By: Alessandro Pecorari, Policy & Public Affairs Manager
At a recent PwC breakfast briefing in Berlin on 25 March, discussions centred on Germany’s evolving role within NATO and the growing importance of infrastructure in enabling credible defence capability. The conversation highlighted a structural shift: modern conflict is no longer defined solely by military strength, but by the resilience and integration of physical, digital and cognitive systems.
The war in Ukraine has reinforced this reality. It demonstrates a combined systems approach, where military operations are inseparable from civilian infrastructure, digital networks and information domains. In this context, infrastructure is no longer a supporting function, but rather a core determinant of operational effectiveness and strategic resilience.
At the alliance level, a strong NATO remains essential, particularly for middle powers seeking to avoid strategic disadvantage. However, as geopolitical focus expands toward the Indo-Pacific and the Middle East and North Africa, maintaining alliance cohesion and operational readiness in Europe becomes more complex and more critical. Achieving decision dominance through faster and better informed political and military decision making is emerging as a key priority, alongside closer alignment between the EU and NATO.
From Funding Availability to Execution Capability
Germany’s commitment to increased defence spending reflects a growing recognition of the evolving threat environment. Discussions at the Berlin briefing pointed to ambitions of allocating up to 5 per cent of GDP toward NATO related capabilities, well above the alliance’s 2 per cent benchmark, signalling a material shift in political intent.
However, participants emphasised that the primary constraint is no longer financial capacity. Drawing on recent policy discussions, it was noted that approximately €500 billion of combined fiscal capacity exists across Europe and Canada to support defence and related infrastructure. The challenge is not capital formation, but mobilisation. This means translating available funding into executable programmes at pace.
This distinction is critical for investors. Capital availability without delivery capacity does not translate into investable opportunity.
Germany as the Alliance’s Main Artery
Within this context, Germany is increasingly positioned as NATO’s central logistical hub in Europe. Its role as the alliance’s main artery is underpinned not only by geography, but by a growing pipeline of defence related infrastructure and capacity expansion.
Planned developments include an increase in troop levels to 200,000 and wider personnel up to 260,000, alongside the construction of 29 new garrisons and the expansion of military housing stock. Training intensity is also expected to rise, with reserve forces undergoing cycles as frequently as every two years.
Taken together, these figures point to a substantial and sustained increase in demand for supporting infrastructure across accommodation, logistics, transport and training assets.
Germany also continues to serve as a key staging ground for United States forces, with extended deployments supporting deterrence and readiness across the alliance. The increasing need to house these over the coming years becomes a demand driver that investors should take note of.
Infrastructure as a Strategic Enabler
NATO readiness ultimately depends on the resilience, scalability and interoperability of infrastructure systems. Requirements span multiple asset classes, including transport, energy, logistics and digital networks.
Railways, roads and bridges must be capable of supporting heavy military equipment and rapid mobilsation. Ports and airports need to meet military specifications for deployment at speed. Energy systems, including fuel storage and pipeline networks, must be expanded and secured, particularly toward Eastern Europe and the Baltics. Hospitals and medical infrastructure must also be equipped to operate under crisis conditions.
Despite this momentum, significant infrastructure constraints remain. Ammunition storage capacity was highlighted as a critical bottleneck, with existing depot networks insufficient to meet the requirements of sustained operations. Warehousing and logistics infrastructure are also underdeveloped relative to NATO readiness needs.
These gaps are not marginal. They represent system level constraints that directly impact operational capability. For investors, they also signal areas where demand is both immediate and structurally supported.
The Role of Private Capital
Defence infrastructure is emerging as a viable and in some cases necessary area for private sector participation, particularly where public delivery capacity is constrained.
Opportunities span a broad range of asset types, including military accommodation, depots and logistics hubs, as well as transport infrastructure such as rail, rolling stock and port facilities. Air and sea logistics, alongside training infrastructure increasingly operated by private providers, also present scalable investment avenues.
From an investment perspective, availability-based models are gaining traction. These structures allow governments to guarantee demand, providing long term revenue certainty aligned with institutional investor requirements. Integrated contractor models, where a single provider is responsible for both construction and operation, offer additional advantages in terms of continuity, efficiency and lifecycle optimisation.
However, a consistent theme remains. Capital will only flow where credible pipelines exist. Without a clear and sustained pipeline of projects, supported by robust policy frameworks, private investment will remain constrained regardless of underlying demand.
Expanding the Definition of Defence Infrastructure
The scope of defence infrastructure is also broadening. Cyber and space capabilities are becoming central to national security yet remain highly concentrated. Only a limited number of countries possess independent space launch capabilities, underscoring the uneven distribution of advanced defence infrastructure.
Similarly, sovereign supply chains, particularly for rare earth materials, are increasingly critical. Ensuring resilience in these areas is essential to reducing dependency on external actors and maintaining operational autonomy.
This concentration of high-end capabilities further reinforces the importance of alliances such as NATO, where collective capacity compensates for national limitations.
Bridging the Execution Gap
The overarching challenge is one of execution. While funding is increasingly available and strategic intent is clear, delivery remains uneven. Infrastructure deficits persist across storage, transport and energy systems, while policy uncertainty continues to delay implementation in some markets.
In the United Kingdom, for example, ongoing processes such as the Strategic Defence Review now set for December 2026, highlight the difficulty of aligning long term strategy with funding commitments. At the same time, dual use requirements, where infrastructure must serve both civilian and military purposes, add further complexity to planning and delivery.
Looking ahead, the threat environment in Europe is expected to remain elevated beyond the war in Ukraine. Russia retains significant industrial and manpower capacity, suggesting that sustained investment and long-term planning across a ‘whole systems approach’ will be required to maintain credible deterrence.