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In recent weeks, the German term _Schuldenbremse_—or debt brake—has gone global, as Berlin has become the focal point for momentous decisions that will shape the future of Europe. In historic sessions of Germany’s two legislative chambers last week, key legislation to reform the debt brake and enable higher defense spending, as well as a special budget for infrastructure, were finalised and passed. The speed at which this was accomplished—amid the formation of a new government—was unprecedented, but it was also necessary. Extraordinary circumstances demand extraordinary responses.
For too long, Europe, and particularly Germany, has been operating under illusions. The so-called “end of history” was an American idea, but a European, and especially a German, reality. We have long been living in a different world, but only now are we accepting it. Events of recent months—the confrontational speech by J.D. Vance at the Munich Security Conference, the public humiliation of President Zelensky in the Oval Office, and the negotiation of European security matters in Saudi Arabia without European participation—have shattered any lingering complacency. The reality is stark: Europe has for decades punched well below its weight, a geopolitical lightweight despite being an economic giant. That is no longer tenable in an era defined by Trump, Xi and Putin.
The decisions made this week in Berlin, along with those reached at the Brussels summit, send a clear signal: Europe is stepping up. And this time, it is not just rhetoric—we are taking concrete action.
**Money Alone Will Not Solve the Problem**
The financial commitment being made is staggering: potentially unlimited spending for defense and intelligence, alongside a €500 billion investment in infrastructure and climate initiatives. But while money is essential, it is not enough. Without efficiency and effectiveness, these billions will be wasted.
To ensure efficiency, we must cut through the notorious red tape of German bureaucracy. Historically, the federal government has been overly cautious, placing excessive oversight mechanisms on spending. While intended to ensure fiscal responsibility, these mechanisms have often stifled investment. In the tough negotiations over this legislation, some of these barriers were successfully removed. Now, we must go further: greater trust, less risk aversion, and a commitment to avoiding bureaucratic paralysis.
Effectiveness is equally critical. The sums being allocated are significant, but in the context of our needs, they remain modest. Without clear targets and structural reforms, this money will vanish without impact. We have seen this before—the €100 billion special defense budget of 2022 largely evaporated without meaningful results. We cannot afford a repeat of that mistake.
**A New Era of European Defense**
For defense spending to be truly effective, two things must happen. First, Europe must prioritize joint projects over national interests. The era of nation-states clinging to domestic defense industries at the expense of collective security must end. We need pooled resources and coordinated efforts to develop European capabilities. Encouragingly, there is now real momentum—especially in Paris, Warsaw, and Berlin—toward establishing a unified European defense framework, with close cooperation from London.
Second, we must overhaul our command structures. Simply expanding national armies is not enough; we must be able to conduct joint operations—if necessary, even without U.S. support. As Herfried Münkler recently argued, achieving European military interoperability and securing a credible nuclear deterrence are critical objectives. These are not financial issues; they are matters of political will.
**Strengthening European Competitiveness**
Beyond defense, Europe’s economic competitiveness must be reinforced—not just through spending, but through smart regulatory reform. Mario Draghi’s recent report, unfortunately overlooked in Germany, highlights significant inefficiencies within the EU’s single market. The EU remains its own largest trading partner, yet internal barriers—such as varying domestic regulations and VAT rates—function as the equivalent of 45% tariffs on goods and 110% tariffs on services. Removing these obstacles is imperative, particularly as U.S. trade policies become more protectionist. The Financial Times estimates that even a modest 2.4% increase in intra-European trade could compensate for a 20% drop in U.S. exports. Addressing this issue requires political resolve, not additional spending.
**Maintaining Public Support**
As a recent study by the German Council on Foreign Relations (DGAP) demonstrates, the decisions made in Berlin this week enjoy strong public backing—but that support is not guaranteed to last. As uncertainty grows, leaders must be honest about what is required and the costs involved. European citizens understand the stakes and are willing to shoulder greater responsibility for defending freedom, prosperity, and security. But their support must not be taken for granted. Transparency, accountability, and results are essential.
Europe has reached a turning point. The complacency of past decades is no longer an option. The steps taken in Berlin and Brussels mark the beginning of a new era—one in which Europe finally assumes the geopolitical role its economic strength demands. Now, we must ensure that our resolve translates into lasting change.