Merz Ties Germany’s Backing for the Next EU Budget to Closing Ukraine’s €70 Billion Gap

German Chancellor Friedrich Merz has made Germany’s support for the European Union’s next long-term budget conditional on every member state helping to close Ukraine’s projected €70 billion financing gap for 2027, according to a letter to European Council President António Costa reported by the Financial Times on Monday, Nov. 9. The letter puts the Merz EU budget Ukraine link at the center of an informal summit of EU leaders in Dublin on Friday, Nov. 13.

“A collective commitment that all of us, without exception, will contribute fairly to closing [Ukraine’s financing] gap is an essential prerequisite for resolving this issue and for discussing any further matters, particularly those with financial implications,” Merz wrote, according to the FT as cited by Anadolu Agency !Unverified claim, Anadolu Agency (Turkish state-run news agency).

What Merz is asking for

The European Commission is examining ways to cover about two-thirds of the extra need, roughly €45 billion, with the aim of a deal by year-end. The EU agreed last December on a €90 billion loan for Kyiv covering 2026 and 2027, backed by 24 member states. Hungary, Slovakia and the Czech Republic stayed out, and Anadolu reported that Bulgaria has also indicated it will not contribute additional funds.

The Kyiv Independent, which reviewed the letter, said it complains that support for Ukraine has been “distributed unevenly and carried mostly by only a few Member States,” and frames the war as a matter of “indivisible European security.” It noted that the letter does not contain an explicit ultimatum, though the FT and Euronews reported the link as a threat to withhold agreement on the 2028-2034 budget.

The letter follows weeks of Russian strikes on Ukraine’s power grid, which have raised Kyiv’s spending needs for repairs and air defense. Ukrainian officials and allies argue that the scale of Russia’s campaign requires more money than the €90 billion loan provides, Anadolu reported.

Why the budget is leverage

The multiannual financial framework, the EU’s seven-year budget, requires unanimity among the 27 governments, and leaders are due to discuss it at a summit on Nov. 26-27. Germany is the largest net contributor, so its approval is essential. By tying the two files, Merz is using the one negotiation where holdouts on Ukraine aid need Berlin’s agreement.

Brussels initially estimated the interest cost of the existing loan at about €3 billion a year, a burden that falls on the EU budget and therefore on all members, including those that opted out of guaranteeing the principal.

The timing gives Berlin a strong hand. The Commission’s proposal for the 2028-2034 framework, published in July 2025, runs to about €2 trillion, and member states are already split over farm funding, cohesion money and new joint debt. Adding Ukraine to that bargain means holdouts on Kyiv’s aid would face pressure on files they care about, such as regional development funds. The risk for Merz is that countries such as Hungary and Slovakia, which have used their own vetoes before, respond in kind and the whole budget stalls.

Reactions

Ireland’s Simon Harris, whose country hosts the Dublin meeting, backed the link, Euronews reported. Polish European affairs official Ignacy Niemczycki warned that the approach could “backfire,” and Slovak Prime Minister Robert Fico called it “very dangerous.”

The push comes alongside other emergency steps for Ukraine, including the EU’s decision this week to activate its civil protection mechanism for Ukraine’s energy crisis, and talks among G7 foreign ministers in Paris. For the battlefield picture, see our war in Ukraine tracker.

What to watch

Dublin on Friday will show whether holdouts move or whether Merz softens his language. A deal by year-end on the €45 billion would likely involve new joint borrowing or guarantees, and the hardest question is whether governments that refused the first loan can be brought in without a confrontation that stalls the 2028-2034 budget.

Sources

• Euronews: No deal on Ukraine aid, then no deal on EU budget, Merz says
• The Kyiv Independent: Germany's Merz complains about unfair burden-sharing, calls EU to prioritize new Ukraine loan
• Anadolu Agency: Germany threatens to block next EU budget without Ukraine funding deal, report