Following a protracted process, Germany finalised its federal budget for 2024 in late January, navigating through economic challenges marked by slowing growth. The resultant austerity course led to significant budget reductions, notably impacting official development assistance (ODA) and funding for peacebuilding. In relative terms, peacebuilding and other international cooperation initiatives rank as the third most affected sector in the new budget landscape. Compounding these fiscal constraints was a landmark decision by Germany’s Constitutional Court ruling against the practice of reallocating funds from earlier special Covid recovery initiatives to the 2024 budget, further exacerbating the funding shortfall. The German budget cuts come at a time when Germany and other European countries are ramping up investments in defence amid a longer trend towards militarised security and a shift away from traditional ODA and peacebuilding efforts.
This article delves into the intricacies of these budget cuts, contextualising them within broader European trends and emphasises the imperative of reassessing funding priorities amidst an escalating global risk of conflicts.
The German Budget Cuts
The federal budget of the Federal Republic of Germany outlines the financial planning and allocation of funds for a specific fiscal year. It is separated into budget plans that relate to different priorities. The section of the budget most relevant for peacebuilding activities is the so-called ‘Budget Plan 05’ (‘Haushaltsplan 05’)1 under the German Federal Foreign Office (GFFO) which is to be reduced by 18%. In comparison, the reduction of the entire household only amounts to 6% making the Budget Plan 05 the third most impacted sector of the budget, as pointed out by Carsten Körber from the centre-right CDU party in the parliamentary budget discussions. A central budget line for peacebuilding, ‘Crisis prevention, Stabilisation and Peacebuilding’, is facing a significant reduction of 29.26% (minus €165.5 million) signifying a de-prioritisation of funding for peacebuilding.
The overall reduction in humanitarian aid is projected to reach 36%, which translates to a decrease of €1 billion. Furthermore, even the budget lines that are not subject to direct cuts will have to adjust to an effective reduction of means as a result of inflation and significant price increases. According to calculations by the umbrella organisation of German development NGOs, VENRO, these plans could lead to an overall reduction of 25% in development funding (approximately €3.5 billion) and a nearly 50% cut in humanitarian aid over the legislative period from 2022 to 2025.
After the decision by the German Constitutional Court in late 2023 that deemed the practice of reallocating special Covid recovery funds to the 2024 budget unlawful, the governing coalition went into a budgetary crisis mode to plug the hole in the budget that was created by the decision. This led to even deeper cuts. Budget lines that were previously untouched such as the support for civil society have been reduced and one of the few budget increases on climate and green transition was largely reversed.
As pointed out by Plattform Zivile Konfliktbearbeitung (PZKB) in a statement (German only), this development stands in stark contrast to growing insecurity in the world with the highest number of armed conflicts since the second World War and a quarter of the total global population affected by conflict, according to UN reports. In its new security strategy, the German Federal Government sets out to “further intensify its engagement in an integrated approach that combines international crisis prevention, stabilisation, peacebuilding, humanitarian assistance and development cooperation”. This stands in contradiction to the proposed budget priorities.
Treasury moves and administrative costs
Looking ahead, the longer-term prospects for budget spending do not appear promising. In a similar approach as taken by Germany for its 2023 budget, the Dutch government used creative ‘treasury moves’ in this year’s budget discussions to avoid cuts after comprehensive advocacy efforts by CSOs. In the Dutch case, the current budgetary life-support stems from the financial buffer of the development budgets of 2027 and 2028, which will consequently not be available to future cabinets. While such moves can provide short-term relief, the German case shows that the problem of budget deficits and strains due to inflation, high energy costs, and increased interest payments will only be pushed to be dealt with in future budgets.
In addition to the proposed budget cuts in Germany, CSOs that receive German funding are also bracing themselves for significantly increased administrative costs. The reason for this is the creation of a new implementing agency titled ‘Bundesamt für Auswärtige Angelegenheiten’ (BfAA, translating to ‘Federal Office for Foreign Affairs’) in 2021, tasked to administrate projects under the GFFO. The agency’s proposal to drop overheads for new projects would markedly increase administrative burdens. Furthermore, the shift from lump sum overheads to detailed spending reporting would require extensive documentation of nearly all project costs, imposing further substantial time and resource demands on CSOs.
