Why Germany might cut aid to Ukraine in its budget and how it plans to compensate it
Headlines like "Germany halts military aid to Ukraine," which are false and exaggerated, shocked many Ukrainians over the weekend.
Germany is not stopping its aid to Ukraine. However, there are reasons for concern as budget debates in Germany have raised doubts about the reliability of German aid.
Read more about the debates in Germany in the article by Khrystyna Bondarieva and Yurii Panchenko of European Pravda – Scholz saves the budget: Why Germany is discussing a review of military aid to Ukraine.
On Saturday, Frankfurter Allgemeine Sonntagszeitung reported on a letter from Finance Minister Christian Lindner to Defence Minister Boris Pistorius and Foreign Minister Annalena Baerbock. Lindner stated that Germany would not be able to finance additional military aid to Ukraine beyond what has already been planned.
€7.5 billion has been allocated for Ukraine's aid this year and about €4 billion is planned for the next one. It is expected that this aid will be transferred to Ukraine.
So what's the issue? The problem is that most of these funds have already been allocated and contracted, while the situation on the battlefield in Ukraine is unpredictable, leading Kyiv to require urgent, additional assistance. Defence Minister Boris Pistorius understands this well and advocates for meeting Ukraine's immediate needs.
An even bigger issue is planning aid for Ukraine in the coming years. The allocated amount decreases visibly each year. Specifically, €4 billion is planned for 2025, €3 billion for 2026 and only €0.5 billion for both 2027 and 2028.
What has caused this reduction?
Firstly, expectations of a gradual decrease in the intensity of the war. Secondly, the governing coalition's desire to increase social spending ahead of the 2025 parliamentary elections, a common practice in many countries. As a result, German politicians face the need to cut spending, and for the first time since the full-scale war began, the debate has touched on aid to Ukraine.
However, Berlin reassures that from next year onwards, Kyiv will have access to a €50 billion loan, financed by frozen assets of the Russian central bank.
The problem is that the mechanism for using the frozen assets of the Russian Central Bank has not yet been implemented. So it's far from certain that it will be operational by the beginning of 2025.
Therefore, Germany's assistance to Kyiv may be limited for some time. This has affected the stock market, with shares of defence companies starting to fall.
Ukraine met the news about potential limitations on support with restraint. However, the reaction in Germany was much more intense. Both the opposition and the ruling coalition warned against the potential reduction of military support for Kyiv.
Sara Nanni, responsible for defence issues in the coalition's Green Party, noted that Germany's security depends on developments in Ukraine. Some voices linked Scholz's potential intentions regarding aid to Ukraine with the upcoming elections in three eastern German states, suggesting that the chancellor might be trying to win over voters who oppose military aid to Kyiv.
There is hope that the German government, aware of all the risks, will not allow disruptions in arms supplies to Ukraine. Given the significant share of German aid, such disruptions would undoubtedly impact the front line.