Scholz and Ukraine aid: Economist Schnitzer criticizes cuts plans

What is true in the kitchen also applies in the German kitchen: nothing is eaten hot. This was evident in the recent debate over financial aid to war-torn Ukraine. The government announced plans over the weekend to limit support for the country this year and then cut it by nearly half in 2025.

Now the role can follow backwards. The Treasury said the injection would be larger than previously announced. The ministry was fundamentally prepared to review the provision of further funds. However, a spokesman said the additional demand would have to be specifically reported and easily understood in order to comply with all budget rules.

The Federal Government is therefore making significant changes to its communication methods. Finance Minister Christian Lindner had previously made it very clear in a letter to his cabinet colleague Boris Pistorius that Ukraine would no longer be allowed to pay any further aid beyond the financial aid already provided in 2024. The Frankfurter Allgemeine Zeitung reported this over the weekend.

Not only that, the aid budget for next year should even be significantly cut. Given the tight budget situation in Germany, 4 billion euros are still allocated as war support for countries invaded by Russia, following 7.5 billion euros this year. This amount is expected to be further reduced in the coming years.

Instead, the German government will rely on Ukraine to finance its defense spending from other sources in the future. The major industrial countries, the so-called G7 countries, are currently working on providing Ukraine with a 50 billion euro aid loan. The loan will be secured by interest income from the Russian central bank’s assets frozen by the West.

Economist Schnitzer warns of soaring costs

Economist Monika Schnitzer believes this is fundamentally the right thing to do. However, the chairperson of the “Wirtschaftsweise”, a committee that advises the federal government on economic issues, warned that the deal is far from done. “Such construction must be developed in a legal and safe way. This is by no means trivial and takes time,” Schnitzer told New Zealand media.

Therefore, the German government should not simply shift responsibility to the international level, but must ensure that Kiev receives all the necessary support the country needs in its struggle with Russia.

Ultimately, the government will send a “fatal signal” to Russia by cutting aid. Moscow may conclude that Germany, and by extension Europe, is no longer ready to do anything to support Ukraine in its fight for survival. Kiev, in turn, depends on being able to rely on its European partners: ammunition and combat equipment must be ordered in advance, otherwise they cannot be delivered on time. “The decision of the German coalition forces unnecessarily jeopardizes Ukraine’s military success, which also jeopardizes the security of all of Europe,” Schnitzer said.

Cutting aid could also be a costly mistake for Germany itself, the economist believes. “The German government already has to spend a lot of money to take care of Ukrainian refugees. If Russia gains further territory, or in the worst case, Ukraine falls, Germany’s refugee crisis will worsen. This will also lead to a significant increase in costs for the German government. “The federal government may now save money in the short term with its program, but in the long run the costs are likely to be significantly higher.”

Pressure on Chancellor Scholz grows

Schnitzer is not the only one to sound the alarm. The opposition and even senior members of the ruling coalition have previously voiced criticism of the federal government’s austerity plans. Even Federal President Frank-Walter Steinmeier feels compelled to weigh in on the current debate — This is unusual for the German president, who usually avoids commenting on current political events.

Steinmeier said during a business trip to the Hungarian city of Sopron that he expected Germany to remain Ukraine’s biggest European supporter.

German Chancellor Olaf Scholz may have simply underestimated the public backlash following his announcement that aid funding for Ukraine would be cut. In an interview with Sat1 TV, the Social Democrat sought to allay doubts about Germany’s commitment. He told the broadcaster that Germany’s commitment to supporting Ukraine “has not wavered in the slightest.”