Germany Pushes Defence Spending Surge

The idea that a ceasefire in Ukraine might soon cool Europe's military build-up has collapsed. Putin has rejected serious negotiations, according to NV, citing Reuters. Allied governments are now budgeting for a longer war, and the numbers are beginning to show it.

For Malta, this is not a distant mainland debate. We do not have Germany's industrial base or Poland's army, but we sit inside the same EU and NATO-adjacent security economy. Defence spending decisions in Berlin, Warsaw and Madrid will shape EU budgets, industrial policy, port infrastructure, cybersecurity priorities and the political space left for smaller member states. The issue now is not whether Europe can announce more money. It is whether that money becomes usable military power before Russia forces the next test.

The Money Is Real

Germany is the anchor of the shift. Chancellor Friedrich Merz has proposed a 2027 defence budget of €109.7 billion, about a fifth of federal spending, with another €11.6 billion for Ukraine (Bundesfinanzministerium). Berlin wants to reach NATO's 3.5% of GDP target by 2029, six years before the alliance's 2035 horizon (Deutschlandfunk).

Poland is already further down that road. Warsaw spent almost 123.6 billion zloty on defence in 2025, including 42.4 billion for modernisation, with more than 45 billion zloty in US weapons purchases planned for 2026–2027 (Defence24). These are not one-year political gestures. They lock governments into factory orders, delivery schedules and maintenance costs that will run long after any hypothetical ceasefire.

Not every capital is moving at the same pace. Spain's Pedro Sanchez refused the 5% of GDP framework proposed by NATO Secretary-General Mark Rutte, split between at least 3.5% for core military needs and 1.5% for resilience (NATO, El Mundo). Spain was the only ally to reject it. Sanchez says countries should be judged by what they can actually field, not by the percentage they spend.

Slovakia's Robert Fico, who says he has direct channels to both Putin and Zelensky but has produced no visible result (Aktuality, Denník N), matters less as a mediator than as political cover. He gives slower governments a language of peace while they delay military commitments.

Where the Money Gets Stuck

The spending surge has exposed a production problem that finance ministries cannot solve by writing larger budgets. Germany has halted its F126 frigate programme after delays and cost overruns. The Eurodrone and FCAS fighter remain behind schedule (ZEIT). Poland's Prime Minister Donald Tusk warned that the coming months could be "really critical", not because he expects a full invasion, but because limited Russian provocations against infrastructure or borders could test whether NATO responds as one (TVN24, BBC).

European and Canadian allies have pledged about €70 billion a year in military support for Ukraine across 2026 and 2027 (DW). EDIP, the EU defence-industry programme designed to place longer-term orders for missiles, air-defence systems and drones, is meant to move procurement away from emergency buying and into predictable contracts (DG DEFIS). SAFE, the EU's €150 billion joint fund for defence procurement, is supposed to direct that demand towards European factories.

That matters for small states too. Once the EU starts using shared borrowing, procurement rules and industrial policy to build defence capacity, the discussion moves into the same Brussels machinery that shapes Malta's ports, digital infrastructure, cyber rules and public finances. The winners are likely to be countries with large defence manufacturers and governments able to absorb complex procurement quickly. The losers are those that pay into a more security-focused EU budget without much industrial return.

The public still cannot see whether Europe is becoming more ready. NATO's capability targets, interceptor delivery timelines and ammunition stockpile levels remain classified. The Commission tracks inputs such as budget pledges and planned production lines, not outputs such as fielded units or readiness rates. According to Open Gate Italia, Italy cut its SAFE request from €14.9 billion to €5 billion, a sign that even governments formally signed up to the shift are hedging on how fast they can absorb it.

The bottleneck sits between the ministers announcing budgets and the procurement agencies, shipyards and missile factories that must deliver. Defence ministries sign contracts. Procurement offices manage specifications, testing and suppliers. Arms manufacturers set production timelines. When one link stalls, as Germany's frigate cancellation shows, money waits while units remain unequipped.

European ministers can now count the money. They still have to show that it buys ammunition, interceptors and units that Russia would actually have to reckon with.