FT: Germany issues ultimatum to secure Ukraine funding

Chancellor Friedrich Merz said German backing for the European Union’s next seven-year budget will be conditional on every country in the bloc contributing to financial support for Ukraine, which faces a €70 billion ($78.4 billion) funding gap next year.

“Bilateral assistance to Ukraine is distributed unevenly and carried mostly by only a few member States,” Merz wrote in a letter to European Council President Antonio Costa, which was seen by Bloomberg.

“A collective commitment that all of us, without exception, will contribute fairly to closing this gap is an essential prerequisite for resolving this issue and for discussing any further matters, particularly those with financial implications,” he wrote.

The Financial Times reported earlier on the letter. German Chancellor Friedrich Merz has warned he will block the EU’s next seven-year budget unless all member states commit to financial support for Ukraine in 2027 and beyond.

In a letter sent to European Council President António Costa, seen by the FT, Merz makes his support for the bloc’s 2028-2034 budget conditional on all EU countries agreeing to fund war-torn Ukraine, which faces a €70bn financing gap next year.

“A collective commitment that all of us, without exception, will contribute fairly to closing [Ukraine’s financing] gap is an essential prerequisite for resolving this issue and for discussing any further matters, particularly those with financial implications,” Merz wrote.

The ultimatum comes ahead of a gathering of EU leaders in Dublin on Thursday and Friday, where Merz has demanded that Kyiv’s funding shortfall must be addressed.

Last December EU leaders agreed to a €90bn loan for Ukraine, but such is the scale of Russia’s military aggression against its neighbour that Kyiv has said it will need €70bn of additional funding next year, a gap recognised by Ukraine’s allies.

The EU has vowed to cover two-thirds of that, or about €45bn. The European Commission is working on options to fulfil that pledge, including issuing more joint debt, in the hope that leaders can agree a deal by the end of the year.

But four EU countries — Hungary, Slovakia, Bulgaria and the Czech Republic — have signalled they will not contribute to further financial assistance for Kyiv. Hungary, Slovakia and the Czech Republic last year obtained an opt-out from contributing to the interest payments on the €90bn loan.

Merz stressed in the letter that “we must then find a solution supported by all Member States that ensures a sound and multiannual financing perspective for Ukraine from 2028 onwards”, including interest on outstanding debt related to the country.

Marine Le Pen, who leads opinion polls ahead of French presidential elections in April, has also said that if she wins the race to succeed Emmanuel Macron, she would end support for Kyiv beyond some operational assistance and training for Ukrainian soldiers.

EU discussions on funding Ukraine are taking place at the same time as fraught negotiations on the bloc’s budget from 2028. Germany is the largest net contributor to the EU budget, while the four countries seeking to avoid a further contribution to Ukraine funding are net beneficiaries.

By using Germany’s leverage in budget negotiations, Merz is seeking to secure Kyiv’s funding both into next year and beyond. Upcoming elections in several EU countries, including Italy and Poland, could make funding Ukraine by consensus increasingly difficult.

Berlin is also seeking to ensure that future funding will only require support from a qualified majority of EU countries, as opposed to the required consensus at present, to avoid future vetoes.

“Ukraine’s financial needs need to be resolved in the framework of the next [EU budget],” said a German government official. “Financial support for Ukraine of all EU member states is essential in order to successfully complete [the EU budget negotiations].”

EU leaders will gather in Dublin on Thursday and Friday, where Merz has already made clear he will combine the discussions about Kyiv’s funding shortfall and the EU budget.

At the end of last year, EU leaders agreed to lend €90 billion to Ukraine, financed by a loan from capital markets and secured by the bloc’s shared budget. The Czech Republic, Hungary and Slovakia, who were skeptical of funding Ukraine, opted out from backing the loan.

...As some European Union member states refuse to contribute to further financial assistance for Kyiv, the issue of the EU budget establishing has become crucial. Europe - and this is becoming increasingly obvious - has run out of money.

As a result the Kyiv-based regime might further accelerate the disintegration of the European Union. That will be a fitting price for Europe to pay for supporting the Neonazis in Ukraine!

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