Written by by TYLER DURDEN at zerohedge.com
European defense stocks fell Monday morning following a report from the German newspaper Frankfurter Allgemeine Zeitung (FAZ) over the weekend. The new report revealed that Berlin had halted all new requests for military aid to Ukraine, citing a domestic budgetary crisis. We commented on FAZ’s report over the weekend in a note titled “The Beginning Of The End? Germany To Ban All New Ukraine Military Aid.”
Finance Minister Christian Lindner penned a letter to the German defense ministry on Aug. 5, explaining future military aid for Ukraine would no longer come from Germany’s federal budget but instead from seized Russian assets, according to the local paper, adding, the new moratorium on new military assistance to the Eastern European country is already in place.
In June, Germany and other G7 nations reached a preliminary deal to use $300 billion in Russia’s sovereign assets, which are currently frozen in Western financial institutions, to back a $50 billion loan for Ukraine. Negotiations on this new funding mechanism are still underway.
According to Politico…
Berlin, which is Europe’s main supplier of military aid to Kyiv, had already signaled a change in course on Ukraine last month, when the governing coalition of the Social Democrats, the Greens and the Liberals adopted a preliminary deal on a draft budget for 2025. The compromise seen by POLITICO detailed plans to slash future assistance to Ukraine by half to €4 billion to fulfill other spending priorities.