Germany plans to massively boost defense spending in 2022 with a new $112.1 million security fund for military modernization, in light of Russia’s invasion of Ukraine.

Olaf Scholz, the German chancellor, also announced Sunday during an address at a special parliamentary session that the country will now invest more than two percent of its GDP in defense annually moving forward.

German Chancellor Olaf Scholz. Photo: Inga Kjer/Bundestag

“We have set this goal not only because we have made a promise to our friends and allies to increase our defense expenditure to two percent of our economic output by 2024. We are also doing this for us, for our own security,” Scholz said, according to an English transcript of his speech. 

Germany currently spends about 1.5 percent of GDP on defense, or around $50 billion annually, but the new increase will match NATO members’ pledge to meet a two percent annual threshold for military spending.

On the one-time $112.1 billion security fund to be established this year, Scholz said the appropriations would be allocated “for necessary investments and armament projects.”

“It is clear that we must invest much more in the security of our country. In order to protect our freedom and our democracy. This is a major national undertaking. The goal is a powerful, cutting-edge, progressive Bundeswehr that can be relied upon to protect us,” Scholz said. “But we should be under no illusions. Better equipment, modern technology, more personnel – all of this costs a lot of money. We will therefore set up a special fund for the Bundeswehr. And I am deeply grateful to Federal Finance Minister Lindner for his support on this.”

Scholz said the uptick in defense spending commitment is intended to ensure Germany keeps pace new technology, with the chancellor citing opportunities to pursue major weapons system develop and acquisition efforts.

“This is why it is so important to me, for example, that we build the next generation of combat aircraft and tanks here in Europe together with European partners, and particularly France. These projects are our utmost priority,” Scholz said. 

More specifically, Scholz noted Germany will continue pursuing a replacement for its nuclear weapon-carrying Tornado jets and noted the Lockheed Martin [LMT]-built F-35 as a potential future option.

Germany will also continue to further the capabilities of its Eurofighter Typhoon fighter aircraft, according to Schultz, who said the platforms are set to be equipped with electronic warfare systems.

Scholz also noted Germany has now signed final contracts to move ahead with procurement of the new Eurodrone UAV and is moving toward procuring armed Heron drones from Israel. 

A day before Scholz’s speech, Germany also announced plans to provide Ukraine with 1,000 anti-tank weapons and 500 Raytheon Technologies [RTX]-built Stinger missiles as the country continues fighting Russian forces’ invasion. 

Germany’s new military assistance to Ukraine also included permission allowing the Netherlands to send 400 rocket-propelled grenade launchers and Estonia to provide nine howitzers. 

“We are living through a watershed era. And that means that the world afterward will no longer be the same as the world before. The issue at the heart of this is whether power is allowed to prevail over the law. Whether we permit Putin to turn back the clock to the nineteenth century and the age of the great powers. Or whether we have it in us to keep warmongers like Putin in check. That requires strength of our own,” Scholz said on Sunday.