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Germany agrees on $107bn fund to modernize military amid Russia 'threat'

US Rep. Ilhan Omar (D-MN) (L) talks with Speaker of the House Nancy Pelosi (D-CA) during a rally with fellow Democrats before voting on H.R. 1, or the People Act, on the East Steps of the US Capitol on March 08, 2019 in Washington, DC. (AFP photo)
Howitzers of the German armed forces Bundeswehr are seen before being loaded to Lithuania at the Bundeswehr military base in Munster, Germany, February 14, 2022. (Photo by Reuters)

Germany’s coalition government and the main opposition party have reached an agreement on a €100 billion ($107 billion) boost to the country's military budget on Sunday, despite the country grappling with record inflation.

The agreement on creating a special fund for the armed forces came after more than three hours of talks in Berlin, German media outlets said, linking the move to the war in Ukraine.

The proposal needed a two-thirds majority in both parliamentary chambers, so Chancellor Olaf Scholz sought pre-approval from the center-right opposition parties.

"Together, we are ensuring that the Bundeswehr will be strengthened in the coming years with €100 billion in additional investment," the joint statement said.

Scholz hailed it as "a huge step" for the security of his country and Europe amid the raging war in Ukraine.

"With 100 billion, we ensure that the Bundeswehr can fulfill its defense mission better than ever before and it will be able to make its contribution in NATO so that we can defend ourselves any time against attacks from outside,” he wrote on Twitter.

Scholz said it was the "right answer to the turning point that started with Russia’s attack on Ukraine”.

Germany’s defense minister Christine Lambrecht called it an "urgently needed step."

“Finally, we can equip our troops as they deserve and as they urgently need to ensure national and alliance defense,” she said in a statement posted on Twitter.

Foreign Minister Annalena Baerbock also welcomed the agreement, describing it as "a good compromise, one in which we ensure that NATO can rely on us," was quoted as saying by German public broadcaster Deutschlandfunk on Monday.

The fund is to be used over several years to increase Germany’s regular budget of around 50 billion euros. It will allow Berlin to achieve NATO’s target of spending 2 percent of GDP on defense ‘on a multi-year average’.

The development comes with the German government struggling to ease the pressure on the citizens who are experiencing a record high inflation of 7.9 percent, the highest figure in nearly half a century.

This is the first time Germany has increased its military budget on such magnitude, signaling its involvement in NATO’s further investment in military projects after Russia’s military operation in Ukraine.

The country has often been derided by the United States and other NATO allies for not investing enough in defense.

It had already set aside a budget of €53 billion for the Defense Ministry in 2022, marking a 3.2 percent increase from last year.

If approved by parliament, the additional spending will mark the largest jump in the country's military expenditure since World War II, said a report in state-run DW.

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