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Germany's Coalition Reaches Agreement on Historic $500 Billion Debt-Financed Investment Plan

Union, SPD, and Greens finalize a deal to amend the constitution for defense, infrastructure, and climate funding, but hurdles remain in the Bundesrat.

  • The agreement includes a constitutional amendment to exempt defense spending over 1% of GDP and a $500 billion infrastructure fund from Germany's debt brake.
  • The infrastructure fund will allocate $100 billion specifically for climate initiatives, marking a key victory for the Greens in the negotiations.
  • The Greens secured a 'Zusätzlichkeit' clause ensuring that the fund will only finance new projects and not replace existing budgetary commitments.
  • The Bundesrat still needs to approve the plan with a two-thirds majority, but opposition from states with BSW and FDP participation could jeopardize the vote.
  • The deal represents a significant shift in Germany's fiscal policy, with critics warning of long-term debt implications and potential misuse of funds.
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