Germany is Too Distracted to Deal With EU Budget Talks, Commission Says

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Political wrangling in Germany is preventing the EU getting a deal on a funding top-up, according to the bloc’s budget commissioner.

“The biggest problem is that Germany is so distracted by domestic issues that they literally don’t find time to deal with this,” Johannes Hahn told reporters in Brussels.

Germany is leading a coalition of countries, mainly in the north and east of Europe, that want the European Commission to finance its new priorities by saving cash from other areas of its current budget, which was agreed in 2021. Berlin hardened its position after a recent shock constitutional court verdict blew a €60 billion hole in the country’s budget.

Governments rejected the Commission’s request in June for an extra €66 billion to cover unexpected spending, and they called on the EU executive to trim the headline figure by at least 20 percent, or around €13 billion. The issue is due to come to a head at a summit of leaders later this month.

“I hope there is quickly a growing understanding in Berlin, that there is a particular responsibility from the biggest economy in the European Union that without their significant involvement and engagement we will not come to an agreement,” Hahn said.

He dismissed calls from northern countries to redeploy existing funds to finance new priorities as a “good slogan” that is difficult to achieve in practice, as the EU budget is already short on cash.

The extra EU funding would finance continued support for Kyiv (€17 billion in grants, plus €33 billion in non-budget low-interest loans), higher interest rates on post-pandemic cash (€18.9 billion) and provide fresh money for migration deals with foreign countries (€15 billion). 

Member countries except for Hungary support extra aid for Ukraine. But Budapest threatened to veto the package unless EU leaders agree to review their entire strategy of support for Kyiv.

Unless countries strike a deal to continue funneling aid to Ukraine, the country risks going bankrupt. Finance Minister Serhiy Marchenko said in early November that Kyiv will need help from the start of 2024 to fill an estimated $29 billion budget shortfall.

Hahn on Thursday opened the door to a backup plan that would allow EU countries to provide bilateral support to Ukraine in 2024.

“In the unlikely case that we cannot get an agreement … one of the options is to have bilateral agreements with 26 member states, which is a more cumbersome process, but is also feasible.”

Source : Politico