehr's personnel expenditures are rising continuously, amounting to approximately €24.71 billion in 2026, €823 million more than in 2025. This trend demonstrates that, despite the special fund, the Bundeswehr's structural problems are not being resolved. On the contrary, the imbalance between administrative expenditure and operational capabilities is exacerbating.
These fast-track projects require additional administrative structures and control components that perform key tasks for the individual projects. Paradoxically, this leads to a further expansion of the administration, even though operational capabilities should actually be strengthened. The challenge lies in efficiently converting the available resources into real combat power and security of supply, rather than allowing them to evaporate into bureaucratic structures.
Inflation significantly reduces real purchasing power
A major problem with the special fund is the erosion of real purchasing power due to inflation. Vice Admiral Carsten Stawitzki, Head of the Equipment Department at the Ministry of Defense, pointed out that of the nominal €100 billion, after deducting the 19 percent VAT, only approximately €84 billion is available in real terms for procurement. If inflation is also taken into account over the planned ten-year spending period, the real purchasing power is reduced to an estimated €60 to €65 billion.
This significant discrepancy between nominal and real purchasing power means that originally planned procurement projects may not be fully realized or may require additional funding. This is particularly problematic for long-term projects spanning several years and affected by rising prices in the defense industry.
The inflation problem is exacerbated by the high demand for military equipment across Europe. Many NATO countries are rearming in parallel, 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.
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Special funds without synergies: Why civil infrastructure is lacking – The French model as a role model? How Germany could finance dual-use
Lack of integration with civil infrastructure planning
The separation between the Bundeswehr Special Fund and the Infrastructure Special Fund prevents a strategically meaningful integration of military and civilian infrastructure needs. While the Infrastructure Special Fund provides €500 billion 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 renewals could be planned to meet military load classes. Digital infrastructures could consider dual-use capabilities from the outset, and energy supply grids could incorporate resilience requirements for crisis situations.
The Bundeswehr's Operational Plan for Germany explicitly states the prerequisites for upgrading German infrastructure so that Germany can function as a military hub in the event of a conflict. However, these requirements are not systematically incorporated into the planning of the Civilian Infrastructure Special Fund, although both areas could benefit from each other.
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Security of supply as a secondary priority
An analysis of the use of funds shows that security of supply and crisis preparedness are secondary priorities in the special fund. While combat aircraft, tanks, and missiles consume the bulk of the funds, investments in resilient supply chains and logistics networks remain limited. This is particularly problematic in light of the experiences from 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 in times of crisis. High-bay container warehouses, digitized port and rail networks, or automated transshipment terminals could serve both the Bundeswehr and disaster relief. However, such dual-use investments are barely considered in the current special fund.
While the Bundeswehr is investing in medical equipment and regenerative modular medical facilities, a comprehensive strategy for medical care in major disaster situations or the integration of civilian and military medical systems is largely lacking. This is a clear shortcoming given the increased threat situation and the need for resilience across society as a whole.
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Regional imbalances in the distribution of resources
The distribution of the special fund's resources leads to significant regional imbalances. While major armaments sites and barracks locations benefit from the investments, structurally weak regions often miss out. This is particularly problematic, as these regions often host strategically important transit routes and logistics hubs that would be crucial for functional dual-use logistics.
The focus on large-scale projects such as F-35 fighter jets or the Arrow missile defense system leads to smaller, but strategically important infrastructure projects being neglected. Local transshipment terminals, regional storage facilities, or the upgrading of rural roads for military transport receive significantly less attention than prestigious weapons systems.
These imbalances ultimately weaken the system's overall resilience. A robust defense infrastructure requires decentralized components and regional redundancies, which are not sufficiently supported by the current allocation of resources. Instead, dependencies on a few central locations arise, which can become vulnerabilities in the event of a crisis.
Time pressure and lack of strategic planning
The special fund is under considerable time pressure, as most of the funds must be committed by the end of 2029. This time pressure leads to suboptimal decisions and hinders thoughtful strategic planning. Instead of developing sustainable solutions that consider both military and civilian requirements, systems that are readily available at short notice are being procured.
Experience from the first two years shows that, despite the availability of 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 easier-to-obtain goods being preferred, even when more strategically important alternatives are available.
The lack of integration between different planning levels exacerbates this problem. While the Bundeswehr Special Fund is being implemented in isolation, other infrastructure programs are running in parallel that could enable significant synergies with coordinated planning. These missed opportunities weaken both the efficiency of the use of funds and the strategic impact of the investments.
International comparisons and alternative approaches
Other European countries are pursuing more integrated approaches to defense financing. France, for example, has invested approximately €13.9 billion in transport infrastructure that also takes military requirements into account over the past five years through private investors, while Germany invested just under €10 billion in this way over the same period. This involvement of private actors not only enables additional capital but also expertise and more efficient project implementation.
The French model demonstrates how dual-use infrastructure can be systematically developed without the government having to bear all the costs alone. While the French government invests only about €46 per year per citizen in the rail network, the German government invests €114. 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 funds 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 it goes into traditional weapons procurement and military equipment, while security of supply, 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 parallel €500 billion infrastructure fund offers opportunities for such dual-use approaches that have so far remained untapped. A coordinated approach could significantly improve both the efficiency of the use of funds and the strategic impact of the investments.
The Bundeswehr's structural problems, particularly the high level of administrative work and bureaucratic hurdles, will not be resolved by the special fund, but will in some cases exacerbate them. Fundamental reforms are needed here that go beyond simply increasing funding. Without such structural reforms, the successor solution after 2027, when the special fund is exhausted, risks experiencing similar efficiency problems.
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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.
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