German Chancellor Friedrich Merz has warned that he will block the European Union\u2019s next seven-year budget unless every member state commits to financing Ukraine in 2027 and beyond.<\/p>\n
In a letter sent on 6 November to European Council President Ant\u00f3nio Costa and European Commission President Ursula von der Leyen, and seen by the Financial Times, Merz made Germany\u2019s support for the 2028-2034 Multiannual Financial Framework conditional on a collective pledge that closes Ukraine\u2019s financing gap without exception.<\/p>\n
The long-term EU budget, known as the Multiannual Financial Framework (MFF), is the subject of difficult negotiations. An informal EU leaders\u2019 meeting in Dublin will address the issue this week.<\/p>\n
\u201cA collective commitment that all of us, without exception, will contribute fairly to closing [Ukraine\u2019s financing] gap is an essential prerequisite for resolving this issue and for discussing any further matters, particularly those with financial implications,\u201d Merz wrote. He further insisted that the future budget must embed \u201ca solution, supported by all member states, that provides Ukraine with a secure, long-term financial outlook from 2028 onwards,\u201d covering both new funding and interest obligations on existing loans. The ultimatum lands ahead of an informal gathering of EU leaders in Dublin on 12-13 November, where Merz has demanded that Kyiv\u2019s shortfall feature as a primary topic, and ahead of a formal European Council summit later in the month.<\/p>\n
Ukraine faces an estimated \u20ac70 billion financing gap in 2027 as Russia\u2019s war continues to drive military and budgetary needs far beyond earlier projections.<\/p>\n
EU leaders last December agreed a \u20ac90 billion loan covering 2026 and 2027, yet the scale of the conflict has rendered that package insufficient.<\/p>\n
The European Union has indicated it will cover roughly two-thirds of the new shortfall, or about \u20ac45 billion, with partners expected to supply the rest. The Commission is preparing options to meet that pledge, including further joint borrowing backed by the EU budget, in the hope of securing agreement by year-end.<\/p>\n
On 30 October \u00a0the Commission also proposed releasing the remaining \u20ac45 billion from the existing loan facility for 2027, but officials acknowledge that this does not address the additional gap.<\/p>\n
Resistance from Central European governments and calls for majority voting<\/p>\n
A central obstacle remains the distribution of costs. Hungary, Slovakia, the Czech Republic and Bulgaria have ruled out participation in another round of funding. The first three of these countries earlier secured exemptions from interest payments on the current \u20ac90 billion loan, leaving the remaining 24 member states to share annual interest costs previously estimated near \u20ac3 billion. Any new commitment would likely operate on a similar model of joint debt serviced through the Union budget. Germany is simultaneously pressing for future decisions on Ukraine financing to shift from unanimity to qualified majority voting, a change that would itself require unanimous consent and would reduce the ability of individual governments to block subsequent packages.<\/p>\n
Merz has pointed to what he describes as an uneven burden. According to data from the Kiel Institute for the World Economy, Germany has provided nearly \u20ac31 billion in bilateral aid since the start of the full-scale invasion, with total estimates for 2022-2026 ranging between \u20ac31 billion and \u20ac42 billion depending on methodology. Measured as a share of GDP, however, Germany ranks only ninth among EU members. Irish Finance Minister Simon Harris has backed the linkage between budget talks and Ukraine financing, arguing that \u201cit is very difficult to have a serious conversation about the European budget for the coming years without including Ukraine.\u201d He suggested a mechanism similar to the existing loan scheme remains the most feasible route and warned against treating the war as a distant conflict with no bearing on European security.<\/p>\n
Not every capital shares the German approach. Finnish European Affairs Minister Joakim Strand stated that \u201cwe must be able to support Ukraine regardless of what happens with the Multiannual Financial Framework.\u201d Polish Deputy Minister for European Affairs Ignacy Niemczycki described the two issues as fundamentally separate and warned that linking them could prove counterproductive. Slovak Prime Minister Robert Fico called the linkage \u201cvery dangerous.\u201d The so-called frugal states, including Germany, Denmark, the Netherlands and Sweden, generally favour connecting budget discipline with Ukraine support and have called for spending restraint elsewhere. Net beneficiary countries in the south and east, often grouped as Friends of Cohesion, resist deep cuts and argue that political choices must still protect regional development funds.<\/p>\n
Dublin summit and longer-term financing architecture<\/p>\n
A spokesperson for Costa confirmed that the Dublin meeting will give leaders an opportunity to present their positions on Ukraine. Funding needs are expected to return at the European Council on 26-27 November, where both the immediate 2027 gap and the broader 2028-2034 budget will be on the table.<\/p>\n
The Commission\u2019s preliminary proposal for the next multiannual framework already envisages mobilising up to \u20ac100 billion for Ukraine, though the figure remains subject to negotiation and is designed with flexibility given the unpredictability of wartime needs. Military-related support would continue through the separate European Peace Facility.<\/p>\n
Separately, Ukrainian President Volodymyr Zelenskyy announced on 9 November, after speaking with von der Leyen, that Brussels will launch a special emergency mechanism to accelerate the transfer of funds.<\/p>\n
Officials have linked this instrument to the Union Civil Protection Mechanism and emphasised that it is distinct from the larger \u20ac45 billion package under discussion. The emergency channel is intended for rapid response, while the loan and multi-year budget talks address longer-term fiscal stability.<\/p>\n
Adoption of the Multiannual Financial Framework requires unanimous agreement among governments and the consent of the European Parliament. As the largest net contributor, Germany possesses effective blocking power. By conditioning its approval on a comprehensive, all-member commitment to Ukraine\u2019s financing, Merz has elevated Kyiv\u2019s needs from a parallel diplomatic track into the heart of the EU\u2019s most consequential spending negotiation.<\/p>\n
Sources: Financial Times, FocusEurope.pl<\/a>, Kyiv Post, Reuters<\/p>\n