An Alternative for Europe: German Bundestag removes budgetary brake on its political self-determination

The aims and challenges of American revisionism

‘America has changed – now it's your turn.’ This brief phrase encapsulates the central message addressed to Europeans in US Vice President Vance’s speech at the Munich Conference. At first glance, the keynote speech seemed like a genre mismatch as lecturing on 'Europe’s lost freedom of speech,' 'the EU turning into the USSR,' and 'the alienation of European governments from their own electorate' did not quite fit the theme of an international security conference. However, beneath this apparent faux pas lay a systemic statement: the ideological and value-based foundations of the Western world are not immutable tablets of eternal truths – they can change, and that is exactly what is happening across the Atlantic right now.

The 'junior' European partners were given a choice: either embark on a similar restructuring of their systems toward ultra-market anti-globalist populism or prepare for a downgrade in Washington’s hierarchy of foreign policy interests. In this context, the new US administration’s flirtation with anti-system forces in Europe – be it Viktor Orbán with his veto-blackmail policy in Brussels or Nigel Farage, who promises to dismantle the entire political landscape of the United Kingdom – appears to be part of a full-fledged strategy of aggressive obstructionism. The same logic applies to the courting of the far-right Alternative for Germany (AfD): from Elon Musk’s column in Die Welt praising the party to Vance’s meeting with AfD leader Alice Weidel, which lasted longer than his talks with Friedrich Merz, Germany’s future chancellor (with the current chancellor, Olaf Scholz, Vance refused to meet altogether – an act of demonstrative disregard that violated not only diplomatic protocol but also basic political logic).

The Trumpist revolution seeks a deep transformation of America and, like any fundamentalist movement, appeals to the idea of a 'return' to a supposed golden age—one that is more imagined than ever truly existed. Over time, it has become clearer where exactly the slogan 'Make America Great Again' is aiming – toward the early 20th century. It is no coincidence that one of Trump’s first executive orders restored the former name of Denali in Alaska – back to McKinley, after the 25th US president (1897–1901). This was an era when the United States was acquiring new colonies, accelerating industrial growth through protective tariffs against trade competitors, and keeping out of conflicts that did not directly affect its interests.

Until recently, European politicians were convinced that any concept of American interests would inevitably include a strategic partnership with Europe. European capitals have long had the opportunity to see how Pax Americana is evolving. In fact, it was Barack Obama who first spoke about the US 'pivot' to Asia. A whole generation of the American foreign policy elite was shaped by wars in the Middle East and Afghanistan, and the US military has long been training for scenarios of direct conflict with China. For them, NATO bases in Ramstein and Heidelberg are, at best, transit hubs. Yet, European capitals preferred to believe that Trump’s first presidency was merely a system glitch – an isolated malfunction. And for four more years, Angela Merkel continued to play the role of guardian of the liberal order, keeping Europe within its familiar transatlantic orbit. The victory of Joe Biden only reinforced the illusion of this inevitability. But a second Trump term changes everything. We now see with what fervor Washington is reprogramming its foreign policy strategy.

This is not about isolationism or a retreat from global ambitions. On the contrary, the US seeks to reaffirm its superpower status but intends to do so by entirely different means. Borrowing from the disruptive logic of the tech startup world, Washington is making significant efforts to dismantle the rules-based order. In the process of rewriting the norms of internal Western relations, the US is willing to cannibalise parts of the very system it spent decades building: international organisations, multilateral diplomacy, investments in soft power, and humanitarian programmes

These tools never yielded quick 'returns on investment,' but in the long term, they created the conditions for effective American leadership, which relied not only on military superiority. It is easier to be a hegemon when you have allies in every region of the world who can be counted on in joint endeavors – whether in military interventions or in shaping international regulatory frameworks. Within this paradigm, alliances cannot be purely transactional and mercantile.

But Trump does not believe in positive-sum games. If America incurs a loss, then someone else must be making a profit. Panama, Canada, Greenland, Germany, Ukraine – the White House seeks to extract not just monetisable resources from US-dependent states but, just as importantly, media-friendly trophies. For Trumpists, this is not only a foreign policy calculation but also a tool for strengthening their position in domestic political battles – a demonstration of the effectiveness of their radically patriotic course. In this business-oriented logic, allied dependence is seen as an unjustified long-term investment that Washington is eager to cash out immediately, regardless of the collateral damage.

Three dependencies and three shocks for Germany

The political DNA of modern, post-war, and reunified Germany does not contain ready-made answers for a situation in which two of the World War II victors simultaneously become challenges to the European security architecture. Among Germany’s five key external policy reference points – the US, France, Israel, Poland, and Russia – only the first and the last have played comparably significant roles in shaping the country’s identity. However, the challenge Germany now faces is broader and systemic.

