Germany, Parties Reach Agreement in Principle on Debt

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RKS NEWS 3 Min Read
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The conservative parties CDU/CSU of the winner of the parliamentary elections in Germany, Friedrich Merz, and the Social Democrats (SPD) have reached a preliminary agreement with the Greens on plans for a massive increase in national debt ahead of next week’s parliamentary vote.

The proposed debt reform plan, presented jointly by the conservatives and SPD, would exempt defense spending from the debt limits set by the country’s constitution and create a special fund of 500 billion euros for infrastructure investments.

The news was reported by the Reuters news agency, citing a source close to the negotiations. One source said the commitment includes providing 100 billion euros for the Climate and Economic Transformation Fund.

What did the German politicians say?

“Germany is back,” said Merz when announcing the debt reform agreement.

“It sends a clear message to our partners and friends, but also to our opponents and enemies of our freedom: we are capable of defending ourselves, and we are now fully prepared to do so,” he said.

Merz also said he expects the country to send an additional 3 billion euros in military aid to Ukraine once the Bundesrat, the chamber of federal states, approves the debt reform.

“There will be no shortage of financial resources to defend freedom and peace on our continent,” Merz emphasized. “Germany is making its significant contribution to the defense of freedom and peace in Europe.”

On his side, the co-chairman of the Social Democrats, Lars Klingbeil, said that the massive increase in debt and government investments represents a “powerful boost” for Europe’s largest economy.

“We have laid the foundations for Germany to recover and defend itself,” Klingbeil said after his SPD party agreed to the historic debt package with the Conservatives and the Greens.

Merz Wants the Bundestag to Approve the Debt Reform

Initially, the Greens had refused to support the plan, which needed their backing to reach the two-thirds majority required for a constitutional change in the Bundestag.

Merz’s goal is to secure the funds before the new Bundestag meets on March 25, where they risk being blocked by an expanded contingent of far-right and far-left lawmakers.

The outgoing Bundestag could approve the legal package on Tuesday. It would then need to be approved with a two-thirds majority in the upper house, the Bundesrat.

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