The future Chancellor of Germany is changing the Constitution to invest hundreds of billions in the defense industry. “Rheinmetall” is preparing to absorb them — and is building factories in Ukraine

The future Chancellor of Germany Friedrich Merz plans to invest huge sums of money in the defense industry — and to do this, he is already changing the countryʼs Constitution. This is a pan-European trend: almost all countries are developing plans to develop their defense-industrial complexes, and the European Union is loosening regulations for them and preparing targeted credit programs. One of the main beneficiaries of this process is likely to be the German concern “Rheinmetall”. Its shares and revenues are growing, and it offers potential customers any weapons and ammunition. Babel tells what “Rheinmetall” is and how it is preparing to capture the arms market of Ukraine and Europe.

Friedrich Merz has not yet become chancellor, but he has already almost pushed through parliament a historic project for Germany.

He plans to spend €500 billion on infrastructure projects: €100 billion will go to a climate and economic transformation fund, another €100 billion will go to investments by federal state governments, and €300 billion will go directly to the German government. Most of this money will go to defense.

To this end, the coalition in the Bundestag, which Merz assembled, yesterday approved amendments to the German Constitution. The point is that in 2009, a so-called debt brake was introduced there: the German budget deficit cannot exceed 0.35% of GDP. Now an exception will be made for defense spending. To get the necessary number of votes, Merz cooperated with the Social Democrats and the Greens. He deliberately did this right now: in the next convocation of the Bundestag, which will meet on March 25, the far-right and left-wing parties will have enough votes to block the changes to the Constitution. Merzʼs plans were supported by 513 deputies in the vote. The document still needs to be approved by the upper house of parliament, the Bundesrat.

“Germany is back,” Merz says. Defense spending exceeding 1% of GDP will be exempt from all fiscal restrictions. This applies to combating cyberattacks, strengthening intelligence, investing in the defense industry, and “aiding countries that have been attacked”.

Of course, he means primarily Ukraine.

The obvious and main beneficiary of German and European rearmament is the “Rheinmetall” concern.

It is one of the largest manufacturers of weapons and ammunition in Europe. The concernʼs CEO Armin Papperger believes that European NATO member states could increase their defense spending to almost a trillion euros. Rheinmetall claims about a quarter of this money.

Since the beginning of the Great War, the concern has been growing at a record pace. “Rheinmetall” is building new facilities in a matter of months and creating thousands of jobs. Its shares have risen by 1 000% in the past few years. Its revenues increased by a third last year, and this year they are expected to grow by another 40%.

The concern is expanding production in Germany. In the city of Unterlüss, “Rheinmetall” built an arms factory in just 13 months — a record for it. It is building its factories in Lithuania, Romania, and Hungary to meet the demands of these countries for equipment and ammunition. According to Papperger, the concern currently produces 750 000 155 mm artillery shells per year and is preparing to reach 1.1 million shells. It is clear that it is one of the key suppliers of weapons to Ukraine.

Ukraine is one of the most promising markets for “Rheinmetall”.

“Rheinmetall” developments such as the Leopard 1 tank, the “Marder” infantry fighting vehicle (IFV), the latest “Skynex” air defense systems, etc. which are at war in Ukraine now. The concern produces machine guns, ammunition, armored vehicles, trucks, tanks, and even air defense systems.

“Rheinmetall” has been cooperating with the Ukrainian defense industry since 2023. In October of the same year, “Rheinmetall” and “Ukroboronprom” created a joint venture that will build factories and repair shops in Ukraine. A year later, Papperger said that the first factory was already operating and the second was being completed. He does not say where they are located, only the region is known — the concernʼs website indicates that the factories operate in western Ukraine.

Initially, “Rheinmetall” will focus on ammunition production and repair of German equipment in Ukraine. But this is just the beginning, as it also plans to produce “Panther” KF51 tanks, Fuchs armored personnel carriers, and “Lynx” infantry fighting vehicles. The concern also promises to build an ammunition production plant in 2026.

Russia also sees opportunities in “Rheinmetall”. That is why the CEO of the concern Armin Papperger is being protected like the German Chancellor.

In the summer of 2024, American media wrote that the US and Germany had foiled Russian plans to kill Papperger. According to their sources, the Russians planned to kill defense industry leaders who supported Ukraine throughout Europe. The most prepared plan was to kill Papperger. Only six months later, this information was officially confirmed by NATO.