A wider trend
These changes in the German development and peace budget have strong implications beyond Germany’s national borders. According to OECD data, Germany has been the second largest ODA donor in absolute terms in 2022, having spent 0.83% of its gross national income (GNI) on ODA which is more than the UN’s yearly target of 0.7%, only topped by the United States.2 With such a weight, the announced German budget cuts will be heavily felt in the broader peacebuilding sector. They also reflect a wider worrying trend of cuts in European ODA budgets, with the United Kingdom and Sweden as further notable examples.
In 2013, Sweden’s former Foreign Minister, Carl Bildt, proudly defined his country’s position as a “humanitarian superpower.” It distinguished itself as one of the few nations consistently allocating 1% of its GNI to ODA for decades, forming a crucial aspect of both its global and domestic identity. However, the Scandinavian nation has since reoriented its political focus, moving away from its robust commitment to development funding.
In the case of the UK, around £1.5 billion (€1.73 bn.) will be cut from the Foreign, Commonwealth and Development Office’s portion of the aid budget next year making it the second year in a row that its budget will be 20% lower than planned.3 This is connected to the UK increasingly spending its foreseen (external) aid budget on British domestic affairs. According to the Independent Commission for Aid Impact, the British government spent around a third of its aid budget within its own borders in 2022 due to increased costs to accommodate refugees, mainly from Ukraine. This pattern is becoming increasingly common throughout Europe, making it challenging to ascertain actual ODA spending.
When looking at the EU countries that are members of the Development Assistance Committee of the OECD, the ODA numbers may appear commendable. With a total of €87 billion there had been an increase of almost 19% from 2021 to 2022. But there are two important caveats: Firstly, this still only amounts to an average of 0.57% of GNI spent on ODA, well below the 0.7% target. Secondly, similar to the UK’s case, the reason for the apparent increase in ODA spending is not an increase in development aid but a diversion of funds through higher domestic spending on hosting refugees which makes up 14.4% of the total “ODA”. In its AidWatch 2023 report, Concord describes how EU member states have increasingly inflated their reported ODA assistance numbers in such ways. According to the report in reality, 1 in 5 euros never reached the intended communities in the majority of the world. In short: EU countries have become the largest recipient of their own ODA.
The combination of propped-up aid budgets and artificially inflated numbers cannot obscure the genuine risk of a defunding of peace efforts, which poses a significant threat to the work of CSOs at a time when conflict prevention and peacebuilding are more critical than ever. With Germany as the latest case of budget cuts and an increasingly difficult legal framework for funding, CSOs may need to rethink their strategies, find new entry points for funding or challenge the legal framework of funding practices. National governments on the other hand should recognise that it is more cost-effective to prevent conflicts than to address their consequences through hard-security means. Martin Luther King Jr. aptly stated: “Those who love peace must learn to organise as effectively as those who love war”, yet, effective organisation is only achievable when the necessary means are available.
- A “budget plan” in the federal budget of the Federal Republic of Germany is a document that outlines the financial planning and allocation of funds for a specific fiscal year. It breaks down the planned expenditures and revenues for various ministries or departments, serving as the financial foundation for government operations and requiring approval by the Federal Cabinet and the Bundestag. These plans are crucial for transparency and the democratic process, as they guide the government’s financial activities for the year. ↩︎
- https://www.oecd-ilibrary.org/sites/0079f636-en/index.html?itemId=/content/component/0079f636-en&mkt_tok=Njg1LUtCTC03NjUAAAGNfhdkxvC8LlXpny5TqNJNoepRcU0xCFIiB9f8Ocfdz8wSPE6WGVXa-L8IsNJVFU1GOhKYOg_8DnKBjxqX-9yusgbPQr2MoCcwUWzedBKuIB_HrK8 ↩︎
- https://www.devex.com/news/uk-aid-budget-totally-transformed-as-another-1-5b-cut-looms-105249 ↩︎
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