Emergency plan for budget 2024: War bonds would be a dangerous path for the traffic light

Due to the lack of alternative financing ideas for climate projects, the SPD and the Greens want to use the Ukraine war to justify new billion-dollar loans. This is constitutionally risky – and also unwise. The traffic light is well on its way to shining a spotlight on our own lack of planning in the struggle with Russia.

The traffic light is still looking for a solution to draw up a constitutional budget for 2024. The SPD and the Greens have therefore been calling louder and louder for days to suspend the debt brake again next year. This time the emergency will be justified by the costs of the war in Ukraine. Not with the effects of the war on prices and security of supply for electricity and heat, as the coalition did with the Economic Stabilization Fund in 2022 and 2023, but with the military aid and budget subsidies for Ukraine as well as with the citizen’s money that around a million Ukrainian refugees are currently receiving. The Federal Republic should therefore take out loans to finance its indirect participation in the war and solidarity with the victims of this war. It would be a new kind of War bonds – and the traffic light is taking a very dangerous course.

It starts with the fact that the federal government would not take a secure constitutional path. Whether the war, which has been raging for almost two years now, escapes state control like a natural disaster, the prerequisite for suspending the debt brake, would have to be discussed. But even more difficult: According to the Federal Constitutional Court’s ruling, the federal government must explain whether the instruments used to date to combat an emergency are suitable for combating the consequences of a disaster – and the longer it has been since the start of the disaster, the better the reasons. The Russian invasion was almost two years ago – and with the annexation of Crimea and the Donbass war, it preceded it by seven years.

Ukraine as a scapegoat for budget conflict

If not in court, then at least in front of parliament and the public, the government would have to explain in detail that its current strategy is the most suitable means of resolving the crisis – that is, pacifying the conflict. It is unlikely that Karlsruhe will get involved in military policy debates, but a possible legal action by the Union would at least lead to a review of whether the emergency justification formally meets the requirements of the most recent ruling from Karlsruhe. These are not insignificant imponderables for a federal government that, by its own admission, wants above all to bring in a proper budget, albeit very late.

The question also arises as to whether what the SPD and the Greens consider to be legal is legitimate. Until the debt brake ruling, the coalition was of the opinion that it could finance its support for Ukraine and its citizens who had fled to Germany from the regular budget. Now that the three-party alliance was prohibited from reassigning credit, which was devised by then Federal Finance Minister Olaf Scholz before the Russian invasion, and projects from the reduced climate transformation fund have to be financed from money that is actually available, should Germany suddenly be overwhelmed by the burdens of the war?

It’s more like this: The federal government – also through Karlsruhe – is obliged to comply with the climate goals, but cannot make the necessary investments from the (Record income because she cannot or does not want to make substantial cuts anywhere else in her huge budget. A reform of the debt brake or another special fund are not possible without the FDP and the Union. So the SPD and the Greens want to circumvent the debt brake again, but this time legally, and are dragging Ukraine into their budget crisis. This is politically extremely unwise.

Billions in debt for war with no foreseeable end

Government debt for investments is usually accepted across party camps because it can create value for the future based on the principle of real estate loans. On the other hand, externalizing the costs of war in loans and placing the price of this defense policy effort on future generations does not follow any compelling logic. If the aim was to directly protect Germany’s territorial integrity and the integrity of its inhabitants, war bonds of this kind would certainly be possible. Germany’s participation in the Ukraine war, on the other hand, is based on security policy considerations, not because of an acute threat to the Federal Republic. It is safer than it has been for a long time from a conventional attack by Russia. It is therefore questionable to burden future federal governments and the population with the financial costs of these political decisions for the coming decades – especially in view of the developments in Ukraine.

Never in the past year and a half have the prospects of a somewhat benign end to the fighting for Kiev been as out of reach as they are now. Ukraine is gradually in danger of running out of material and psychological fighting strength. Their international support is waning and none of these signals encourage Russia to begin negotiating a ceasefire – quite the opposite. The war could last for many more years without the risk of further destabilization of Europe by Russia being permanently minimized. To speak cynically: From a fiscal perspective, the billions in loans that the SPD and the Greens want to take out will probably only prolong the emergency cited as justification, but not end it. As things stand today, the federal government could only achieve an end to the war by stopping aid or by substantially increasing it.

And in this situation of all places, citizens are supposed to approve double-digit billion-dollar loans – perhaps year after year until the ruler in the Kremlin loses his desire for war? This is a highly risky strategy, especially since Ukraine policy is being dragged into the center of already charged distribution debates because savings are supposedly not possible elsewhere. The traffic light would risk that approval for Germany’s arms and budget aid for Ukraine would continue to decline. In December 2023, the federal government lacks a sustainable, long-term and comprehensible strategy both when financing its climate protection projects and when supporting Ukraine. But linking your helplessness in both questions is the worst possible answer that the traffic light could give in this existential crisis.

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