Germany slashes Ukraine funding in savings push

BERLIN — Germany, which overcame its initial reluctance to support Ukraine to become the country’s biggest European supplier of military aid, looks poised to change course as the finance minister said the government would slash future assistance by half in order to fulfill other spending priorities. 

That appeared to be Berlin’s unequivocal message to Ukraine on Wednesday as the government detailed its preliminary 2025 budget, in which military aid to Ukraine is slated to be cut by half to just €4 billion, according to a draft seen by POLITICO.

Speaking after the cabinet approved the draft budget, Finance Minister Christian Lindner said Ukraine would have to rely more on funds from “European sources” as well as hoped-for income from frozen Russian assets.

“The aim is to make $50 billion available this year, Ukraine can then decide for itself how to use them,” he added, referring to a deal on Russian assets struck by world leaders last month.

The decision to cut aid to Ukraine, which was first reported by Reuters, resolves a mystery surrounding the German coalition’s unexpected agreement over the budget following an all-night bargaining session two weeks ago.

At the time, Chancellor Olaf Scholz, Lindner and Vice Chancellor Robert Habeck offered only vague explanations for how they had managed to bridge a substantial financing gap that threatened to bring down their alliance. The three partners were at odds over how to fund increases in social programs and climate initiatives without violating Germany’s debt rules.

That they waited until the last day of regular business before much of political Berlin leaves on summer holiday suggests they were well aware of the political sensitivity of the move, which will likely be seen in Kyiv as further evidence of Germany overpromising and underdelivering on assistance. Scholz’s government has dragged its feet on helping Ukraine since the beginning of Russia’s onslaught, drawing ridicule for an early offer to send helmets weeks before the full-scale invasion.

That said, Berlin has done more overall for Ukraine than any other European country. In addition to thousands of rounds of artillery shells and armored vehicles, the government has provided substantial help on air defense and other systems. Defense Minister Boris Pistorius has been pushing other countries to follow suit, especially on air defense.

Olaf Scholz’s government has dragged its feet on helping Ukraine since the beginning of Russia’s onslaught. | Ralf Hirschberger/Getty Images

Scholz has repeatedly touted Germany’s aid to Ukraine, and has pushed other European countries to do more, particularly as the reelection of Donald Trump in the U.S. looks increasingly likely and Europe faces the chilling prospect of needing to fund and arm Ukraine alone.

A victory in the U.S. presidential election by Trump, who has signaled that he would draw back Washington’s aid to Ukraine, could force Berlin to reverse its decision.

Even though the cabinet gave its blessing to the draft, a final budget remains far from the finish line. The bigger hurdle will be in parliament, where MPs from all three governing parties will have to hammer out the details by the end of the year.

“The many promises of the chancellor and his defense minister to continue to support Ukraine are turning out to be hollow phrases,” Ingo Gädechens, a lawmaker from the center-right Christian Democratic Union (CDU), told POLITICO.

Germany’s fiscal flexibility is significantly limited by its constitutional debt brake, which restricts the federal deficit to 0.35 percent of GDP, except in times of emergency. Lindner has resisted declaring the war in Ukraine such an emergency.

At the same time, the coalition has been at odds over how to finance its own military needs in order to fulfill Scholz’s promises to rebuild Germany’s armed forces and meet NATO’s annual spending target of 2 percent of GDP.

Germany is likely to meet that target thanks to extraordinary spending from a special €100 billion fund the government created in 2022. Yet that money will be exhausted by the end of 2027, raising the question of how Berlin will fund the shortfall from 2028 on.

“We have an extraordinary need for action in 2028 amounting to €38.9 billion,” Lindner said, adding that Germany would either have to grow faster or take on more debt. “It is a fundamental question and one that the next federal government will also have to address.”

Henry Donovan contributed reporting.