Farmers’ pushback stands to derail German budget compromise

1 year ago 39

The German government’s delicately constructed new federal budget risks being toppled by pushback, including from inside the governing coalition, against planned cuts to diesel tax breaks for farmers.

Days after Germany’s coalition government reached a compromise on how to patch a €17 billion gap in the 2024 state budget, it looks like negotiations might have to be re-opened due to fierce opposition against cuts to subsidies for farmers.

Apart from large-scale farmers’ protests in Berlin on Monday (18 December), Green agriculture minister Cem Özdemir, as well as the parliamentary group of business-friendly government party FDP, have come out against the planned cuts.

The budget deal, struck by the leaderships of the three governing parties last Wednesday, consists of a mix of additional income sources for the state and spending cuts, with a focus on slashing what are deemed as climate-harmful subsidies.

The latter include tax breaks on agricultural vehicles and the fuel used for them. These are currently granted to farmers and are one of the measures which the three parties agreed to suspend.

However, the announcement was immediately met with criticism from farmers, who organised large-scale tractor protests in Berlin and around Germany on Monday.

Farmers also found advocates for their cause within the government: Agriculture Minister Özdemir attended the protest after he had come out against the planned cuts shortly after last week’s compromise, from which he distanced himself.

Speaking on German public TV (ARD) on Monday morning, Özdemir warned of unfair competition with farmers in other EU countries who do have similar subsidies, and argued that agricultural fuel cannot easily be substituted by more climate-friendly alternatives.

One “cannot simply retrofit heavy machinery to electrify it,” he said.

FDP finance minister Christian Lindner, one of the authors of the original compromise, also told RND during the weekend that he is “open for alternatives” to slashing the two subsidies, after his party’s parliamentary group announced it would veto such plans in a Bundestag vote.

Green vice chancellor Robert Habeck, on the other hand, warned against reopening the hard-won compromise package.

“If individual struts are now pulled out without inserting new ones, the overall solution collapses,” he told news agency dpa on Monday, contradicting Lindner and addressing his party colleague Özdemir.

Asked by journalists about potential renegotiations, a government spokesperson also said on Monday that Berlin “is fully determined to implement the agreement”.

To what extent this will be possible in the face of disagreement from several ministers as well as part of the government’s parliamentary majority, however, remains unsure.

[Edited by Nathalie Weatherald]