Top economist accuses German defense minister of misinvesting military funds

Moritz Schularick, president of the Kiel Institute for the World Economy (IfW), has sharply criticized German Defense Minister Boris Pistorius's investment priorities for the Bundeswehr's modernization. Schularick contends that a significant portion of the 700 billion euros allocated for defense until 2030 is being directed towards obsolete technologies such as tanks and frigates, rather than future-oriented systems.

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Instead of more soldiers, more manned vehicles and more barracks, we must – wherever possible – rely on AI, robotics, drones and satellite technology.

According to Schularick, this approach risks rendering the substantial, largely credit-financed program ineffective. He argues that Germany possesses considerable capital, industrial expertise, and advanced technologies, but lacks the necessary personnel for traditional warfare. Instead of focusing on more soldiers, manned vehicles, and barracks, Schularick advocates for prioritizing artificial intelligence, robotics, drones, and satellite technology wherever possible.

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We have a lot of capital, a lot of industrial know-how and, in some areas, still state-of-the-art technologies. What we don't have are hundreds of thousands of people who want to get into tanks and drive to the front.

The economist also called for the establishment of a central coordinator within the Chancellery to manage military procurement. He believes a single, slow-moving ministry is ill-equipped to reorganize German and European defense strategy. This coordinator, empowered with political authority, would be responsible for bringing together industry, startups, and ministries, resolving friction points, and concentrating efforts toward a singular objective. Schularick suggested former Telekom CEO René Obermann or ex-Airbus CEO Tom Enders as potential candidates for such a role.

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Someone is needed who is equipped with political power, brings together industry, start-ups and ministries, can remove friction, and concentrates everything on one goal.

Schularick stressed that both the government and industry must fundamentally change their approach to arms procurement. Simply spending large sums and replenishing Bundeswehr stocks is insufficient. He emphasized the need to consider economic processes from the outset to ensure that necessary weapon systems can be rapidly and adequately reproduced in times of crisis. This means focusing on building production capacities, such as ordering an entire factory capable of producing 2,000 rockets annually instead of just 200, rather than ordering individual, complex, custom-made devices in small quantities.

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In other words: we are no longer ordering the individual device, but the entire factory, which can then produce 2,000 rockets per year instead of 200 in an emergency.