Eichel Puts Squeeze on Defense Budget

According to a report published in Wednesday's edition of Die Welt, Eichel needs to save some additional two billion euros from Germany's government budget for 2005. To meet that goal, the German military is expected to shave off some €250 million ($322 million) from its budget, leaving it with a meager €24 billion for operating next year.

In the past, Defense Minister Peter Struck has opposed such cuts to the Bundeswehr, claiming its effectiveness and the current reform process to turn the German military into a modern force would be adversely affected. But given the current state of the German deficit and Eichel's need to fill the growing holes in the state coffers, it is unlikely the military will be spared from hard-hitting cuts.

Disproportionate cuts

Defense expert for the Social Democrats Elke Leonhard has criticized Eichel's plans for cutting the military's budget, saying the defense ministry had to carry a disproportionate burden compared to other ministries. Leonhard told the newspaper that the budget cuts needed to be limited to the upcoming year and should not interfere with mid and long-term planning for the future of the armed forces.

The budget cuts should not come at the expense of the current reform investments or personnel, she said, otherwise the military will have reached "the end of its tether."

The conservative opposition Christian Democrats have also attacked the penny-pinching plans as ineffective. Eichel's budget proposal "has more wholes in it than Swiss cheese," Dietrich Austermann told Die Welt. The budget expert said the finance minister's chopping axe was ill-aimed and should spare the Bundeswehr, given its currently stretched resources.

If Eichel's proposal goes through, the reforms to the German military are doomed to fail, Austermann said. Struck would never be able to do anything more with the armed forces, he added.

Necessary cuts

Eichel has defended the budget cuts as necessary to help reduce Germany's mounting deficit, which is currently hovering at a record €43.7 billion. After the failed attempt to save money by canceling the Oct. 3 national unity holiday, Eichel has focused on the government's ministries and reining in their swelling expenses.

If Germany does not rein in its debt, it risks once again violating the European Union's Stability and Growth Pact, which requires all euro zone members to maintain a budget deficit of no more than 3 percent of Gross Domestic Product. Germany has broken the pact for three years in a row and is widely expected to pass the limit again in 2005. If that is the case it will face a series of penalties from the EU.