German government halves its aid to Ukraine amid budget crisis

Why is Germany slashing aid to Ukraine? As Berlin tightens its budget, it's betting big on seized Russian assets to fill the gap—a bold move that's raising eyebrows and sparking fierce debate about Germany's commitment to Ukraine's fight.

The German government has finalized its 2025 budget proposal, reducing aid to Ukraine from $8.3 billion to just $4.5 billion—a substantial cut that has sparked controversy both at home and abroad. This decision follows intense negotiations within the coalition government, which has been grappling with the challenge of balancing national financial obligations while continuing to support Ukraine amidst its ongoing conflict with Russia.

The budget, finalized last Friday, reflects broader efforts by the government to curb its projected deficit. Initially, the Finance Ministry aimed to reduce the 2025 deficit target from $18.9 billion to $10 billion. However, the final compromise settled on a reduction to $13.3 billion, highlighting the government's struggle to manage rising expenditures within tight revenue constraints.

Germany's decision to halve its military aid to Ukraine is particularly contentious given its role as one of Ukraine's most significant supporters. Since January 2022, Germany has provided $11.4 billion in military aid, making it the second-largest donor after the United States. This substantial contribution underscores the controversy surrounding the recent cuts, as Ukraine continues to rely heavily on Germany's support.

A key factor in these financial decisions is Germany's "Schuldbremse" or "debt brake" requirement. Enshrined in the constitution in 2009, this rule limits the federal government from taking on new debt exceeding 0.35 percent of GDP in normal economic conditions. While the Schuldbremse ensures long-term financial stability, it also restricts the government's flexibility in times of crisis, such as the current situation with Ukraine.

Despite the budget cuts, the German government insists that it remains committed to supporting Ukraine. Finance Minister Christian Lindner emphasized that the reduction in direct aid does not indicate a retreat from this commitment. Instead, Germany is placing its hopes on a new financing mechanism agreed upon by the G7 nations, involving a $50 billion loan to Ukraine funded by proceeds from frozen Russian assets. However, this G7 fund has yet to be fully operationalized, raising concerns about potential delays in disbursement. Critics argue that relying on an unconfirmed financing plan could jeopardize Germany's position as a leading supporter of Ukraine.

The government's decision has drawn sharp criticism from the parliamentary opposition, with CDU defense expert Roderich Kiesewetter accusing Chancellor Olaf Scholz of prioritizing electoral gains over international responsibilities. This accusation is tied to the upcoming state elections in Saxony and Thuringia on September 1st. In these eastern states, 45 percent of voters oppose arms deliveries to Ukraine, compared to just 28 percent nationwide, fueling concerns that Scholz is catering to Eastern voters at the expense of Germany's commitments to Ukraine.

Despite these criticisms, the German government has reiterated its commitment to Ukraine. Economic Minister Robert Habeck stated that support for Ukraine remains "unconditional." He assured that if the G7 fund does not materialize, alternative methods of support will be explored. However, Habeck declined to speculate on whether Germany might declare a budgetary emergency to increase debt for Ukraine's aid, highlighting the complexity and uncertainty surrounding the situation.

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