Russia’s invasion of Ukraine marked a permanent departure from one of the key assumptions underlying Europe’s post-war security architecture. For the first time in seven decades, high-intensity inter-state conflict returned to Europe, a possibility most policymakers had mentally relegated to the continent’s troubled past. In Berlin, the psychological shock was immediate. In a speech to the Bundestag, then-Chancellor Olaf Scholz characterized the moment as a Zeitenwende—a turning point—that would necessitate a strategic realignment of German foreign policy [1]. However, until events across the Atlantic forced a conclusion, the German domestic reaction remained merely symbolic. Scholz’s promise to bolster security investment materialized in the form of a modest €100 billion emergency fund, an insufficient sum to offset decades of defense underinvestment [2]. In practice, Russian escalation created a shift in German strategic thinking, not a fundamental reassessment. Rather than charting its own course, Berlin remained dependent, if not more entrenched, in the U.S. security umbrella as Washington ramped up its support for Kyiv following Moscow’s opening blunders. 

A real Zeitenwende required an additional systemic shock, delivered by the Trump administration’s overhaul of decades-old U.S. trade policy and security realignment towards Europe. The effects of the turning point were substantiated shortly after President Donald Trump’s “Liberation Day” sent shockwaves through global financial markets, with the Bundestag passing an unprecedented spending package, unlocking €1 trillion for investments in defense and infrastructure [3]. Notably, the Bundestag exempted military spending from the constitutionally-enshrined mandate that restricted deficit spending to 0.35% of GDP, solidifying Germany's departure from its restrained postwar role in European security affairs and signifying a structural transformation beyond the modest funding increases of the Scholz government [4]. As Europe’s largest economy and home to deep capital markets and advanced manufacturing, Germany is well-positioned to emerge as the leader of a newly independent Europe. Nonetheless, to fully implement this turning point, Berlin must effectively manage domestic dissatisfaction while assuaging inevitable fears from neighboring states concerning the long-term shift in the European balance of power. 

Germany’s landmark fiscal package materialized in the midst of a seismic shift in U.S. foreign and trade policy. At a NATO security meeting in February, the U.S.'s newly confirmed Defense Secretary Pete Hegseth unilaterally ruled out NATO membership for Ukraine and called a return to pre-2014 borders “unrealistic” [5]. The abrupt announcement, though arguably grounded in the current reality of the war, understandably angered European allies. NATO partners were neither consulted prior to the meeting nor included in subsequent talks between Washington and Moscow. Furthermore, the lack of clarity on the U.S.’s long-term commitment to the continent, at least in its current form, creates further pressure to develop an alternative security guarantee. Recently-elected Chancellor Friedrich Merz, whose coalition secured power in the February German elections, called for “independence from the U.S.A.” and stated that the new administration’s actions demonstrated that it “does not care [about] the fate of Europe” [6]. Combined with the announced—though subsequently postponed—universal and reciprocal tariffs unveiled in early April, German rearmament appears not just plausible, but an increasingly inevitable reality in response to an unpredictable international situation.

However, despite committing to a significant expansion of their defense footprint, Germany must resolve—or at the very least, effectively manage—rising domestic discontent and pessimism. According to polls taken shortly before the election, over 80% of Germans perceive the current situation as a “cause for concern” [7]. The new coalition government under center-right CDU leader Mr. Merz has not alleviated the dissatisfaction: the CDU’s polling continues to decline post-election and is now roughly equal to the Alternative for Deutschland (AfD), mere months after the German far-right party’s second-place showing in the elections [8]. Significantly, Mr. Merz failed to obtain the majority of votes necessary to secure his chancellorship in the first parliamentary vote, an unprecedented event in postwar German politics. Though the CDU leader managed to secure the chancellorship in a subsequent ballot hours later, the unexpected setback revealed deep fractures within the core governing coalition [9]. Facing internal and external pressures, the incoming coalition holds a razor-thin 52% majority. Similar to other deadlocked governments in neighboring France and Spain, the new coalition must manage a restricted mandate unconducive to decisive policymaking. To regain legitimacy, Merz’s government will need to provide credible answers for Germany’s chief domestic and foreign challenges. 

The newly minted €500 billion infrastructure fund is a good starting point to addressing the nation’s declining transportation and road systems. German dissatisfaction has risen alongside underinvestment in basic services over the past decade following constitutionally enforced austerity measures: WEF data tracking air, rail, port, and road transport infrastructure quality registered near-continuous declines since the Great Recession in excess of 10% for all categories [10]. Reduced public works translate into minor but visible diminishments in quality of life metrics such as commute times and train punctuality [11]. Over time, even marginal infrastructure reductions can accumulate and worsen social discontent. Beyond addressing domestic concerns and boosting economic growth, infrastructure modernization is inextricably linked to national security priorities. Germany’s energy costs remain well above pre-2022 levels, making new investments in LNG terminals, battery storage, and renewable energy vital to securing energy independence and enabling rearmament [12]. Moreover, the 21st-century digital transformation of warfare necessitates a commensurate transformation of digital infrastructure. Modern militaries are increasingly dependent on real-time data sharing, secure communications, and supply chain optimization, necessitating a vast array of data centers, communication networks, and encryption systems. 

