German lawmakers have reached an agreement to exempt some defense spending from the nation’s tight rules on running up debt.

The agreement between centrist parties, led by the likely next chancellor, Friedrich Merz, was billed as a response to America’s shrinking security guarantees.

Germany’s Green party rejected a debt-financed package that would unleash hundreds billions of euros in defense and infrastructure spending, potentially imperiling the flagship policy of chancellor-in-waiting Friedrich Merz.