In the world of the late twentieth and early decades of the twenty-first century, connections and interdependencies were seen as a natural effect of globalisation and an unquestionable good. But in the 2020s, the situation has been changing rapidly. Germany only began perceiving its dependencies as sources of existential risk during the pandemic when the vulnerabilities of outsourced production and cross-border just-in-time logistics were laid bare.

But this was only the first stage of the painful discovery of their own vulnerabilities. The transformation of the Russia-Ukraine conflict into a full-scale war put an end to the special relationship between Berlin and Moscow and destroyed the political-economic foundation of German-Russian relations – energy trade. Nearly half a century of Russian gas supplies to Germany had been a striking example of how asymmetric interdependence can shift from an economically beneficial tool to a strategic risk.

The second blow came with changes in China's export policy, particularly in the automotive sector. For decades, the German economy viewed China in two roles: as a relatively cheap manufacturing hub for German goods and, at the same time, as a market for high-tech products. This division of labour – design and engineering patents in Germany, manufacturing and sales in China – had already been evolving for some time. However, Germany’s traditionally strong industrial sector was slow to let go of its familiar worldview.

Germany greatly benefited from trade with China and therefore navigated the global financial crisis relatively easily, with its economy growing until 2019. But now, China is no longer just a supplier or buyer – it has become a full-fledged competitor to Germany at every level of the technological hierarchy, from the production of the smallest components to design and software development. The state-subsidised Chinese auto industry’s push into European markets, compounded by Europe’s lag in the affordable electric vehicle sector, signals a complete paradigm shift. Germany cannot afford a full-scale trade war with China, but losing its leadership in the automotive industry would be a devastating blow.

Germany responded unexpectedly swiftly to the energy dependency crisis with Russia: within a year, it built liquefied natural gas terminals and introduced programmes to cap industrial electricity costs. Dependence on trade with China, however, represents a far more systemic risk, and the EU is only beginning to respond with protective tariffs and anti-dumping measures. But the most challenging dependency to grasp remains the third: Germany's reliance on the US for security.

Unlike Russian energy supplies or the Chinese market, American security guarantees were never perceived as a vulnerability but as a reliable and unshakable pillar. However, the new reality – where the US no longer considers European security a priority – turns this relationship from a stabilising factor into a source of risks and threats. The issue is not just Trump himself but the broader realisation among Europeans that the internal dysfunctions of the US political system could lead to a shift in American policy every four years.

America is ceasing to be the provider of the most critical service expected from a hegemon in a hierarchical system – a clear and stable outlook for its future actions. Regardless of who becomes the next US president, Europe must prepare for the least favorable scenario. This means an urgent reassessment of its own defence capabilities and the rapid establishment of new mechanisms for continental cooperation, without American involvement.

Three dependencies have turned into three shocks for Germany. Overcoming the first two already requires significant effort. But neutralising the third will demand a quantum leap – both in mindset and in the very structure of European security.

The quantum leap and its institutional implications

Any large-scale European project depends not so much on Brussels as on the political will of its member states. In this case, we are witnessing a 'bottom-up demand': Paris’s proactive diplomatic efforts have laid the groundwork for an adequate collective response to the new tone coming from the White House and have served as the catalyst for the ReArm Europe programme.

Of the €800 billion announced by Ursula von der Leyen for additional defence spending over the next four years, €650 billion will come from national budgets. This means that European countries are not only politically prepared to ramp up their defence efforts but are also willing to take on urgent financial commitments. The remaining €150 billion is expected to be raised through the issuance of joint EU bonds.

Although this is not yet a full-fledged 'pan-European debt,' the gradual use of this mechanism to finance megaprojects – such as NextGeneration EU (a crisis recovery fund established after the pandemic), EU Green Bonds (a tool for decarbonising the economy), and the Ukraine Facility (a fund for post-war reconstruction in Ukraine) – is steadily bringing the EU closer to forming a common fiscal policy. A full-fledged 'European Treasury' would mark a fundamentally new level of European sovereignty. In the past, Germany was the main opponent of turning the EU into a 'debt union,' but the fundamental changes in budgetary policy expected under future Chancellor Friedrich Merz make this scenario more realistic.

The European Commission has already announced a relaxation of the Maastricht budget discipline criteria to give member states more flexibility in financing defence spending. At the same time, work is underway to attract private capital through the European Investment Bank and other financial instruments. It is also significant that the EU is beginning to redirect funds from structural and cooperative programmes toward defence needs and invest in strategic military projects, from air and missile defence systems to drone technologies and cybersecurity. Cases where the US has threatened to cut Ukraine off from its satellite or artillery systems are being carefully documented by European defence ministries as arguments for reassessing long-term procurement strategies concerning American military-industrial products.

