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GERMANY AND UKRAINE

Germany to cut Ukraine military aid in 2025 budget

Germany, the second largest contributor of aid to war-torn Ukraine, plans to halve its bilateral military aid to Kyiv in 2025, a parliamentary source told AFP on Saturday.

Published: 17 August 2024 15:56 CEST
Germany to cut Ukraine military aid in 2025 budget
Ukrainian servicemen sit and stand on a German-made self-propelled anti-aircraft (SPAAG), better known as the Flakpanzer Gepard. Photo: Sergei SUPINSKY/AFP.

Instead the government of Chancellor Olaf Scholz will bank on money generated by frozen Russian assets to continue supporting Kyiv, and is not planning any “additional aid” to the €4billion ($4.4 billion) set aside in next year’s budget.

This year aid from Berlin amounted to €8 billion.

To compensate, Germany is counting on “the creation, within the framework of the G7 and the European Union, of a financial instrument using frozen Russian assets”, said a separate source from inside the finance ministry.

The sources were confirming separate press reports, with the newspaper Frankfurter Allgemeine Sonntagszeitung saying in its weekend edition that the move was part of an agreement between the chancellor, of the centre-left Social Democratic party, and the liberal Finance Minister Christian Lindner.

The 2025 budget has been the subject of fierce discussions between the government coalition of the liberal FDP party, the Greens and the Social Democrats.

The finance minister has asked his counterparts to make savings in order to respect a constitutional rule that aims to prevent the state from taking on too much debt.

However the budget is still subject to discussions before being adopted by the end of the year.

Ukraine’s allies have been working on a mechanism to allow part of the $300 billion of Russian assets frozen worldwide to be used to support Kyiv in its war with Moscow.

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GERMANY AND UKRAINE

EXPLAINED: Why German leaders are bashing planned Ukraine aid cuts

The German government's plan for significantly cutting down military aid to Ukraine, as laid out in the latest draft budget, is being met with severe criticism from both inside and outside the traffic light coalition.

Published: 19 August 2024 11:11 CEST
Updated: 19 August 2024 13:43 CEST
EXPLAINED: Why German leaders are bashing planned Ukraine aid cuts

As was announced Saturday, Germany’s proposed 2025 budget includes €4 billion in financial aid for Ukraine’s defence next year – about half of what was budgeted this year.

But the idea of cutting defence funding to Ukraine has brought backlash from both the conservative CDU party as well as leaders within the coalition.

Finance Minister Christian Lindner (FDP) has led the charge on ensuring Germany maintains a tight budget. The DPA reported that he wrote a letter to Defence Minister Boris Pistorius (SPD) and Foreign Minister Annalena Baerbock (Greens) that “new measures” should only be entered into if “financing is secured” in the budgets for the coming years. 

Budget cuts for Ukraine met with severe criticism

The finance ministry has suggested that any additional funding to Ukraine needs to be based on specifically reported and comprehensible needs. 

The finance ministry’s phrasing seems to have come as a shock to many given an onslaught of bleak reports from the front lines in Ukraine this year that highlighted the damage being done due to lack of key air defences and funding.

Members of the CDU denounced what they claim to be foul politics and irresponsible policy.

“No one knows when and how much money will be available…This is another chapter of political tricks and deception,” Thorsten Frei, parliamentary secretary of the CDU party, told Funke media.

CDU member Christoph Ploß told Der Spiegel, “If the federal government now acts hesitantly and opportunistically, not only we, but also our children and grandchildren will have to pay bitterly.”

But criticism for the draft budget, which is backed by Chancellor Olaf Scholz, isn’t only coming from opposition parties.

Chairman of the Bundestag Committee on Foreign Affairs, Michael Roth, from Scholz’s own Social Democrat Party, said on Monday that the budget “is a fatal signal for Ukraine”. He added, “We cannot make our security dependent on budgetary constraints”.

The Green party also penned an open letter to German government leadership calling for commitment to Ukraine. 

“The budget agreement gives the impression that the German debt brake is more important than the life and survival of an attacked European nation…” the Green party’s letter reads.

Aspects of Germany’s 2025 budget are still to be negotiated until it is officially adopted by the end of the year.

READ ALSO: Two years on – How many Ukrainians have come to (and stayed) in Germany?

Can German aid be offset with Russian assets?

The finance ministry suggests that billions in aid from Germany can be replaced by allowing Ukraine to collect interest from frozen Russian state assets.

G7 countries recently agreed to fund Ukraine with an additional €50 billion, using Russian central bank assets which were frozen in 2022 as collateral – a loan which is expected to sustain the Ukrainian army for roughly one year.

But critics warn that providing Ukraine with the resources it needs to defend itself will take further investments in the coming years, whereas Germany’s current plan is to cut down aid significantly through 2027.

In the current year, Germany is providing almost €7.5 billion for military support for Ukraine, amounting to about €34 billion in military, humanitarian and financial aid to Ukraine since the beginning of the Russian invasion. 

READ ALSO: What a Russian victory in Ukraine would mean for Germany

According to the draft budget, funding would be cut to €4 billion in 2025, and down to €500 million in 2027.

With reporting by DPA.

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