Development groups prepare to fight German budget cuts

It took months of political wrangling for Germany’s ruling coalition to reach an agreement on a 2024 budget proposal. But the compromise they introduced has set alarm bells ringing in development circles and beyond. The proposal, announced last month, introduced deep cuts across the board — except for the defense ministry. German development organizations are outraged at the proposed 5% reduction in the Ministry of Economic Cooperation and Development’s budget, from €12.2 billion ($13.4 billion) this year to €11.5 billion in 2024. The ministry’s budget is projected to fall even further in the coming years — down to €10.3 billion in 2025, with a slight increase to €10.4 billion in 2026 and 2027. There is also deep concern about the proposal to cut €1.1 billion from the Foreign Affairs Ministry’s budget for humanitarian assistance, according to an analysis by SEEK Development’s Donor Tracker. “It’s a political game and we have a watchdog task to say this is nonsense.” --— Tobias Hauschild, policy adviser in the advocacy and campaigns department, Oxfam Germany “The consequence is that there will be significantly less funding available to address the challenges we are currently facing, even though the needs just keep rising,” Bettina Iseli, programs director of the NGO Welthungerhilfe, told Devex in an email. Broken promises Members of Germany’s Parliament, known as the Bundestag, must still approve the budget before the end of the year, so now activists have turned their attention to persuading lawmakers to restore some of the funding. They are warning that such a significant reduction by Germany — the second-largest provider of official development assistance, or ODA, within the Development Assistance Committee — will hurt communities around the world and could trigger similar cuts by other donors. But they also recognize that it may be a difficult undertaking to win back the funds. “So much was already achieved by compromise,” said Tobias Hauschild, policy adviser at Oxfam Germany’s advocacy and campaigns department. “And part of the truth is that development is not the highest political priority,” particularly in a government determined to maintain a debt brake that limits new debt to 0.35% of the country’s gross domestic product. But when the ruling coalition took power in December 2021, the idea wasn’t for development to take a back seat. The unprecedented three-party grouping of Social Democrats, Greens, and classically liberal Free Democrats, or FDP, pledged in their coalition agreement to channel 0.7% of the country’s gross national income to ODA, with at least 0.2% going to the world’s least-developed countries. The previous government consistently missed the 0.7% target. The Social Democrats, the strongest party in the ruling coalition, also appointed one of their own, Svenja Schulze, to head the development ministry, known as BMZ, which appeared to signal the department’s importance to the new leadership. Most significantly, the coalition pledged to increase development spending in tandem with defense spending: Every new euro for defense would mean another euro for the development budget. Then, in February 2022, Russia invaded Ukraine, prompting the young coalition government to promise significant increases to the German defense budget, which it is now preparing to deliver. “We understand that [one-to-one] commitment is now out of reach due to the war in Ukraine,” Hauschild said. “But that they now decrease the development budget is really breaking the coalition treaty massively.” On the cutting room floor The budget proposal was delayed nearly four months while the coalition struggled to come up with a plan that satisfied all of its members. Finance Minister Christian Lindner, who belongs to FDP, was resolved to maintain the debt brake, resulting in major cuts from nearly every department. He achieved his goal: At €445.7 billion, the 2024 budget is down 6% from this year’s total, according to Donor Tracker. “We are now ending the crisis era of expansive fiscal policies,” Lindner said in a statement after the budget proposal was adopted. Iseli offered a harsher critique: “With this draft, the federal government withdraws from its international responsibility,” she wrote. Germany has hit the 0.7% target every year since the coalition took over — even reaching an estimated 0.83% last year — but activists are not convinced that the government will continue to do so if the proposed funding cuts are sustained. About half of Germany’s ODA is channeled through BMZ, according to Donor Tracker. More worrying to observers is exactly what is going to end up getting cut. Most of the funding removed from BMZ’s budget was slated for bilateral cooperation. Schulze has indicated that savings will primarily have to come from the budget earmarked for acute crises. In an interview with RedaktionsNetzwerk Deutschland last month, she acknowledged: “My budget has a lot of funds committed over several years. … This also applies to projects by non-governmental development organizations that we support.” At the same time, the foreign ministry’s budget is set to shrink from €7.5 billion to €6.2 billion, with the vast majority of that coming from cuts to funds for humanitarian aid and crisis prevention. “I don’t understand how we can really cut so severely humanitarian assistance,” Hauschild said. “The climate crisis is coming, the world is more and more unstable. We will need these resources.” Political games There is a possibility that the Bundestag could restore some, or all, of the slashed funding, though aid organizations and advocacy groups are growing weary of lobbying to recover funds each budget cycle, and then being forced to count any money they do protect as a victory. A similar situation played out last cycle when the government proposed €1.3 billion in cuts and then the Bundestag restored all but €190 million. “It’s a political game and we have a watchdog task to say this is nonsense,” Hauschild said. Negotiations are set to continue in September, with a final budget due to be announced in November.