Germany’s budget cuts: What Ukraine has to do with it
Photo: German Chancellor Olaf Scholz (Getty Images)
The German publication Frankfurter Allgemeine Zeitung (FAZ) has learned about the alleged plans of the German government to cut budget expenditures. Specifically, Berlin is reportedly planning to stop allocating new funds for military aid to Ukraine.
RBC-Ukraine has investigated what is known about the potential reduction in German spending and whether it will affect aid to Ukraine.
According to FAZ, citing internal government documents and its sources, Finance Minister Christian Lindner informed Defense Minister Boris Pistorius at the beginning of August about the planned cut in aid to Ukraine.
The plan is for aid to Ukraine to be provided only from the funds already allocated in the German budget — 8 billion euros this year and 4 billion euros next year. FAZ reports that no additional requests from the German Ministry of Defense will be approved by the government.
Reason for the cut
Germany has a so-called "debt brake" — a formal limit on state debt that the German government cannot exceed. In recent years, Germany's state debt has been rising, reaching a record level of 1.69 trillion euros in 2023. On a per capita basis, this amounted to 20,078 euros per person. The debt continued to grow in the first quarter of 2024.
The increase in state debt, as noted by the Federal Statistical Office of Germany, is linked to rising costs for the Bundeswehr's special fund for modernizing the German army and financing measures to mitigate the energy crisis caused by Russia's war against Ukraine.
As a result, Berlin began discussing various options for reducing expenditures last year to meet the formal limit of 0.35% of Germany's GDP. For instance, the federal budget for 2024 has cut spending on social support for the unemployed.
Impact on aid to Ukraine
Currently, Germany is the leading EU country in terms of support for Ukraine. As mentioned, all German aid promised within the already allocated budget will be provided to Ukraine. Any restrictions, if they occur, will only affect additional expenses.
German Defense Ministry spokesman Major General Christian Freuding has stated that Germany will deliver several military aid packages to Ukraine by the end of 2024, including four Iris-T air defense systems, Leopard tanks, Gepard anti-aircraft guns, PzH 2000 and RCH 155 self-propelled howitzers, and various other weapons.
At the same time, FAZ reports that the German government is working with G7 partners to finance military support for Ukraine using frozen Russian assets.
This summer, the European Union transferred the first funds from frozen Russian assets to a special fund, which will be used for military support and reconstruction of Ukraine. However, at the June summit, the G7 countries agreed to allocate 50 billion dollars to Ukraine from frozen Russian assets, but the mechanism is still under discussion.
Sources: Frankfurter Allgemeine Zeitung, Deutsche Welle, and the Federal Statistical Office of Germany, as well as statements from German Major General Christian Freuding.
