Germany hopes interest from Russian assets will ease the strain of financing aid to Ukraine

BERLIN -- German officials on Monday rejected suggestions that national budget constraints could hurt weapons deliveries to Ukraine. Berlin is its biggest supplier after the United States.

The German government hopes a $50 billion international loan package funded by interest on profits from frozen Russian assets will ease some of the strain of financing military support to Kyiv starting next year.

Weekend reports that aid financing could be curbed by Germany's domestic budget concerns drew criticism from some in the governing coalition.

Chancellor Olaf Scholz's government has struggled to balance the priorities of three ideologically disparate parties and produce budgets that comply with Germany's strict self-imposed rules on running up debt.

This year's budget foresees nearly 7.5 billion euros ($8.3 billion) in military aid for Ukraine while next year's plan is for 4 billion euros, a figure that could increase as the budget goes through parliament.

The government hopes the loan package for Ukraine that Group of Seven leaders agreed to in June will play a growing role in financing aid, with Kyiv procuring weapons directly. Interest earned on profits from Russia’s frozen central bank assets would be used as collateral.

German government spokesperson Wolfgang Büchner said Germany is confident that the system will be set up by the end of this year.

Büchner said “there is no European state that has planned more support for Ukraine, including next year” and it's reasonable for Germany's planned support to diminish in coming years as the “windfall profits” from seized Russian assets come into play.

“Germany remains absolutely engaged, and the chancellor's word is still valid that support for Ukraine will be continued for as long as necessary, and that no one, above all the Russian president, can hope that we will let up,” he told reporters in Berlin.

A letter from Finance Minister Christian Lindner to the defense and foreign ministers, cited by German news agency dpa on Saturday, said additional “new measures” on aid to Ukraine could only be embarked on if financing is secured in the budget plans.

However, Defense Ministry spokesperson Arne Collatz said all ministries are convinced that “pragmatic solutions” will be found for any short-term needs that arise, and the Finance Ministry said it's prepared to look at such additional requirements.

Collatz and Büchner dismissed suggestions that IRIS-T air defense systems, for example, might not be delivered as pledged.