Predicting German foreign policy risks missing the next shock. Who foresaw the terror attacks of 9/11, a global pandemic reshaping the economy, or the return of large-scale war in Europe? Equally, one risks stating the obvious: Germany will remain committed to NATO, to European integration, to a rules-based order. All of this is most likely correct and still doesn’t tell you much.
I want to use this opportunity in a different way: to express my unease with the state of our foreign and security policy debate, and to spell out what I think needs to change for Germany to remain an effective actor in the future.
Two observations have shaped my view.
First, for all the talk of integrated or networked security, we too often ignore the economic and fiscal foundations of policymaking. Without the corresponding resources, there is no foreign policy.
Second, good foreign policy analysis does not automatically lead to good decisions. Too often, it remains within the foreign policy sphere instead of being incorporated into decision-making by those who make the budgets.
Self-Limiting Decisions
Take Germany’s approach to Russia before it launched its full-scale invasion of Ukraine. The post-mortems are familiar: Germany underestimated Russian President Vladimir Putin, depended too heavily on Russian energy, and neglected the Bundeswehr, Germany’s armed forces. But the elephant in the room hardly ever gets mentioned in foreign policy debates: a highly consequential fiscal policy decision.
In May 2009, Germany’s parliament passed the Schuldenbremse, enshrining a strict “debt brake” into the constitution, alterable only by a two-thirds supermajority. This was a deliberate policy decision. It took place after Putin’s Munich speech in 2007 and his invasion of Georgia in 2008. While an American friend, when asked how the US sustains such high levels of defense spending, answered with four words (“Just swipe the card.”), Germany introduced a constitutional provision to limit itself to the equivalent of a children’s credit card.
This decision had real consequences: Military conscription was suspended in 2011—to save money. The then defense minister declared fiscal consolidation to be the “key strategic parameter” for the Bundeswehr’s future. Back in the day, nobody considered this outrageous. The security of future generations was put at risk in the name of intergenerational justice. Those who warned about Russia and those who guarded the budget operated in entirely separate worlds—even though it was often the very same politicians who voted for the “debt brake” in parliament and gave interviews explaining the Russian threat.
Learning from the Past
I’m not interested in blaming anyone. But we should learn from the past so that we can be smarter tomorrow: Events that seem to have nothing to do with foreign policy may end up being the most consequential—whether it’s drawing up a budget, setting fiscal norms, or reforming the constitution.
The separation between foreign and domestic policy never made a lot of sense and definitely does not work today. Brexit was not a foreign policy event, yet it reduced British influence abroad for at least a generation. President Donald Trump’s election victories may have catastrophic consequences for the United States’ superpower status. Rising support for anti-system parties in Germany is a reminder that foreign policy rests on contested domestic ground.
If Germany wants to remain a consequential foreign policy actor, those Chinese walls between domestic and foreign policy need to come down. I’m thinking of three in particular:
Foreign and Fiscal Policy
The first wall that needs to fall is the one between foreign and fiscal policy. The 2022 “special fund” (Sondervermögen), which provided the Bundeswehr with an extra €100 billion, and the constitutional exemption for defense spending of 2025, which now allows unlimited debt-financed expenditure, resolved an immediate crisis, but not the structural problem. By 2029 at the latest, interest payments on defense borrowing will put severe pressure on the federal budget. Defense spending will crowd out public investment and spending on a functional welfare state core to a productive economy.
For Germany, guns versus butter (and essential government services) is not a theoretical debate but a foregone conclusion under its current fiscal framework. By 2035, Germany will either have re-engineered its fiscal framework to sustain sufficient levels of defense spending, investment, and social cohesion simultaneously or it will have quietly scaled back its international ambitions.
Germany needs an honest debate about priorities—what international engagement costs, where the money comes from, including from taxes, and what trade-offs that requires. A foreign policy that cannot be financed is not a foreign policy. It is a wish list.
Germany’s Economic Model
The second wall refers to Germany’s economic model. Many of those who warned about Germany’s dependency on Russia are now warning about Germany’s dependency on China. What they rarely address is the corollary: that dependency is the necessary by-product of Germany’s much celebrated export model.
We were so proud of being world champion in exports that we may have failed to debate whether that was actually desirable. To this day, there is very little serious thinking about how an economy built on export surpluses can actually transition toward domestic demand, higher wages, and investment-led growth.
Germany’s deep exposure to the Chinese market and supply chains did not arise by accident; it reflects strategic economic choices—mainly by companies, but also by policymakers who did not prioritize the necessary investments at home and were not sufficiently worried about domestic demand. How often is that debated as a foreign policy question? If Germany has not have shifted toward a more investment-driven growth model by the early 2030s, every foreign policy crisis involving China will translate directly into domestic economic insecurity.
In short, economic policy is foreign policy. And should be treated as such.
Defending Domestic Democracy
The third wall that needs to vanish is the one between the defense of our democracy and foreign policy. This may be the most important divide of all—the assumption that foreign policy thinkers can leave the defense of democracy to someone else.
Autocracies have real tactical advantages. They don’t need to fear neither public criticism and parliamentary debates, nor elections they may lose. But democracies have an advantage no autocracy will ever get to enjoy: legitimacy, resilience, and adaptive capacity rooted in genuine consent. What erodes that strength is not only economic hardship. It is the deliberate weaponization of the open debate itself, including the use of digital platforms to undermine trust and polarize public opinion.
Germany’s future strategic weight will depend on whether its democracy still commands the trust required to sustain costly international commitments, to play by the rules, and be a reliable global player. Sustaining international engagement requires domestic legitimacy. Winning the public argument for international responsibility therefore becomes part of foreign policy itself.
Germany in 2035
None of this precludes the obvious: Germany will need its alliances and partnerships more than ever. Credible deterrence within NATO will remain indispensable. Germany will need to sustain significantly higher levels of defense investment while supporting renewed efforts at arms control in an increasingly fragile nuclear order; and it may have to do so with an adversary in the east it cannot trust to stand by its word.
Without the European Union, even Germany’s 84 million people and sizable economy would not be sufficient to allow it to hold its ground in a world dominated by superpowers and spheres of influence. Only as part of a bloc of 450 million will we continue to be influential.
Beyond Europe, many of the countries shaping the next decade lie outside NATO and the G7: India, Indonesia, Brazil, Nigeria, South Africa, Saudi Arabia, Mexico, just to name a few. Building genuine partnerships with these emerging powers means moving beyond transactional diplomacy. That requires honest exchange without double standards. Whether Germany can credibly contribute to NATO’s security, take on a joint leadership role in the EU, and develop a genuine partnership with emerging powers by 2035 will depend on the fiscal, economic, and democratic choices it makes now.
The most consequential foreign policy decisions are very often not made in foreign ministries. They are made in budget committees, constitutional commissions, and parliamentary debates about tax policy and industrial strategy. The financial crisis of 2008 created the political conditions for constitutional reform in 2009 that has been shaping German defense policy for 15 years. The foreign policy community needs to be in those rooms. Not as observers, but as participants.
I am convinced that Germany can remain a capable actor in European and global affairs. But that future is not a given. Projecting strength on the international stage requires strength at home: economic, fiscal, and democratic.
Wolfgang Schmidt served as head of the chancellery, minister for special affairs, and commissioner for the intelligence services from 2021 to 2025.
