BERLIN : Germany has initiated a broad review of its defense industrial base as part of its ongoing military modernization under the “Zeitenwende” policy shift announced after Russia’s invasion of Ukraine. The effort focuses on identifying and reducing supply chain dependencies on China for raw materials and on the United States for certain high-technology platforms and maintenance systems, according to government and industry assessments.
The review comes as Berlin increases defense spending and works to replenish stockpiles while supporting Ukraine. Officials are examining deep-tier supply chains to assess whether critical inputs for ammunition, electronics and advanced weapons systems could be disrupted during a geopolitical crisis.
Critical Raw Materials: Cotton Linters and Rare Earth Elements
A key concern identified by defense planners is Germany’s dependence on China for cotton linters, a byproduct of cotton processing used to manufacture nitrocellulose. Nitrocellulose is an essential component in gunpowder and artillery propellants, including NATO-standard 155mm artillery shells.
Industry data indicate that more than 70% of cotton linters used by German and broader European ammunition manufacturers are sourced from China. Without these imports, the production of artillery ammunition used for domestic stockpiling and deliveries to Ukraine would face significant disruption.
Rare earth elements represent another major vulnerability. Internal assessments show that approximately 95% of German firms source rare earth materials from China. These elements are essential for multiple defense applications:
-
Neodymium and dysprosium are used in high-strength permanent magnets for missile guidance systems and electric motors in military vehicles.
-
Lanthanum is required for optical equipment, including night-vision devices and sensor lenses.
Recent Chinese export restrictions on gallium and germanium—materials used in radar systems and semiconductor manufacturing—have reinforced concerns within the German government about concentration risks in high-technology supply chains.
Reassessment of Dependence on U.S. Platforms
In parallel with efforts to diversify away from Chinese inputs, German officials are evaluating reliance on U.S.-origin defense systems. Germany has committed to acquiring the F-35 Lightning II to replace its aging Panavia Tornado fleet.
While the F-35 purchase remains central to Germany’s air force modernization, policymakers are reviewing issues related to software access, logistical support and long-term maintenance. Concerns focus on ensuring operational continuity if political or policy shifts in Washington were to affect export controls, technical updates or spare parts supply.
Officials are therefore studying options to expand domestic or European-based maintenance capabilities for U.S.-made equipment and to secure greater software and systems sovereignty where feasible. The objective is not to replace transatlantic defense cooperation but to reduce the risk of operational dependency.
Policy Measures Under Consideration
To address identified vulnerabilities, Berlin is examining a combination of legislative, financial and industrial measures.
One proposal involves establishing state-funded strategic reserves of critical raw materials, including rare earth elements and chemical precursors used in ammunition production. The goal is to maintain sufficient stockpiles to sustain defense manufacturing for extended periods in the event of supply interruptions.
Policymakers are also debating potential adjustments to Germany’s constitutionally mandated debt brake (Schuldenbremse). Some officials argue that investments in defense infrastructure and industrial resilience should qualify for exemptions from strict borrowing limits, given their relevance to national security.
The Ministry for Economic Affairs is exploring tax incentives for companies that diversify supply chains away from single-source, high-risk countries. These incentives would encourage alternative sourcing within Europe or from other trusted partners.
At the corporate level, German defense manufacturer Rheinmetall has taken steps to strengthen domestic production capacity. The company recently acquired a majority stake in a German nitrocellulose producer, reducing reliance on imported cotton linters from China.
Integration with NATO and European Defense Goals
Germany has positioned itself as a logistical and industrial hub for European NATO defense. Increased production of artillery ammunition, armored vehicles and air defense systems forms part of this broader strategy.
The current supply chain review is intended to align Germany’s industrial expansion with long-term resilience requirements. Officials have emphasized that modern defense planning must account for raw material security, software sovereignty and diversified sourcing, in addition to conventional procurement.
The government has not announced a formal timeline for implementing all proposed measures. However, the review is being conducted alongside ongoing increases in defense spending and procurement commitments.
Germany’s approach reflects a shift from globalization-focused policies toward a framework that prioritizes supply security in strategic sectors as the country continues its military buildup under the Zeitenwende framework.
——— End of Article ———
