bne IntelliNews – France no longer has money for Ukraine

France has run out of money to fulfill its promised military aid to Ukraine. France will fall short of its originally planned military aid to Ukraine due to its budget deficit and will not reach the promised 3 billion euro mark, the country’s defense minister Sébastien Lecornu said on October 15, adding that the figure will exceed 2 billion euros .

“Politically, it was decided at the beginning of 2024 that this aid could reach 3 billion euros. In reality we will be above 2 billion euros, but not at 3 billion euros,” said Lecornu.

France’s budget is in bad shape. The deficit will reach 6% of GDP, leaving the government struggling to save money and reduce its deficit at a time when the economy is sliding into recession.

In total, Paris provided military aid worth 1.7 billion euros to Kiev in 2022 and 2.1 billion euros in 2023; This puts it behind countries such as Germany, Great Britain and Sweden. Politically Reports.

France’s financial deficit follows that of Germany, which also ran out of money in August due to its own budget crisis. Berlin has halved this year’s allocation for Ukraine to 4 billion euros and says it will reduce it to 500 million euros in the following two years. It froze all additional military aid to Ukraine due to budget constraints after a Constitutional Court decision on the so-called “debt brake” ripped a €60 billion hole in the federal budget. However, when Chancellor Olaf Scholz met with Zelensky in Berlin last week, he announced a further arms package worth 1.4 billion euros, in addition to the 4 billion euros planned for this year.

In Germany there are very strict restrictions on federal borrowing, which can only be relaxed in “times of crisis”. The Supreme Court ruled that the war in Ukraine was not a time of crisis for Germany. German Vice Chancellor Robert Habeck also admitted last week that the economy will miss its 0.3% growth target this year and will most likely slip into a second year of recession in 2024, contracting by 0.2% instead. In contrast, the Russian economy is thriving and is expected to grow by 2.6% or more this year, although the outlook for 2025 looks significantly worse, according to a pessimistic medium-term macroeconomic outlook from the Central Bank of Russia (CBR) this summer.

Funds from the USA are also drying up. The US completely ran out of money for Ukraine earlier this year, leading to a catastrophic shortage of arms supplies in the spring. Russia launched a missile barrage in January that depleted Ukraine’s air defense ammunition. In March, another large open-air shelling followed and began to systematically destroy entire non-nuclear energy production facilities in Ukraine.

Facing Ukraine’s impending defeat, Congress finally rushed through a $61 billion aid package on April 20, but disbursements from that fund were reportedly delayed.

Mike Johnson said there was “no desire” to provide more funding to Ukraine and that if Donald Trump wins the US presidential election on November 5, he would likely push for an immediate end to the war.

When US President Joe Biden was in Washington during the sessions of the United Nations General Assembly (UNGA), he granted a new $8 billion aid package to Ukrainian President Volodymyr Zelensky. However, two-thirds of these were previously approved presidential appropriations that were still pending procedural approval by Congress. Of the other third, a large proportion were not real weapons, but rather a way for Ukraine to order new weapons such as Patriot missiles from US manufacturers.

The $50 billion G7 loan to Ukraine, approved at a G7 summit in Italy on June 13, has also been mired in controversy. The US refuses to approve its share of up to $20 billion unless the EU extends the loan review period from six months to three years.

Meanwhile, the EU has promised to make its €35 billion share of this loan available sooner, but this too was prevented by a Hungarian veto. The EU is currently trying to find a solution and Hungarian Prime Minister Viktor Orban indicated last week that he might withdraw his objections. The EU loan was approved by EU finance ministers last week but still needs to go through an approval process by the full EU Parliament and Council of Ministers before it can be released – possibly before the end of the year.

According to the Ukrainian Finance Ministry, Ukraine received around $14.6 billion from its allies in the summer, but only $10 million in September. Currently, Ukraine runs a monthly deficit of $3.5 billion, almost entirely financed by its international partners.

The Ministry of Finance (MinFin) expects support to fall and the budget expects international aid to fall from about $36 billion this year to $19 billion in 2016. The Rada is currently preparing various tax increases, including increasing the war levy from 1% to 5% and increasing the tax on recoveries from 25% to 50%, in order to raise more revenue.