Thus, ReArm Europe goes far beyond simply increasing defence spending. It is an institutional experiment in a field that was never originally intended to be part of EU integration. For a long time, there was a clear functional division: 'NATO to survive, EU to thrive' – NATO handled security, while the EU focused on the economy and prosperity. Although the European Union enshrined a collective defence clause (Article 42.7) in its 2009 treaty – obligating member states to assist each other in the event of an armed attack – it has so far been regarded as largely symbolic and has remained in the shadow of Article 5 of the North Atlantic Treaty. The only precedent for its invocation – France’s request for support after the 2015 terrorist attacks in Paris – was indeed more symbolic than practical.

France and the renaissance of European sovereignty

Among Germany’s traditional five key partners, France is now emerging as the primary pillar and the player effectively organising both Poland and post-Brexit Britain around common strategic issues during Berlin’s political interregnum.

Unlike Berlin, for which relations with the US have been a key pillar of foreign policy balance, Paris has never ceased to view Europe as a potentially self-sufficient pole in the global order. Today, Emmanuel Macron, almost quoting Charles de Gaulle, asserts that neither Washington nor Moscow can guarantee Europe’s security. In his 2017 Sorbonne speech – delivered in response to Brexit and Trump’s first presidency – Macron called for concrete steps toward 'European sovereignty.' However, neither Angela Merkel nor Olaf Scholz supported his initiative, continuing to believe in the transatlantic anchor. Today, Germany finally seems ready to back France’s decisive initiatives on European sovereignty.

France is the only EU country with a permanent seat on the UN Security Council. Whatever reforms this body may undergo in the multipolar world of the 21st century, Paris guarantees a 'seat at the table' for Europeans. France is also the EU’s only nuclear power, and Macron has already proposed extending France’s nuclear umbrella to European partners. While it cannot yet replace American guarantees, it could become the nucleus of a European nuclear deterrence force. Germany, on the other hand, is unlikely to become a nuclear power itself, as it remains committed to its dual self-restraint through the 1968 Nuclear Non-Proliferation Treaty and the 1990 Treaty on the Final Settlement with Respect to Germany, which formalised its renunciation of weapons of mass destruction. However, its financial participation in developing and maintaining European nuclear capabilities appears to be a key condition for such a transformation. Future Chancellor Friedrich Merz has effectively already endorsed this idea.

Finally, France is the only European country with an independent intelligence infrastructure. The French foreign intelligence service (DGSE) not only operates independently of the US but also competes with and sometimes even clashes with the CIA. The DGSE’s proposal to replace American intelligence-sharing with Ukraine makes it a central player in shaping a new European intelligence network – a potential European Eyes initiative to counterbalance the US-led Five Eyes alliance.

France’s traditional state-driven approach to industrial policy also makes it the driving force behind the development of Europe’s defence industry. The Franco-German-Spanish corporation Airbus Defence and Space, the EU’s largest defence contractor, has backed the Élysée Palace’s initiative by calling on EU countries to stop purchasing American weapons in favor of European manufacturers. While European defence markets currently compete with each other for export contracts, ReArm Europe offers 'long-term capital' to create internal demand for European military products.

Sovereignty – with or without the EU?

In French political circles, the memory of the Western European Union (WEU), the first European defence institution after the Second World War, which was supposed to lay the foundations for ‘strategic autonomy’, that is, European independence in military-technological terms, is alive and well. However, the Cold War and Europe’s integration into NATO effectively buried the project, and in 2011, the WEU was officially dissolved (this was also the reason why the EU treaty incorporated a clause on collective defence).

When members of the Trump administration claim that Europeans are 'not ready' to organise and fund their own defence, they either do not know (or deliberately omit) the fact that the WEU failed precisely because of American skepticism. From the outset, Washington had different objectives for European integration: 'To keep the Americans in, the Russians out, and the Germans down' – meaning no European sovereignty. This structure defined the essence of the North Atlantic Alliance throughout its 75-year existence. But times have changed, and what was once forgotten is now rapidly returning.

At the same time, today’s resurgence of European sovereignty and strategic autonomy faces structural challenges within the EU. Security matters remain the prerogative of national governments, while the EU’s unanimity principle has turned into a tool of blackmail, allowing individual member states to extract benefits and concessions. Even if Hungary and Slovakia end their obstructionist policies, there is no guarantee that others won’t adopt similar tactics.

