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According to CCTV News, on August 17 local time, as part of the German ruling coalition's spending cuts plan, the German government will suspend new military aid to Ukraine.

On August 16, the German Social Democratic Party(Social Democratic Party), the Green Party and the Liberal Democrats(Liberal Democratic Party)The ruling coalition formed by the two sides reached a final consensus on spending cuts and passed a draft budget agreement for 2025. According to the plan, Germany's aid to Ukraine will be cut by half to 4 billion euros to give priority to other domestic spending needs.

According to members of the Bundestag's Budget Committee, this year's aid budget for Ukraine has been exhausted and next year's aid plan has exceeded the budget, which means that the German government cannot provide new aid to Ukraine.

Germany is the second largest aid donor to Ukraine. So far, the total value of German aid to Ukraine has exceeded 37 billion euros, second only to the United States and ranking first among European countries. Therefore, the news that Germany's aid to Ukraine has been halved has attracted widespread attention.

Some analysts believe that this means that Germany will no longer provide funding to Ukraine. However, Ukraine accused this statement of "information manipulation." German Finance Minister Lindner also responded on the 18th that it would not "cut off" Ukraine, but some of the aid in the future would be transferred to international projects, especially the G7 using frozen Russian assets to provide Ukraine with a $50 billion loan.

On the one hand, the amount of aid to Ukraine was halved, and on the other hand, new military projects to Ukraine were suspended. What happened in Germany?

The origin is that Germany wants to restart the "debt brake"

Since the outbreak of the Russian-Ukrainian conflict in 2022, the total amount of German aid to Ukraine has continued to grow. In 2022, Germany's military aid to Ukraine was only 1.6 billion euros, which increased to 5 billion euros in 2023 and 8 billion euros in 2024.

The amount of German aid to Ukraine has been rising sharply. The important background is that in March 2020, in response to the epidemic, Germany suspended the "debt brake". The "debt brake" is Germany's most important fiscal constraint mechanism and was written into the constitution in 2009. According to the "debt brake" clause, Germany's new fiscal deficit shall not exceed 0.35% of GDP to maintain a balanced budget.

The suspension of the "debt brake" provides the German government with free space in formulating its fiscal budget. This is the main reason why Germany has been able to continuously increase its aid to Ukraine in the past nearly three years.

In 2024, Germany's aid to Ukraine reached 8 billion euros. Although "generous", it also left Germany with a fiscal gap of 17 billion euros. The matter was once brought to the German Federal Court.

To this end, the "traffic light" ruling coalition had to drastically cut government spending, and the original budget of about 480 billion euros in 2024 was finally reduced to 450 billion euros. This also marks the beginning of Germany's restart of the "debt brake".

In July this year, the "traffic light" ruling coalition reached a consensus on the fiscal budget plan for 2025. According to the plan, Germany's 2025 draft budget stipulates an expenditure of 480.6 billion euros and an additional debt of 43.8 billion euros. Germany's debt level is still higher than the constitutional provisions, which requires government departments to continue to cut spending.

Under this constraint, Germany cut its aid to Ukraine by 4 billion euros. However, Germany's overall military expenditure will reach a record high of 75.3 billion euros in 2025. In contrast, why the amount of aid to Ukraine was halved is a matter of opinion.

The timing of the halving of aid to Ukraine is sensitive

The 2025 fiscal budget compiled by the "traffic light" ruling coalition will not become a bill until it is approved by the German parliament in November. Since this year's aid budget to Ukraine has been used up, Germany can only suspend new military aid for now.

Theoretically, the German parliament may request additional budget aid to Ukraine and restart new military aid when reviewing the 2025 fiscal budget, but the probability is very small.

At present, the German economy is still in a state of stagnation. In 2023, the German economy declined by 0.3%. So far this year, the German economy has only grown by 0.2% from January to April, and then fell into contraction again. Germany's August ZEW Economic Sentiment Index(Analysts' economic expectations for the next six months)It fell sharply to 19.2, far below the 29.0 predicted by economists. German Economy Minister Habeck admitted on the 14th that the German government has not yet overcome the economic crisis.

Under such circumstances, continuing to spend a lot of money on aid to Ukraine is bound to cause much greater resistance than before.

On the other hand, the gradual clarification of the investigation into the Nord Stream pipeline explosion has also aroused Germany's doubts. In September 2022, two Nord Stream 1 pipelines and one Nord Stream 2 pipeline were damaged near the Danish island of Bornholm, and Germany, Denmark and Sweden immediately launched an investigation.

By February this year, Sweden and Denmark had announced the end of their investigations and pointed the finger at "a state-sponsored group" as the responsible party. However, Germany, as the main victim, is still continuing its investigation.

The German investigation showed that a six-member team was involved in the Nord Stream pipeline explosion. In June this year, the German Federal Attorney General secretly issued a warrant for the main suspect in the team, Ukrainian Zhuralev, in Europe for the first time.

Zhuralev had been living in a small town near the Polish capital Warsaw, but returned to Ukraine in early July. In August, Polish prosecutors said they did receive a European arrest warrant from the German Federal Prosecutor's Office, but because Germany did not enter the suspect's information in the Schengen system, Polish border police failed to arrest the suspect.

After the incident, Ukraine denied any relationship between the government and the suspect, but some German politicians still pointed the finger at Ukraine. Recently, Weidel, the leader of the Alternative for Germany, the second largest party in the European Parliament with 78 seats in the German Parliament, called on social media that Germany should demand state compensation from Ukraine.

Although German government officials denied that the investigation into the Nord Stream pipeline explosion was related to the reduction of aid to Ukraine, the two major news were exposed one after another, which inevitably led to associations.

Or change the model of European countries' aid to Ukraine

It should also be noted that although the amount of Germany's aid to Ukraine is not large, this change may have a chain effect, causing European countries to change their aid model to Ukraine.

European countries have long been overwhelmed. For example, in 2023, the EU promised to provide Ukraine with 1 million artillery shells within a year, but a year later, Ukraine said it had only received half of the ammunition.

In addition to the inability to keep up with production capacity, the economies of European countries are also an important factor restricting free aid to Ukraine. The latest data from the European Central Bank in August showed that the economy of the entire eurozone grew by 0.3% in the second quarter of this year, while per capita labor productivity fell by 0.4% year-on-year, the number of employed people only increased by 0.2%, and many companies slowed down their recruitment pace.

In June this year, G7(Group of Seven)The summit decided to provide Ukraine with $50 billion, using the proceeds from Russia's frozen assets of more than $260 billion as collateral.(about 45.7 billion euros)Germany is now eyeing this new way to help Ukraine without having to pay out of pocket. Other European countries are likely to follow suit.

Germany and other European countries are gradually changing their free aid model to a paid model for Ukraine, which is also stimulated by the US election. Trump has previously proposed to use interest-free loans instead of free gifts to help Ukraine, and his running mate Vance has clearly stated that he is against military aid to Ukraine and let Europe find its own solution.

If Trump returns to the White House and cuts aid to Ukraine, Europe will inevitably bear more costs for aiding Ukraine. Therefore, countries such as Germany are eager to change the aid model to Ukraine as soon as possible, using less budget and more interest and other income generated by Russia's overseas assets.

Of course, changing the aid model to Ukraine is not without cost. For example, if Ukraine cannot repay the loan in the future, will the income generated by Russia's overseas assets really be confiscated? Because confiscating Russia's overseas assets also involves the question of whether it will affect financial credit. However, this headache is far less urgent and important than the current economic stagnation and the US election.