Germany's Defence Ministry to sign record artillery deal

According to the magazine Der Spiegel, Germany's Defense Minister Boris Pistorius intends to sign another agreement to purchase a record amount of artillery ammunition. This illustrates Germany's preparation for the war in Ukraine.

The German Ministry of Defense and the Ministry of Finance presented the Bundestag's budget committee with relevant documents concerning the agreement with a consortium of two arms manufacturers, Diehl Defense and Nammo Raufoss. The framework agreement is worth up to 15 billion euros, a record amount.

The planned contingent is 2.35 million rounds of ammunition, which both companies are to produce by the end of the decade. The 155-millimetre ammunition, currently lacking in the German arsenal, will be available to the Bundeswehr, NATO countries, and Ukraine. The framework agreement explicitly provides for this, reports "Der Spiegel."

Initially, the German army wanted to order only a tranche of 200,000 rounds for about 1.31 billion euros, which would be delivered by 2030.

The record order suggests that Bundeswehr is preparing for a prolonged war in Ukraine and a lasting 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 stockpiles had significantly decreased in recent decades, but "there was a lack of political will to place a large order like the one being placed now," 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 Defense signed a similar deal with the Rheinmetall Corporation for up to 8.5 billion euros 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 shells for the coming years.

"Der Spiegel" also reveals some transaction details. For example, the Diehl Defense and Nammo Raufoss consortium is demanding 10-15 percent more for the first tranche of 200,000 grenades, costing about 1.31 billion euros, than it did for the first order last year. The documents state that this increase is due to production preparation and licensing fees.

The defense budget and the 100 billion euro special fund for the Bundeswehr will cover invoices for the first ammunition deliveries in the coming years. However, when the special fund is exhausted by 2028, the Ministry of Defense will need to cover procurement costs from the current budget.

The parliament's budget committee will now address the purchase of ammunition. Though both the ruling coalition and the opposition CDU/CSU do not doubt the sense of such a large order, the fact that Boris Pistorius is presenting another ammunition contract whose financing is not solidly secured may be critically assessed, comments Der Spiegel.

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