In the space of 30 minutes, Olaf Scholz overturned decades of German foreign and defense policy. Speaking to the Bundestag in a special session on Sunday, the chancellor announced a massive €100bn fund to modernize the military. He also vowed that Germany would finally meet its Nato commitment to spend 2 percent of gross domestic product yearly on defense — up from the 1.5 percent currently spent that has long frustrated allies.

The plans could mark a watershed moment for the way Europe’s largest economy engages with the world.

Coming into the office barely three months ago, Scholz’s cabinet had taken the reins from Angela Merkel with an ambitious plan of domestic modernization, and seemed reluctant to be sidetracked by a foreign entanglement or make any moves that could hit the economy.

“President Putin created a new reality with his invasion of Ukraine. This new reality requires a clear response,” Scholz said. “We have given it.”

His words left observers reeling. Ukraine’s ambassador to Germany, who earlier on Sunday criticised the government for doing too little for Ukraine, called the Bundestag session a “truly historic moment”.

Images of the destruction visited on Ukraine — and growing public outrage over German hesitancy to act — have pushed Scholz’s cabinet to outline a plan of action that critics and allies alike had unsuccessfully demanded for years.

The new plan upends many traditional German policy dogmas — from pointing to its second world war legacy to justify avoiding military expenditures, to its focus on trade and dialogue instead of tougher stances toward authoritarian states.

“There has been a lot of shocks, but also a sense of shame and guilt — that we underestimated what Putin would do, that we believed our weapons wouldn’t make a difference,” said Thorsten Benner, head of the Global Public Policy Institute in Berlin.

For weeks, the government stood by a longstanding German policy of not delivering weapons to active conflict zones. Foreign minister Annalena Baerbock said that sending weapons would only increase the likelihood of