A significant overhaul of Germany’s military procurement process is being advocated for, potentially sidelining the current procurement agency in Koblenz and replacing it with a new, specialized entity. This proposal, championed by Moritz Schularick, President of the Kiel Institute for World Economics and newly appointed arms advisor to the Minister for Economic Affairs, aims to ensure optimal allocation of the substantial investment planned for the Bundeswehr’s rearmament.
Schularick argues that the sheer volume of expenditure necessitates a more economically focused approach to procurement. He expressed concern that strategic and technological considerations are being overlooked within the Ministry of Defence, potentially hindering the Bundeswehr’s ability to adapt to evolving threats. While praising the agency’s suitability for maintaining existing weapon systems such as Leopard tanks, he believes it lacks the capacity to effectively manage the acquisition of advanced, high-tech equipment involving higher levels of risk.
A new agency would be instrumental in fostering innovation and scaling up production across various sectors. Expanding capacity from localized manufacturing to industrial mass production is seen as crucial for traditional weaponry like artillery, tanks and helicopters. However, equally important is a leap forward in next-generation defense technology, including autonomous systems, artificial intelligence, robotics, satellite technology and hypersonic capabilities – areas where Germany lags behind nations like the United States and China.
To support this shift, Schularick proposes a two-pronged strategy: establishing a state-backed fund to co-invest alongside private capital in promising startups and scale-ups and positioning the German government as an anchor customer for innovative companies. The model would involve the Bundeswehr committing to guaranteed purchases of novel technology, such as underwater drones, over a multi-year period, acknowledging the inherent risk involved but emphasizing that inaction is not a viable option. The intent is to nurture innovation through calculated risk-taking, enabling the German economy to benefit alongside the Bundeswehr’s modernization efforts.