German parliament gives final approval to huge defense and borrowing package

The prospective next German government’s plans to enable higher defense spending by loosening strict debt rules and to set up a huge infrastructure fund that’s aimed at boosting Europe’s biggest economy have cleared their final parliamentary hurdle wit…

BERLIN — The prospective next German government’s plans to enable higher defense spending by loosening strict debt rules and to set up a huge infrastructure fund that’s aimed at boosting Europe’s biggest economy cleared their final parliamentary hurdle Friday with approval by the upper house.

The chamber, which represents Germany’s 16 state governments, approved the measure proposed by likely next chancellor Friedrich Merz with the necessary two-thirds majority. Its endorsement followed approval on Tuesday by the lower house.

Conservative leader Merz, who won last month’s election, and his prospective center-left coalition partners say recent weeks have brought new urgency to efforts to further strengthen Germany’s long-neglected military, as doubts have grown about the United States’ commitment to the trans-Atlantic alliance.

The plans needed a two-thirds majority in both houses of parliament because they involve changes to Germany’s strict self-imposed borrowing rules — the so-called “debt brake,” which allows new borrowing worth only 0.35% of annual gross domestic product and is anchored in the constitution. That forced the would-be coalition partners into negotiations with the environmentalist Greens, whose votes were needed to get enough support.

The package exempts from the debt rules spending on defense and security, including intelligence agencies and assistance to Ukraine, of more than 1% of GDP. It also foresees setting up a 500 billion-euro ($544 billion) fund, financed by borrowing, to pour money into Germany’s creaking infrastructure over the next 12 years and help restore the stagnant economy to growth.

At the Greens’ insistence, 100 billion euros from the investment fund will go into climate-related spending. The package also will give state governments more freedom to borrow money.

The parties that negotiated the plans control 41 of the 69 votes in the upper house of parliament. Another 12 votes from states where other parties are also in government gave the package the necessary majority. Four states whose governments contain parties that oppose the plans abstained.

Friday’s vote completed a successful first test for Merz, but he still faces plenty of work to put together a coalition of his Union bloc and the center-left Social Democrats of outgoing Chancellor Olaf Scholz.