Germany's coalition contract includes new cuts to aid budget

The world’s second biggest provider of official development assistance is officially planning cuts. Germany’s next centrist government announced its coalition contract on Wednesday. On page 134 of the 144-page agreement, the contract states that “due to the necessity to consolidate the budget, an appropriate reduction of the ODA-share has to happen.” In a leaked draft from earlier this month, the center-left Social Democratic Party, or SPD, had called for maintaining ODA at the internationally encouraged goal of 0.7% of gross national income, while the center-right Christian Democratic Union, or CDU, proposed cuts. The final draft does not include this percentage goal. “It would be short-sighted to make further cuts to development budgets, as is currently planned,” United Nations Industrial Development Organization Director-General Gerd Müller, who served as the minister of economic cooperation and development under former Chancellor Angela Merkel, told Devex. “This would further reduce Germany’s ability to shape international affairs and build alliances.” Müller, who is a member of the center-right party, added that the country must keep the 0.7% target. “If the world spends 2,200 billion per year on armaments, then it should also be possible to invest 200 billion in development.” The extent of the cuts remains unclear, but the draft budget includes an 8% cut to the country’s primary aid agency, the German Federal Ministry for Economic Cooperation and Development, or BMZ. The budget process — which was interrupted by the collapse of the previous government — won’t be finalized until after the new government takes office in the coming weeks. German aid peaked in 2022 at 0.85% of GNI and has declined since then. Recent changes to the constitutional debt brake have reduced the pressure on the budget. This could have allowed for development spending to be maintained or increased. However, the coalition agreement suggests a continued downward trend is more likely. In better news for the center-left party’s goals for aid, BMZ narrowly escaped a merger with the German Foreign Ministry. CDU, which will lead the new government, campaigned on a promise to merge, but conceded the issue to SPD. Müller said that keeping BMZ independent is “encouraging” and shows Germany is not following the same trend set by the “USA’s withdrawal from development and economic cooperation.” “Germany, as the third largest economy, remains a reliable partner for global development,” he said, adding that there is a need to “further strengthen international cooperation” both within Germany and across Europe. He pointed specifically to critical minerals for the energy transition and addressing local job scarcity as the root cause of illegal migration. “Every Euro we invest today in economic cooperation and development will yield many times over in the future,” he added. It is yet to be announced which minister will lead BMZ, but it’s clear that the person named will be a member of SPD. Svenja Schulze, an SPD member, has led the ministry since 2021 and could continue to do so. The agreement also introduced a North-South Commission, which could help develop joint efforts that better prepare the global south to respond to the current dismantling of development. The coalition parties also made some moves on climate. They recommitted Germany to achieving net-zero emissions by 2045, but will seek the European Union’s consent to water down their share of emissions reductions. They hope to lighten their load by offsetting their emissions by around 3% through climate projects outside of the EU.