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Berlin has rejected a multi-billion spending request by Brussels, saying that a ruling by the German constitutional court made it impossible to cobble together extra funding.
The European Commission had asked for a €100bn top-up to the EU common budget, which is mainly funded by member states. Half of it would be earmarked for Ukraine over the next 4 years, while the other €50bn would be used to repay common debt, for migration spending and a salary increase for EU officials.
Berlin said it was fully committed to providing more funding to Kyiv, but that the court ruling imposing strict limits on government spending meant it had no spare money for the remainder of Brussels’ request.
The German ambassador to the EU made the remarks to fellow member state envoys at a meeting on Friday, according to three people briefed on the matter.
The constitutional court in Karlsruhe on Wednesday ordered that €60bn of funding for clean energy and industrial projects be cancelled, as the German government had breached the constitutionally enshrined “debt brake”, which places hard limits on public spending. The judgment casts doubt on other German spending plans and the Bundestag has delayed a vote on the 2024 budget by at least a week.
The EU budget decision requires unanimous support from the 27 member states.
Germany is the bloc’s biggest paymaster and its rejection of the extra spending makes it highly unlikely the increase will be approved. Several other countries including the Netherlands, Denmark and Finland have already expressed opposition to the increase.
Commission president Ursula von der Leyen has insisted that the money for Ukraine — €17bn in grants and €33bn in loans — be part of the €100bn increase in the EU’s 2021-27 budget, known as the multiannual financial framework.
Given Germany’s positioning, countries opposing the non-Ukraine request will now amp up pressure on von der Leyen to untangle the two funding lines.
Leaders at a summit in October told her she must find savings and repurpose unused cash. They are struggling to curb rising spending domestically because of high inflation and sluggish economic growth.
Denmark has identified €16bn in unallocated EU spending, according to a document seen by the Financial Times.
Von der Leyen’s gambit in resisting requests to de-link the two funding requests has already amped up anxiety in Kyiv, in addition to uncertainty about future aid from the US. Ukraine’s deputy prime minister Olha Stefanishyna told the FT this month that the delay was putting her country’s macroeconomic stability at risk.
“You can easily do the money for Ukraine outside the MFF,” said an EU diplomat.
They said Germany’s constitutional issues could force the EU to trim spending in many other areas, such as support for companies dealing with high energy costs and research and development.
“Germany provides 25 per cent of the EU budget. German money greases the machine,” they said.
The commission declined to comment.
