The EU budget is under threat due to disputes over aid to Ukraine – FT

German Chancellor Friedrich Merz warned that Berlin could block the adoption of the European Union’s next budget for 2028–2034. Germany is prepared to take this step if all EU member states do not provide guarantees of financial support for Ukraine in 2027 and in the years that follow. 

What Merz Is Demanding

In a letter, the chancellor made Germany’s support for the 2028–2034 EU budget contingent on all member states agreeing to finance Ukraine. Merz wrote:

“A collective commitment by all of us, without exception, to fairly contribute to covering Ukraine’s funding shortfall is a necessary prerequisite for resolving this issue and discussing any other matters, especially those with financial implications.”

According to the FT, the letter was sent ahead of the EU leaders’ meeting in Dublin, which will take place on Thursday and Friday. Merz is demanding that the issue of Kyiv’s funding shortfall be resolved at the meeting. 

A 70-billion deficit

• Last December, EU leaders agreed to a 90 billion euro loan for Ukraine. However, due to the scale of Russian aggression, Kyiv has stated that it will need an additional 70 billion euros next year. Ukraine’s allies also acknowledge this shortfall.

• The EU has promised to cover two-thirds of the amount, or about 45 billion euros. The European Commission is working on options to fulfill this promise, including the issuance of additional joint debt obligations. Brussels hopes that leaders will reach an agreement by the end of the year.

Four Countries Oppose

Four EU countries—Hungary, Slovakia, Bulgaria, and the Czech Republic—have made it clear that they will not contribute to further financial aid for Kyiv. Last year, Hungary, Slovakia, and the Czech Republic secured an exemption from paying interest on a 90 billion euro loan. 
 

These four countries are net recipients of the EU budget, while Germany is the largest net contributor. Leveraging Berlin’s financial clout in budget negotiations, Merz aims to secure funding for Kyiv both next year and in the long term. 

In his letter, Merz also emphasized that “we must then find a solution that all member states will support and that will provide Ukraine with a reliable long-term financing outlook starting in 2028,” particularly for interest payments on outstanding debt. 

This is stated in Merz’s letter to European Council President António Costa, which was reviewed by the Financial Times.

The EU wants to finalize a budget that includes aid for Ukraine by the end of the year, but member states cannot reach an agreement.

As a reminder, Ireland has proposed cutting the EU budget by €159 billion, according to Politico Europe.

Mágyar criticized the draft EU budget for 2028–2034.