The modus operandi for defence and foreign policy decisions must shift toward qualified majority voting. This would mark the end of the EU’s history as a consensus-driven integration project. If the EU fails to achieve this, alternative institutions will inevitably emerge – either in the form of a more exclusive club within the EU or as a completely separate organisation bringing together countries ready for deeper defence cooperation, potentially including the United Kingdom and Norway. This would effectively turn the 'old' EU into a kind of antechamber, where membership would no longer grant access to shared intelligence and defence resources.

A significant and noteworthy signal: despite blocking military aid to Ukraine, Hungary has supported the ReArm Europe programme. This means that even the most skeptical countries toward deeper European integration recognise the inevitability of change.

Germany’s Zeitenwende

At first glance, Friedrich Merz, the future Chancellor of Germany, seems like an unlikely figure to lead the country toward strategic autonomy. The Christian Democratic Union (CDU) and its Bavarian sister party CSU have historically been the most pro-American political forces in Germany. Their foreign policy has always been based on the idea that the United States is the central pillar of European security. Konrad Adenauer, Helmut Kohl, and Angela Merkel were all staunch advocates of Germany’s transatlantic alignment.

The situation Friedrich Merz finds himself in is unique. He openly declares that his top priority is Germany’s maximum independence. Notably, he uses the term Unabhängigkeit (independence) rather than the more diplomatic sovereignty or autonomy, emphasising the revolutionary nature of his intentions. Until recently, any politician advocating for a course of separation from the US would have been dismissed as either a crypto-Putinist or a political madman. Merz’s initial statements have been striking in their speed and decisiveness. He explicitly asserts that external interference in German affairs – whether from Washington or Moscow – is unacceptable. This stance is a reaction both to attempts by American figures like Elon Musk to publicly influence German elections and to Russian disinformation campaigns in the lead-up to those elections. In political Berlin, comparisons to Nixon are already being made: 'Only Nixon could go to China, only Merz can turn away from the US'.

Another significant signal from Merz is his willingness for Germany to participate in financing a pan-European nuclear umbrella – not only alongside France but also with the United Kingdom. This suggests that Berlin is ready to reconsider its institutional logic, which until now dictated that London should be 'punished' for Brexit.

Merz also has a concrete answer to the question of how to implement this proclaimed independence. Angela Merkel’s tenure was synonymous with strict fiscal discipline, and one of her key legacies was the ‘debt brake’ – a constitutional mechanism limiting new government borrowing. This became a structural impediment to increasing defence spending, as any additional spending inevitably led to a deadlocked domestic political conflict: how would defence be funded? Would raising taxes, already high, undermine the competitiveness of the economy? Could budget spending on non-power areas, which was politically unacceptable to supporters of the welfare state, be cut? Germany has been stuck in this dilemma for twenty years, and even Scholz's emergency defence special fund, created in response to 24 February 2022, did not overcome this paradigm.

Now, Germany has finally moved forward. Merz, who during his election campaign supported the classical market-liberal view that excessive debt is a burden on economic growth, radically reversed his stance within days of Washington’s first disruptive signals. In partnership with the Social Democrats, the likely coalition partners in his future government, he has introduced a plan for Germany’s financial transformation.

At the constitutional level, a separate €500 billion infrastructure fund is envisaged, which is taken out from under the ‘debt brake’. Given Germany’s geographical position, its infrastructure is effectively pan-European, meaning its financing extends beyond purely national interests. In addition, Germany's defence budget will now effectively have no ceiling. It will be calculated on the basis of 1% of GDP spent on defence spending. This means that Germany gets the possibility of long-term and, in fact, unlimited (sic!) defence planning. These ‘long-term funds’ provide the German military-industrial complex with the predictability needed to expand production capacity, and Ukraine with clarity on the military-industrial assistance it can count on in the coming years.

The Bundeswehr, which was previously oriented toward expeditionary missions, is now rapidly restructuring into a continental defence army. The future government plans to swiftly review different models for reintroducing conscription and strengthening the armed forces.

Merz’s government is not yet formed, and he lacks the constitutional majority to change fiscal policy without securing votes from the Greens – whom he does not intend to invite into his coalition. However, in just the past week, he has managed to negotiate with them by including €100 billion for 'greening' the German economy in the planned infrastructure spending. Merz will have to, among other things, reverse migration policy, restart economic growth which has been stalled since 2019, halt voter migration to the AfD, and he must accomplish all of this without the comfortable parliamentary majority on which Merkel could rely. Nevertheless, there is every reason to believe that Germany is now passing the point of no return and the Zeitenwende – the change of eras – first proclaimed by Olaf Scholz has finally arrived.