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German cabinet agrees €60 billion climate investment plan

The new German government approved a €60 billion climate investment plan in a cabinet meeting on Monday, laying the first stone towards achieving its ambitious environmental targets.

Germany's Finance Minister Christian Lindner on Monday.
Germany's Finance Minister Christian Lindner on Monday. Photo: picture alliance/dpa | Kay Nietfeld

The agreement was announced by Finance Minister Christian Lindner, who celebrated a “booster” for Europe’s top economy and “the beginning of a climate-neutral and digital future for Germany”.

The investment in the new government’s “Climate and Transformation Fund”, first announced on Friday, comes from unused debts intended to tackle the coronavirus.

The government had gained the approval from the German parliament to borrow €240.2 billion this year to finance measures to lessen the impact of the pandemic on businesses but will now only need €180 billion.

Germany’s coalition government of the Social Democrats (SPD), Greens and pro-business FDP has announced ambitious plans to tackle climate change, including ending coal power and generating 80 percent of electricity from renewables by 2030.

READ ALSO: The five biggest challenges facing the German government

The fund, which builds on a previous “Climate and Energy Fund”, will hold “around €76.2 billion” after the supplementary budget measures are passed, Lindner said.

The fund would be topped up in future through the government’s budget, the new finance minister said.

Lindner stressed that the money did not amount to “new debt”, a politically controversial subject in Germany.

The coalition has promised a return to the so-called debt brake – a rule enshrined in the constitution that normally limits Germany’s public deficit to 0.35 percent of overall annual economic output – by 2023.

The debt brake was lifted to help fight the coronavirus pandemic and the coalition has used the reprieve to set money aside for green investments.

Lindner said he expected €100 billion of new debt planned by the government under the relaxed rules to be “sufficient” for 2022, but underlined the uncertainty around the economic impact of the most recent wave of the coronavirus.

The budget measures will be debated in the Bundestag lower house of parliament on Thursday.

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POLITICS

‘Russia must not win this war,’ says Germany’s Scholz

German Chancellor Olaf Scholz pledged once again to stand with Ukraine against Russia - but said Ukraine's bid to join the EU cannot be sped up.

'Russia must not win this war,' says Germany's Scholz

Scholz said the war in Ukraine was the greatest crisis facing the EU in its history, but that solidarity was strong. 

“We are all united by one goal: Russia must not win this war, Ukraine must prevail,” Scholz said in the speech to the Bundestag on Thursday.

Putin thinks he can use bombs to dictate the terms for peace, the SPD politician said. 

“He’s wrong. He was wrong in judging the unity of Ukrainians, and the determination of our alliances. Russia will not dictate peace because the Ukrainians won’t accept it and we won’t accept it.”

Scholz said it was only when Putin understands that he cannot break Ukraine’s defence capability that he would “be prepared to seriously negotiate peace”.

For this, he said, it is important to strengthen Ukraine’s defences. 

Scholz also pledged to help cut Europe free from its reliance on Russian energy. 

The Chancellor welcomed the accession of Finland and Sweden to Nato. “With you at our side, Nato, Europe will become stronger and safer,” he said.

However, Scholz dampened expectations for Ukraine’s quick accession to the EU.

“There are no shortcuts on the way to the EU,” Scholz said, adding that an exception for Ukraine would be unfair to the Western Balkan countries also seeking membership.

“The accession process is not a matter of a few months or years,” he said.

Scholz had in April called for Western Balkan countries’ efforts to join the EU to be accelerated amid a “new era” in the wake of Russia’s invasion of Ukraine.

Last October, EU leaders at a summit in Slovenia only reiterated their “commitment to the enlargement process” in a statement that disappointed the six candidates for EU membership — Albania, Bosnia, Serbia, Montenegro, North Macedonia and Kosovo – who had hoped for a concrete timetable.

“For years, they have been undertaking intensive reforms and preparing for accession,” Scholz said on Thursday.

“It is not only a question of our credibility that we keep our promises to them. Today more than ever, their integration is also in our strategic interest,” he said.

The chancellor said he would be attending the EU summit at the end of May “with the clear message that the Western Balkans belong in the European Union”.

Scholz also called for other ways to help Ukraine in the short term, saying the priority was to “concentrate on supporting Ukraine quickly and pragmatically”.

France’s President Emmanuel Macron has also said it will take “decades” for a candidate like Ukraine to join the EU, and suggested building a broader political club beyond the bloc that could also include Britain.

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