The war in Ukraine has run Germany’s weapons stockpile down to the point where it will take decades to replenish it to 2004 levels, according to a report by the Kiel Institute for the World Economy.

Despite a new €100bn special fund established for military spending, Germany’s slow pace of procurement and limited investment in industrial capacity is hindering the country’s rearmament efforts.

“It took more than 18 months after February 2022 to see a real increase in procurement activity,” Guntram Wolff, Director of the German Council on Foreign Relations, said in a thread on social media. “But even now, orders are really quite small and often only replace what is committed to be sent to Ukraine.”

"Decades of "peace dividend" means major shortages and massive declines in all key weapon systems. In budget terms, it looks like the chart. In numbers: tanks are down from ~2,400 to ~340, artillery howitzers from ~1,000 to mere 120, even combat aircraft, not to speak of air defence," says Wolff. 

The Kiel Military Procurement Tracker found that much of Germany’s defence budget has shifted towards the special debt fund, known as Sondervermögen, while the regular defence budget, the Einzelplan, has stagnated.

“The regular defence budget has remained stagnant, and almost all procurement activity has shifted to the special €100bn debt fund,” Wolff said, adding that the fund will not be enough to meet Germany’s long-term defence needs after years of underspending.

One of the key concerns is that Germany’s defence spending, which remains stuck at around 1.2% of GDP and less than the Nato mandatory 2% of GDP spending, is insufficient to support a significant build-up in industrial capacity to enable more military production. Without a second debt fund and more orders, there is little incentive for defence companies to invest in production capabilities.

“Defence companies don’t invest in industrial capacity build-up, and the result is a self-defeating situation,” he said. “Small orders mean high prices per unit without any scale economies, which feeds political dissatisfaction with military spending and yields little results.”

The sluggish pace of procurement comes at a critical time, when the Kremlin is ramping up military spending to 8% of GDP a year and is investing heavily into expanding production as well as into R&D and innovation.

Russia’s increased capabilities in long-range loitering drones is a growing concern and its closer military support from North Korea has had a dramatic impact on Moscow’s supply of shells for one. “With access to North Korea, Russia has ample firing capacity,” Wolff noted, adding that these developments present a serious concern for Germany’s national security. And Russia has also ramped up its drone production.

But even now, German orders are really quite small and often only replace more or less what is committed to be sent to Ukraine. 

And Germany is not alone. The UK is also reportedly run its own stockpile down and European defence policy in general is badly in need of an overhaul. The three key elements necessary for a robust armament strategy include: “First, serious long-term budget commitments; second, a serious European strategy to get scale into defence production and move beyond small national procurement; and third, a focus on agility, logistics, and technology – all areas with very little progress.” Yet all attempts to unify EU arms procurement and production so far have come to little.

In the absence of these reforms, Germany risks falling further behind in its defence preparedness. “We need a serious German and European armament strategy,” he said, underscoring the need for a coordinated approach across Europe to address the growing security threats posed by Russia.

German, French, British, and Polish Arms Stocks 1992–2021