Key Takeaways:
Germany and Japan are dismantling postwar defense restraints as doubts about US security commitments and rising threats from Russia and China drive the largest military expansions in either country since World War II.
Germany and Japan are moving away from military restraints maintained for more than eight decades as doubts about US security commitments and growing threats from Russia and China drive the largest defense expansions in either country since World War II, according to officials and policy documents from both nations.
"Countries that support the rules-based international order must move closer together and clearly demonstrate what we stand for," German Defense Minister Boris Pistorius said during a visit to a Japan Maritime Self-Defense Force base in March.
German Chancellor Friedrich Merz secured an easing of constitutional borrowing restrictions before taking office, laying the financial foundation for a major increase in military spending that could eventually exceed the combined defense budgets of Britain and France. Japan's defense budget this year totals about $58 billion under Prime Minister Sanae Takaichi, who campaigned on stronger national defense. Tokyo also signed a roughly $6.5 billion agreement to supply warships to Australia and is pursuing naval export deals with the Philippines and Indonesia.
The shift carries significant implications for global security architecture and defense supply chains. If Germany and Japan sustain current spending trajectories, the two economies could redirect hundreds of billions of dollars toward military procurement over the next decade, reshaping competition among defense contractors from Rheinmetall to Mitsubishi Heavy Industries.
Russia's Invasion and Trump's Ambiguity Accelerate the Shift
Russia's full-scale invasion of Ukraine in February 2022 served as the primary catalyst for Europe's defense rethink, while China's increasingly assertive military posture under President Xi Jinping drove Japan's recalibration. US President Donald Trump's threats to reconsider Washington's security commitments added urgency for both allies, according to officials familiar with the discussions.
Germany has worked closely with Ukraine on developing and deploying new weapons and has sought discussions with France about extending nuclear deterrence protections to European allies. About two-thirds of Germans support higher defense spending, according to a recent poll, though the country's armed forces have struggled to attract enough young volunteers in the absence of mandatory military service.
Japan has advanced plans to deploy long-range missiles in southern Japan and further loosen restrictions on arms exports imposed after World War II. Takaichi has rejected accusations from China and Russia that her government is reviving Japanese militarism. "No country can now protect its peace and security by itself," she said, adding that Japan's commitment to remaining a peaceful nation had not changed in more than eight decades.
Trump has welcomed increased military spending by US allies but offered a more ambiguous response to Japan's buildup. Referring to Gen. Douglas MacArthur, who oversaw the Allied occupation of Japan after World War II, Trump said he was unsure whether MacArthur would have approved of a rearmed Japan, according to the New York Times.
Domestic Friction and Economic Strain Follow the Boom
Both countries face domestic obstacles as they expand military capabilities. In Japan, tens of thousands of people demonstrated in Tokyo this spring against the government's expansion of arms exports and plans to establish a national intelligence agency. Many protesters said they feared the policies could undermine Article 9 of Japan's Constitution, under which the country renounces war and the use of force to settle international disputes.
The defense boom has also created economic strains in communities hosting military production. In Barrow-in-Furness, England, BAE Systems expanded its workforce to about 14,000 employees after receiving a $5.4 billion contract to build nuclear-powered attack submarines. The higher wages drew mechanics, driving instructors and nurses away from local employers, worsening labor shortages. Housing costs rose sharply as workers moved into the area.
In Bergerac, France, explosives manufacturer Eurenco invested about $231 million to expand its workforce from 200 to 600 people. Annual revenue more than tripled to approximately $670 million. But local benefits have been limited because many employees commute from outside the area and much of the assembly process is automated. Eight people were injured in an explosion at the plant in 2022, and unauthorized drones detected over the facility have caused some prospective residents to reconsider moving to the area.
Alexandra Sakaki, a Japan specialist at the German Institute for International and Security Affairs in Berlin, said both countries would have to prepare their citizens for a fundamentally different relationship with their armed forces. "If policies such as conscription are introduced, society as a whole will have to think about its relationship with the military in a completely different way," Sakaki said. "Japan and Germany must be prepared to persuade the public to support their military vision."
The G7 summit in Évian-les-Bains, France, this week is expected to make Germany-Japan defense cooperation more visible. The two countries are increasingly working with Britain, France, Canada and other former wartime adversaries to support what they describe as the rules-based international order — a partnership that does not represent a revival of the wartime Axis alliance but rather a pragmatic response to a deteriorating security environment.
This article is for informational purposes only and does not constitute investment advice.
