Record-breaking €15B deal: Germany's move to boost artillery stocks

German Defense Minister Boris Pistorius wants to sign another deal for a record amount of artillery ammunition, reported the magazine "Der Spiegel." This indicates what Germany is preparing for in the context of the war in Ukraine.

The German Ministry of Defense and the Finance Ministry presented the Bundestag's Budget Committee with relevant documents regarding the agreement with the arms manufacturers consortium Diehl Defense and Nammo Raufoss. The framework agreement amounts to a record sum of up to €15 billion ($16 billion).

The planned contingent is 2.35 million pieces of ammunition, which both companies will 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. According to Der Spiegel, the framework agreement stipulates this.

Initially, the German army plans to order only a batch of 200,000 rounds for approximately €1.31 billion ($1.4 billion), to be delivered by 2030.

The record order indicates that the Bundeswehr is preparing for a long war in Ukraine and a prolonged confrontation with Russia. Last year, the German Ministry of Defense ordered only about 5,000 shells for the howitzer 2000 from the Diehl and Nammo consortium. It was clear even then that the Bundeswehr's reserves had significantly decreased in recent decades, but "there was a lack of political will to place a large order like the one currently being placed," writes "Der Spiegel."

The framework agreement is already the second large ammunition transaction in a short period. A few weeks ago, the German Ministry of Defense signed a similar agreement with the Rheinmetall group for up to €8.5 billion ($9 billion) to enable the arms manufacturer to launch a new production line in Lower Saxony. The Ministry of Defense also increased the framework agreement for Rheinmetall to 2.35 million rounds in the coming years.

"Der Spiegel" also reveals some transaction details. For example, the Diehl Defense and Nammo Raufoss consortium is demanding approximately 10-15 percent more for the first batch of 200,000 grenades, around €1.31 billion ($1.4 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 defense budget and the €100 billion ($106 billion) special fund for the Bundeswehr. However, by 2028 at the latest, when the special fund is exhausted, the Ministry of Defense will have to cover the purchase costs from the current budget.

Now the Budget Committee of the parliament will deal with the issue of ammunition purchase. Both the ruling coalition and the opposition CDU/CSU have no doubts about the sense of such a large order, but the fact that Boris Pistorius is presenting another ammunition contract without solid financing secured could be critically assessed, comments "Der Spiegel."

Last week, the Ministry of Defense already sent two requests to the committee to purchase 105 Leopard tanks and four additional Patriot air defense systems.