In May 2016 Germany announced that 25 years of budget and personnel reductions in the military had ended. The current force will be increased 7.5 percent to 199,000. Civilian workers will increase 7.7 percent to 60,000. This is all about the growing threat of Islamic terrorism and the return of Russian aggression. All that was old is new again.
During the Cold War, the West German army was 400,000 strong, well equipped and trained to fight. There were another 250,000 troops in the communist East German armed forces. Then the Cold War ended in 1991, the two Germanys united and East German forces were disbanded with the West German military absorbing some of the East German troops and weapons. Then the united German forces began to shrink. With the Soviet Union gone, and the former Soviet allies in East Europe clamoring to join NATO, Germany no longer had any threatening neighbors. The Cold War German army of Panzertruppen (mechanized troops) had lost its mission. Thus in 25 years German armed forces were reduced over 70 percent from their combined 1991 strength of 650,000 to 185,000. Earlier in 2016 Germany announced it was increasing its defense budget to $41 billion, which is what it was in 2011.
All this comes after 2011 when major changes were implemented for the armed forces. The main change was that the armed forces were going all- volunteer with the end of conscription. That caused the armed forces to shrink from 220,000 to 185,000 troops. In 2011 about 22 percent of the troops are conscripts, in service for only six months (although many could, and did, volunteer to stay in for up to 23 months.) The number of civilians working for the armed forces also shrank from 75,000 to 56,000. The number of staff at the Defense ministry shrank from 3,500 to 2,000. This was a big change from what had been going on for half a century. With the end of conscription Germany managed to find enough effective troops for peacekeeping, and special operations. Just not many of them. The generals had long asked for an all-volunteer force but for a long time the politicians, and public opinion, were opposed to this.
The reality was not what everyone expected. The all-volunteer force had no shortage of volunteers for peacekeeping duty, even in dangerous areas. But it was soon discovered that with a volunteer force it was very difficult to all the troops needed for tech jobs. This is mainly because there is high demand for these people outside the military where the money is better and the working environment safer.
There have been other changes recently. In 2002 German troops saw combat again in Afghanistan, for the first time in nearly 60 years. German troops have been in Afghanistan since 2002. Over 5,000 have served there, mainly as peacekeepers. But one percent of the German troops serving in Afghanistan were killed there. Some remain, mainly as trainers and for commando type work (counter-terrorism).
The 2011 plan was to create an army of peacekeepers. Well, only 5-10,000 of them are involved in peacekeeping at any one time. Not only is the army smaller, but it has older equipment, and less of it. Not much purchasing of new stuff after 1991 and much of what was bought was to support peacekeeping missions. The peacekeepers, particularly in Afghanistan, got more modern gear and the expense of this was another reason for shrinking the size of armed forces. The reduced budget meant there was not enough to keep equipment and weapons in good shape or updates as needed. So the defense budget will go up a lot in the next few years to deal with all the overdue maintenance and updates. The post-Cold War peace dividend has expired and it is now back to more traditional defense conditions.