Germany to sign record €15bn ammo deal amid Ukraine conflict
German Defence Minister Boris Pistorius is planning to sign another deal for a record amount of artillery ammunition, according to the magazine "Der Spiegel". This illustrates Germany's preparations in light of the war in Ukraine.
26 June 2024 08:59
The German Ministry of Defence and the Finance Ministry have presented the Budget Committee of the Bundestag with the necessary documents concerning the agreement with the consortium of arms manufacturers Diehl Defence and Nammo Raufoss. The framework agreement amounts to a record sum of up to €15 billion (approximately £13 billion).
For NATO countries and Ukraine
The planned contingent is 2.35 million pieces of ammunition, which both companies are to produce by the end of the decade. The Bundeswehr, NATO countries and Ukraine can order the 155-millimeter ammunition (which is currently lacking in the German arsenal). This is stipulated in the framework agreement, as reported by Der Spiegel.
Initially, the German army intends to order only a batch of 200,000 rounds for approximately €1.31 billion (around £1.1 billion), to be delivered by 2030.
The record order suggests that the Bundeswehr is preparing for a protracted war in Ukraine and a prolonged confrontation with Russia. Last year, the German Ministry of Defence ordered only about 5,000 shells for the Howitzer 2000 from the Diehl and Nammo consortium. It was already apparent then that the Bundeswehr's reserves had significantly dwindled in recent decades, but "there was a lack of political will to place a large order like the current one," writes "Der Spiegel".
The framework agreement is already the second largest ammunition transaction in a short period. A few weeks ago, the German Ministry of Defence signed a similar agreement with the Rheinmetall group for up to €8.5 billion (around £7.4 billion) to enable the arms manufacturer to open a new production line in Lower Saxony. The Ministry of Defence also increased the framework agreement for Rheinmetall to 2.35 million rounds in the coming years.
Where will the money come from?
"Der Spiegel" also reveals some transaction details. For example, the Diehl Defence and Nammo Raufoss consortium is demanding approximately 10-15 percent more for the first batch of 200,000 shells, around €1.31 billion (about £1.1 billion), than for the first order last year. The documents state that this is due to production preparation and license fees.
Invoices for the first ammunition deliveries in the coming years will be covered by the defence budget and the €100 billion (approximately £88 billion) special fund for the Bundeswehr. However, by 2028 at the latest, when the special fund is exhausted, the Ministry of Defence will have to cover the purchase costs from the current budget.
The parliament's budget committee will now address the issue of ammunition purchase. Both the ruling coalition and the opposition CDU/CSU agree on the necessity of such a large order, but the fact that Boris Pistorius is presenting another ammunition contract without secured financing could face critical assessment, comments "Der Spiegel".
Last week, the Ministry of Defence already sent two requests to the committee to purchase 105 Leopard tanks and four additional Patriot air defence systems.
