Germany’s Scholz ignites fierce debate by making Ukraine aid contingent on borrowing

BERLIN — Chancellor Olaf Scholz has set off a fierce political debate in Germany by making new Ukraine aid contingent on loosening his country’s strict spending restraints.

As invading Russian forces make slow, grinding gains in Ukraine, German leaders from across the political spectrum have been pushing to pass a €3 billion aid package for Ukraine ahead of Germany’s national election on Feb. 23. If realized, the aid would amount to the largest single package yet from any ally.

But Chancellor Scholz is vowing to support the aid package only if it’s paid for with new borrowing — a controversial demand in the arena of German politics that not only makes speedy passage of the aid package far less likely, but is enflaming a dispute over spending that is shaping up to be one of the key issues ahead the election.

“I would still be in favor if everyone agreed to a resolution to finance this through loans,” Scholz said on German television late Wednesday.

Right-leaning parties like the Christian Democratic Union and the fiscally-conservative Free Democratic Party favor aid for Ukraine, but are broadly against loosening Germany’s constitutional “debt brake” — which limits the structural budget deficit to 0.35 percent of gross domestic product, except in times of emergency — setting up a conflict over how to finance the assistance.

Scholz now wants parliament to declare an emergency so that Ukraine aid can be financed with additional borrowing. Out on the campaign trail, the chancellor has repeatedly argued that using normal budgetary spending would mean helping Ukraine at the expense of Germany’s social welfare system and pensions.

Scholz’s critics are hitting back.

The chancellor’s latest demand “is obviously being used as an excuse not to help Ukraine,” said senior CDU parliamentarian Jürgen Hardt. “The fact that the chancellor seriously claimed during the election campaign that otherwise money would have to be taken away from German pensioners can hardly be surpassed in terms of audacity.”

Hardt argued that paying the interest on new debt is what would really hurt the German taxpayer as would “failure” in Ukraine, an outcome he said would end up being “more expensive and worse for the economy.”

FDP politicians were also sharply critical of Scholz’s demand.

“[Scholz] now wants to blackmail the Bundestag for €3 billion by threatening that Ukraine will otherwise go away empty-handed,” Marco Buschmann, the FDP’s general secretary, wrote on X.

Even members of the Greens, who generally favor taking on more debt, sharply criticized Scholz, accusing him of merely wanting to block Ukraine aid ahead of the election.

“Apparently, the chancellery has been feverishly searching for a way that does NOT have a majority in the Bundestag,” Greens parliamentarian Sebastian Schäfer, who sits on the budget committee, wrote on X.

Scholz has sought to walk an awkward line on Ukraine aid, trumpeting the fact that Germany is Ukraine’s second-biggest provider of military aid after the United States, while also depicting himself as a “peace chancellor,” a leader who knows how to keep the war from spiraling out of control.

Earlier this month, German media outlet Spiegel reported that Foreign Minister Annalena Baerbock of the Greens and Defense Minister Boris Pistorius from Scholz’s own Social Democratic Party were pushing for the €3 billion aid package, but that Scholz was blocking the proposal.

Scholz’s SPD is now polling in third place at around 16 percent, while the conservatives, led by chancellor candidate Friedrich Merz, are in first at 31 percent.

If the conservatives win the election, as seems likely, they may well end up governing with the SPD, an eventuality that would mean both parties would have to reconcile their differences on spending and Ukraine aid.