Next, Merz’s coalition will inevitably have to confront immigration. In the past decade, migration has become the most salient issue for the German public, amplifying support for the far-right AfD, which doubled its vote share in the recent elections [13]. Ten years after Chancellor Angela Merkel’s Open-Door policy, public support has shifted away from refugee acceptance [14]. AfD platform policies such as permanent border controls have also gained mainstream acceptance, as evidenced by Merz’s abortive attempt to pass legislation mirroring AfD proposals prior to his chancellorship [15]. If the coalition hopes to sustain its parliamentary firewall against a rising AfD, it may be forced to take more substantive and visible measures. Already, CDU and SPD coalition leaders are indicating a much tougher stance on border security, including new measures on deportation and a temporary suspension of family reunification [16]. While the latest shift indicates coalition leaders are trying to reclaim ground on the polarizing issue, there are no guarantees a more restrictive approach will temper the AfD’s rise. 

Furthermore, Germany will need to critically assess and readjust its current Ukraine policy. With the United States seemingly committed to ending the conflict and willing to offer concessions to Moscow, Berlin is left with little room to maneuver [17]. Currently, neither Germany nor any other European countries are capable of supplementing American military support. While the Bundestag has unlocked dormant fiscal capacity in its latest legislation, the transformation of capital into hard military power through new manufacturing facilities, supply chains, and recruitment is measured in years, if not decades. One trillion euros will alter the military balance of power in the long term. However, there is little Berlin can do to immediately ramp up production and procurement. The recent summits hosted by French President Emmanuel Macron and U.K. Prime Minister Sir Keir Starmer in support of Ukraine produced little more than moral affirmation, an unsurprising result given material constraints [18]. In the short term, Europe may be able to supplement American aid by purchasing and transferring U.S. weapons directly to Kyiv. There is also no guarantee that President Trump will stick with his current course, especially in the face of prolonged Russian evasiveness. Nonetheless, President Trump has repeatedly stated he believes the Ukraine war to be an exclusively European issue. Absent any shift from Washington, German policymakers may have to come to terms with an imperfect peace to preserve Ukrainian sovereignty amid a constrained post-war settlement. By preparing for all possibilities, Berlin can better position itself to influence the post-war architecture through reasserting normative authority and serving as an institutional anchor for post-war Ukraine’s integration into non-NATO European organizations.  

Postwar planning is not only important for rebuilding European security, but also forces Germany to clarify its role in a shifting European order. At the February NATO summit, the U.S. Secretary of Defense warned Europe that from the Trump Administration’s perspective, “stark strategic realities prevent the United States of America from being primarily focused on the security of Europe” [19]. Mr. Hegseth stated that the U.S. is “prioritizing deterring war with China in the Pacific” and will therefore need to make tradeoffs in other theaters, including Europe [20]. Regardless of the underlying intent for the U.S. Indo-Pacific pivot, Merz’s statements on American indifference indicate that Berlin views Washington’s deprioritization of Europe as credible. In a postwar Europe with a reduced U.S. military presence, Berlin is geographically and economically positioned to anchor any future security architecture. Its relatively low debt levels, favorable interest rates, and large tax base enable Berlin to spend more than its European partners without prompting backlash in the bond markets. Germany’s low-growth economy will also receive a welcome boost from the infrastructure and military spending package, estimated to be a greater share of GDP than the Marshall Plan [21]. Additionally, the nation’s capital markets are well-positioned to benefit from capital reallocations from U.S. markets in the wake of unpredictable trade policy. While U.S. equities have partially reversed their dramatic April outflows, German markets have delivered much higher returns than both European and American peers, year-to-date. German fiscal stimulus combined with American policy variability might finally temper the American financial exceptionalism that has been the norm for the past two decades, resulting in U.S. markets outperforming Europe since 1999 by around 150% [22].

With the eventual end of the Russia-Ukraine War and an American pullback from Europe in sight, Germany will also need to reassure allies as old fears potentially return. Warsaw, Paris, and Berlin remain in alignment with German defense modernization plans out of shared opposition to Moscow. The conclusion of the war will necessitate a redrawing of European security arrangements with potential points of friction. In response to a reduced American presence, European allies will likely seek to create an independent nuclear umbrella, an idea proposed by leaders including the French president [23]. While Paris has been floated as the anchor for deterrence due to the nation’s independent nuclear triad, it is unclear whether such an arrangement will be credible in the eyes of other European powers. Macron is understandably against conceding the “power to decide when France’s vital interests are at risk” and thus the power to determine nuclear policy [24]. South Korea, another U.S. ally concerned about the stability of its long-term security arrangement, has expressed openness to acquiring a domestic deterrent in recent years [25]. While there are clear strategic pressures for developing sovereign nuclear capabilities, any action in this direction risks provoking fear from Warsaw and Paris, given their historic trauma. The massive defense investments alone could displace France’s unique military primacy in the EU, owing to its long-standing independent foreign policy. To avoid threatening Paris and other European partners, German rearmament must be presented through a multilateral framework. Berlin’s strategic pivot, rather than threatening its neighbors, enables Europe to remain relevant and secure in the face of seismic changes to the global order and American retrenchment. If Germany can tame its domestic storms and efficiently leverage dormant industrial and fiscal capacity, it will be able to provide much-needed leadership and clarity to a continent increasingly untethered to Washington.