What do Germany’s snap elections mean for aid?

With the breakup of Germany’s governing coalition early last month, proposed changes to the country’s development policy — including the drastic funding cuts that were expected to pass with the 2025 budget — are currently frozen. But the snap elections that are likely to be called for Feb. 23, 2025, could remake the government and have the potential to shift the country’s approach to development. Germany’s ruling three-party coalition collapsed in early November when Chancellor Olaf Scholz of the Social Democrats, or SPD, fired Finance Minister Christian Lindner of the Free Democrats, or FDP, over economic and budget disagreements. The SPD and the Greens, the third member of the coalition, have continued to govern, but essentially as a caretaker administration until elections are held. The breakup came as the German Parliament, known as the Bundestag, attempted to finalize a 2025 budget that worried the development sector. The draft proposal slashed the budget of the Federal Ministry for Economic Cooperation and Development, or BMZ, by nearly €1 billion ($1.05 billion). It also cut €1.04 billion in humanitarian aid, which falls under the Ministry of Foreign Affairs. Those plans are now shelved as the country prepares for the outcome of the February vote and, eventually, a new budget proposal. In the meantime, the government will continue to work off of the 2024 allocations, though the development ministry and others will not be able to make any new investments. At the same time, discussions about Germany’s contributions to next year’s replenishment drives for Gavi, the Vaccine Alliance and the Global Fund to Fight AIDS, Tuberculosis and Malaria are also frozen. “Now that is all completely up in the air,” Stephan Exo-Kreischer, ONE’s executive director for continental Europe, told Devex. Germany won’t have to completely step off the global stage. The current government does appear likely to announce a contribution to the World Bank’s International Development Association at its final replenishment meeting in Seoul, South Korea, this week. Meanwhile, observers said that a potential change in government does not wipe out the possibility of cuts to the development sector. Whether they happen — and how steep they are — may depend on any new government’s willingness to take on major economic and budget policy reforms. In a bid to limit debt, Germany’s constitution requires that the federal government’s budget deficit not exceed 0.35% of the country’s annual gross domestic product. Known as the debt brake, this played a critical role in the breakup of the ruling coalition. Lindner, from the traditionally liberal FDP, insisted on maintaining the debt brake despite worries that the German economy might be tipping over into recession. That led to clashes with Scholz, who wanted to reform the debt brake so that the government might be able to exceed it in certain situations. This dispute ultimately precipitated the collapse of their coalition. The future of cuts will depend, in part, on whether the new government is willing — or wins the seats — to take on the debt brake. The right-center Christian Democrats, or CDU, the party former Chancellor Angela Merkel led for decades, is currently ahead in the polls. CDU has stood against debt brake reform during the current administration, though the party’s current leader, and potential future chancellor, Friedrich Merz, has signaled some willingness to discuss reforms after the elections. But CDU and its sister party the Christian Social Union do not appear to be drawing enough support for an outright victory. That means they would have to enter into a coalition, which could take on various permutations — and policy directions. Even if the debt brake lifts and funding expands, there are so many competing funding priorities, including support to Ukraine, that most observers do not expect the BMZ’s budget to return to its 2024 spending levels of €11.22 billion. “Potentially there could be a situation where we have no further cuts and even maybe here and there some funding for strategic priorities,” Exo-Kreischer said. “If that will raise the entire envelope for BMZ, I’m not sure.” Ultimately, the funding assigned to BMZ will be read both as an indication of any new government’s commitment to ongoing development spending, but also as an expression of the role the ministry will play in exercising German soft power. While that role may vary, there is little expectation that February’s election will spell a wholesale change in the direction of Germany’s development policy. This is despite a minor outcry over German development spending earlier this year following the spread of misinformation about ministry programs, including false assertions that BMZ had dedicated €315 million to building bicycle paths in Peru. Amid this tempest, FDP resurfaced an old proposal to fold BMZ into the Ministry of Foreign Affairs. But both supporters and opponents of German development spending said the scheme is a nonstarter. “It’s an old topic that has been talked about for decades,” Kurt Gerhardt, a retired journalist, told Devex. “It gathers no political momentum.” Gerhardt is one of the leaders of a movement calling for the end of German development financing, arguing against the idea that “more money will lead to more development.” But even he acknowledges that a commitment to development spending will remain no matter which party takes over. While it may not feature in many political debates ahead of the February vote, Anna-Katharina Hornidge, director of the German Institute of Development and Sustainability, said development policy could take on more significance once an administration is installed. That has as much to do with Donald Trump’s re-election as United States president as anything that happens in Germany’s upcoming vote. BMZ could be central to any German efforts to distance itself from the U.S. “At the European Union, but definitely on the German governmental level, there is an awareness that we need to emancipate ourselves from the United States and need to substantially invest into alliances and multilateralism,” Hornidge said.