Published in Newsroom.co.nz (Wellington), 30 June 2026
We have a new colleague at The New Zealand Initiative. Our latest senior fellow is Major General John Howard, retired. He built this country’s defence intelligence and is the only New Zealander given an executive role inside the United States’ Defense Intelligence Agency.
John is finalising a paper on New Zealand’s frigate replacement. I was reading a draft last week when I heard news from Berlin.
Germany has just cancelled its largest warship programme since 1945. I walked over to John in the office next door to discuss it straight away. We both saw the parallels immediately and decided that it would warrant a paragraph or two in his paper.
Germany’s latest procurement disaster follows an old pattern. Give a state more money than it knows what to do with, and it will show you, over time, exactly what it is worst at.
Germany is halfway through that demonstration. For two decades its military was a running joke in Europe, able to field just nine working tanks against a Nato requirement of 44. At the end of one recent year, not one of its six submarines was fit to leave port.
Then Russia made its full-scale invasion of Ukraine, and Chancellor Olaf Scholz proclaimed a Zeitenwende, a turning of the times, backed by a special rearmament fund of €100 billion. But that money went to programmes conceived years earlier, in a calmer world. What followed was one embarrassment after another.
The 166 metre F126 frigate, built to hunt submarines across the North Atlantic, cost €2.3b. It never got wet. The ship had been commissioned in gentler times, when the navy still expected a decade of chasing pirates and maybe the occasional peace mission. So, it was asked to do almost everything.
The German language even has a word for such things, an eierlegende Wollmilchsau, a beast that lays eggs, gives milk, grows wool and provides meat all at once. The F126 was the seagoing version. It proved about as realistic as the animal.
The F126 was a first-of-its-kind design, loaded with thousands of bespoke requirements. As the demands multiplied, the budget for six hulls climbed from €10b towards €18b, and first delivery slipped from 2028 towards 2032.
It gets worse. A Dutch firm designed the ship, but German yards built it. A procurement agency demanded its paperwork on actual paper and in German, so the design data did not reliably pass from drawing office to slipway. That the contractor was on trial at home for bribery and for shipping hulls to Russia in defiance of sanctions did not help either.
Boris Pistorius, the German defence minister who cancelled the F126, is somewhat surprisingly the most popular politician in his country, despite having no defence achievement to his name. But he looks the part, gives good speeches – and perhaps his name has a certain martial ring to it.
Pistorius inherited the programme when he became defence minister in 2023. He ordered two more of its six ships himself in the Zeitenwende rush.
Walking away from those sunk costs was therefore braver than it looks. It is quite a confession of failure.
Usually, governments remain stuck in their sunk-cost fallacies, forever defending doomed ventures precisely because they are doomed and expensive. The ability to stop such projects is a much rarer skill. So Pistorius did do the right thing – eventually.
Still, knowing when to quit is no substitute for knowing what to buy. And that does not only apply to ships.
Earlier this month, Germany also walked away from FCAS, the Franco-German fighter jet programme French President Macron and Chancellor Merkel launched in 2017. Nine years and €4b later, it had not produced a single prototype.
The problem was that France wanted an aircraft that could fly from its carriers and deliver its nuclear bombs. Germany, meanwhile, wanted neither and certainly did not wish to pay for both. Beneath that sat the usual industrial policy quarrels over which companies from which countries would build the bulk of it.
And so, two flagship defence programmes, the future of the fleet and the future of the air force, were buried inside a single month.
Our new colleague John has a phrase he reaches for often: that capability must arrive “at the speed of relevance”. It means a funded programme is worth nothing if the ship or the jet come too late. Or never.
In the case of the frigates, Germany understood that speed mattered. Chancellor Merz has promised Nato the extra capacity on time, and even changed the constitution to pay for it, under pressure from US President Donald Trump.
But modern warships and fighter jets are among the hardest things for a state to commission, and the urgency degenerated into a very expensive rush. Germany could not win a future war this way, John observed to me. As a German, I could only add that, fortunately, my country has not won one since 1871.
You might think Germany’s procurement disasters have little to teach us. And in a sense that is true, as New Zealand could never embark on programmes as large or as bespoke as the ones Germany attempted.
For a sense of proportion, between the cancelled frigate and the abandoned fighter, Germany has just wasted more than New Zealand spends on its entire defence force in a year.
Being unable to fail on Germany’s scale is, in its way, a mercy. Our instinct, sensibly, is to buy what others have already proven, as we did with the Anzac frigates alongside Australia. The ageing Te Kaha and Te Mana are therefore to give way to either Japan’s Mogami or Britain’s Type 31, both proven in bigger navies. A recommendation is due to Cabinet by the end of next year.
But are we any better placed to spend the money well? Because that would require another kind of discipline, namely to procure a type of ship and modify almost nothing. As soon as you start thinking about adding ‘improvements’, you turn a proven ship into a prototype again.
We now mean to rebuild almost everything that floats or flies, lifting spending towards two percent of GDP after two decades on barely one. Yet the whole effort rests on a defence ministry of a few hundred officials.
John’s paper, which we will release in July, argues that spending money is the easy part. Spending it well is much harder.
Germany is large enough to write off a warship programme in an afternoon and start again. New Zealand must get it right the first time.
