When was this law enacted?
> The public and other government institutions would much prefer to hear that there is no threat from Russia, and that we do not need to pull productive members of society away from their work and studies to serve as conscripts.
Sadly this is not how politics works. If the human race was a giant insectoid hive mind, we would have way better use of resources than we have now. There is a great essay called Meditations on Moloch [1], that explains what youre describing, especially about war. The military industrial complex is its own self propelling feedback loop industry. If no country had a ministry of defense, we would all be better off, but if one country does it, then every country has to have it, so all of this percentages of GDP are sunk into it, instead of going into healthcare or education.
Since WW2, or even before maybe WW1, the rules of war and occupation have changed. Its not possible anymore for one country to just occupy another, mainly because more territory doesnt mean more economic growth or gain, and mainly because its impossible to rule over another peoples in the modern age, as opposed to in the past. The modern occupation consists of the occupying country having some kind of same-ethnicity but minority faction inside the occupied country, and trying to use that situation to create a breakaway state (which the occupied country wouldnt want of course) so it would create a pretense for war, or use that faction to influence politics for the whole country. The other modern occupation method is to influence the politics of the country by either heavily financially supporting a given faction, or heavily arming that faction (in a paramilitary way). Both of these methods provide political backsupport for the occupying country, in order for better economic deals and geopolitical positioning. But the main goal for the game of modern occupation and warfare is better economic deals.
What politicians and governments state in public is quite different than what actions they enact. Russia's politicians have to look strong. By stating those things about Finland, they hope to say "we hold Finland by the balls" because there is a Russian minority there, and because sometime ago parts of Finland was Russian territory, so they can sell those arguments to the public for a necessary invasion if needed. So they want to tell Finland to not escalate this further by putting nukes on the border, since that would result in war, and to keep being a buffer zone. But in all reality there's 0% chance of Russia invading Finland unprovoked, mainly because we western europeans consider Finland to be part of us, part of the EU, unlike Ukraine which we consider to be a part of the Russian sphere of influence. In all reality, if Russia invades Finland, that would be the biggest blunder for Russian politics because in a matter of seconds NATO would occupy Moscow.
> the entire German fleet consisted of only ~200 operational tanks
Germany was demilitarized until a few years ago, as part of post WW2 rules. They're not the example you're thinking of. In addition, tanks are not important for european warfare anymore, because most of the warfare NATO was waging was overseas. Most of the combat strategy has changed to involve combat aircraft and rockets, which NATO excels at.
[1]https://www.slatestarcodexabridged.com/Meditations-On-Moloch