France and Germany cut aid to Ukraine due to budget problems
The West has been cutting its funding for Ukraine. Next year loans remain doubtful.
Photo: flickr.com by Paul Korecky, CC BY-SA 2.0
European heavyweights have announced a reduction in funding for Ukraine.
France, which promised 3 billion euros in aid to Ukraine this year, has cut it by 1 billion, or by one-third. This is due to budget problems — budget deficit for 2024 may amount to about six percent of France’s GDP, which is unacceptable according to EU rules. French Defense Minister Sebastien Lecornu clarified in an interview with Politico that he did not plan to request additional funds for Kyiv from parliament until the end of this year.
Germany has also cut aid to Ukraine by half starting in 2025. According to the 2025 budget, it will decrease from 7.1 billion euros this year to 4 billion euros next year.
Other European donors may follow suit, analysts at the Kiel Institute say.
According to their data, the amount of Western aid planned for 2025 — $100 billion, the same as in 2024 — will decrease to $75 billion should Donald Trump come to power in the United States. It may fall to 50 billion if “all factors in Europe come together.” Loans from frozen Russian assets and the allocation of new money from NATO states will not help maintain the level of financing.
“This will only be enough to plug the leaks,” the Kiel Institute believes.
Allocation of loans to Ukraine for 2025 at risk of failure
The G7 loan for Ukraine in the amount of $50 billion is at risk of failure, Armin Steinbach, a professor of law and economics at HEC Paris said in a column for Politico.
The G7 leaders agreed that the loan would be repaid using profits from frozen Russian assets which are mostly located in European banks. Yet, sanctions on the Russian financial sector in the EU may be lifted (there are such concerns in the US) — the EU extends them every six months. To avoid risks, Washington demanded the EU should extend the sanctions to two years. Hungarian Prime Minister Viktor Orban made it clear, though, that he would veto such a decision.
The Americans do not want to sacrifice their budget risks — Congress warns that it will not approve a loan for an “unreliable inflow of income”. Such double standards indicate a strong internal struggle within the “consolidated” West.
According to Steinbach, a separate loan from the European Union in the amount of 40 billion euros may not materialize either. This is a recourse loan. Therefore, if there is no profit from frozen Russian assets, Ukraine will be obliged to pay 40 billion dollars. This, in turn, may cause “concerns” of the International Monetary Fund about the acceptable debt level, which may deprive Ukraine of access to vital capital, the author says.
Experts at the Kiel Institute drew attention to the fact that humanitarian aid to Ukraine dried up almost completely. Most money is allocated either for weapons or to the government. The goal of the “humane” West — a war with Russia to the last Ukrainian — has become a reality.
Scholz speaks for low energy prices. Will he restore the Nord Stream?
Western politicians made a big mistake when they decided to start a major confrontation with Russia.
Sanctions against Russia have led to a decline in EU’s industrial production as it refused Russian energy resources. Today, natural gas in the United States is five times cheaper than in Europe. This gives rise to questions that German Chancellor Olaf Scholz has recently voiced in his speech in the Bundestag. Scholz announced the need for “affordable” energy prices for industrial companies and a sharp reduction in regulation at the EU level.
“If the price of electricity is so important, it should not be too expensive,” he said. “The Federal Republic is an industrial country and must remain so,” the Chancellor stressed, promising to discuss measures with German industrialists in his office in October.
We will see how Olaf Scholz can strive for low energy prices for industry. Perhaps industrialists will talk some sense into the Chancellor and he will fix the Nord Stream pipeline under the slogan: to help Ukraine, you need to be a strong economy.
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Olaf Scholz is a German politician who has been the chancellor of Germany since 8 December 2021. A member of the Social Democratic Party (SPD), he previously served as Vice Chancellor in the fourth Merkel cabinet and as Federal Minister of Finance from 2018 to 2021. He was also First Mayor of Hamburg from 2011 to 2018, deputy leader of the SPD from 2009 to 2019, and Federal Minister of Labour and Social Affairs from 2007 to 2009. Scholz began his career as a lawyer specialising in labour and employment law. He became a member of the SPD in the 1970s and was a member of the Bundestag from 1998 to 2011. Scholz served in the Hamburg Government under First Mayor Ortwin Runde in 2001 and became General Secretary of the SPD in 2002, where he served alongside SPD leader and then-Chancellor Gerhard Schröder. He became his party’s Chief Whip in the Bundestag, later entering the First Merkel Government in 2007 as Federal Minister for Labour and Social Affairs. After the SPD moved into the opposition following the 2009 election, Scholz returned to lead the SPD in Hamburg. He was then elected Deputy Leader of the SPD. He led his party to victory in the 2011 Hamburg state election and became First Mayor, a position he held until 2018.
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