German position paper: Berlin against new EU debt

The new federal government also rejects new EU debts based on the model of the debt-financed Corona reorganization. “The Federal Government rejects a stimulation of this extraordinary and temporary instrument, an extension is legally excluded,” says a German position paper at the beginning of the negotiations on the next EU household framework for the period after 2027. The paper is available.

The EU Commission wants to submit its proposal for the next EU budget in mid-July. After that, the negotiations of the Member States slowly begin. The Berlin paper obviously serves the purpose of warding off some foreseeable Brussels demands – not least the budget. “There is no basis for increasing the volume of the medium -term financial framework in terms of economic strength,” says the paper. The volume of the “classic” budget of the current period in 2021 to 2027 is around 1.2 trillion euros financed by contributions from the Member States. In addition, the funds of the Coronafond are around 800 billion euros.

The federal government also clearly rejects the request that Germany must make a significantly higher net contribution to the EU budget. A “fair load division” is necessary. This means that “still existing disproportionate net bends” will continue to be compensated for by “corrections on the revenue side”. This means that the net payer Germany should continue to receive payouts from individual pots of the EU budget.

On the question of continuous EU debts, Commission President Ursula von der Leyen has so far been covered. For the federal government, this instrument is unattractive because Germany would have to be one of the first countries in the event of credit cases. Other, highly indebted Member States, on the other hand, have repeatedly raised the demand for community debt because they are increasingly reaching the limits of their own financing options.

Failures or difficulties in repaying Corona loans are no longer as unlikely as it seemed a few years ago. Because the loan rates have risen considerably since 2021. In the paper, the Federal Government therefore demands that the future budget framework from 2028 must begin repayment of the loans.

In principle, the paper does not leave a back door for EU debt for arms financing, which are further promoted by several member states. Berlin calls for a “modernized financial framework that strengthens European security and defense ability and competitiveness of the EU”. “Reliable programs and solutions” are also required for the support of Ukraine, says a German diplomat. Insofar as the Federal Government supports additional European armaments spending, they should obviously remain in the framework that has already been outlined by the EU Commission.

This affects the already decided credit program Safe of 150 billion euros. In addition, Berlin apparently wants to benefit from the possibility that national arms expenditure is excluded from the EU stability pact. Countries like France and Italy do not make use of this possibility because it threatens to bring their government debt to difficult to portable heights.

The Federal Government should conflict with the EU Commission, the Federal Government's cancellation of the EU Budget. In contrast, the German statements regarding the change in the budget structure seem less conflicting. A German diplomat says that the limited funds would have to be used where they created a “clear European added value”. “The existing tasks must also be put to the test.” In the paper, examples are mentioned in the paper “Future, Innovation and Transformation Expanes”.

This will also support the Commission in this general public. From the Leyen, the structure geared towards the future is more important, and it wants to flexible the uses that have been stubbornly stored so far. This is also supported by the federal government. “More flexibility is necessary, even horizontal due to shifting between political areas,” says the paper.

The coalition also basically supports the EU Fund for Competitiveness. However, this must “follow competitive and excellence principles alone”. He requires a “transparent governance, adequate say of the member states and mechanisms that can be planned to support the support of strategic key technologies”.

However, the Federal Government's will also have limits. A repeated total reform of the common agricultural policy, for which around a quarter of the EU funds are still being spent, rejects Berlin. “We want common agricultural policy to remain an independent policy area, with rural development as an integral part.”