Germany's chancellor is waging fiscal war on two fronts — one in Brussels, one at home — and neither is going well. Friedrich Merz has co-signed a letter with the leaders of the Netherlands, Sweden, Denmark, Austria, and Finland threatening to block the European Commission's proposed seven-year budget for 2028-2034, set at nearly €2 trillion ($2.33 trillion), unless it is slashed by billions. Merz rejected further joint EU borrowing, calling excessive debt a threat. The budget requires unanimous approval from all EU member states, giving the frugal six an effective veto. The timing is brutal. Ukraine's defense minister Yevgeniy Khmara canceled his scheduled Tuesday meeting with German counterpart Boris Pistorius due to intensifying Russian round-the-clock drone attacks, which killed at least nine people across Ukraine on Monday and struck the National Academy of Sciences in downtown Kyiv. The cancellation underscores a widening gap between Europe's budget politics and the security crisis on its eastern flank — precisely when Ukraine is pushing allies to step up military and financial aid ahead of winter. Domestically, Merz's CDU is in freefall. The party suffered unprecedented defeats in state elections in Saxony-Anhalt, Mecklenburg-Western Pomerania, and Berlin. In Mecklenburg-Western Pomerania, the far-right AfD won with 38.2% of the vote, forcing the SPD (35.5%) into coalition talks with the Greens and the Left Party — the only viable combination to keep the AfD out of government. The CDU didn't even factor into the governing equation. The party's optics problem is self-inflicted. Jens Spahn resigned as CDU/CSU parliamentary group leader after a surrogacy hypocrisy scandal — he used a US surrogate mother while having voted to uphold Germany's surrogacy ban — then was photographed vacationing in Sardinia on a day he'd called in sick from the Budget Committee, forcing a second resignation. Philipp Amthor, newly appointed Minister of State for Federal-State Cooperation, placed a beach chair on his chancellery office balcony and showed it to a TV reporter days after his party was ejected from parliament in his home state. The chair was removed. The damage was not. Meanwhile, the German government is moving to block Chinese state-owned shipping giant Cosco's planned acquisition of an 80% stake in Hamburg logistics firm Zippel, citing security and strategic risks in a restricted government memo reported by Handelsblatt. Cosco already holds a minority stake in Hamburg's port terminal. Multiple ministries favor blocking the deal, though a final decision has not been made. NRW premier Hendrik Wüst — widely regarded as the CDU's "reserve chancellor" — traveled to Turkey to meet President Erdogan and three ministers, striking a self-critical tone on Germany's treatment of its three million people of Turkish descent. The former director of Berlin broadcaster RBB, Patricia Schlesinger, will stand trial beginning November 10 on charges of financial mismanagement and misuse of company resources, with 56 hearing days scheduled through June 2027. Schlesinger, who also headed the powerful ARD association, has denied all allegations. Her lawyer Oliver Sahan told DPA: "Ms. Schlesinger based all her decisions as director solely on the interests of RBB. We will fully refute the accusations." The picture that emerges is of a governing party simultaneously picking fights it may not win — a Brussels budget veto that could isolate Berlin on defense spending, a China block that signals strategic seriousness but adds another friction point — while failing to address the domestic rot that is handing state after state to the AfD. Merz is playing the fiscal hawk in Europe while his own house burns.
