Merz warns US over $3m grant scheme targeting European elections

Friedrich Merz has issued a direct warning to the Trump administration after the US State Department unveiled a grant scheme that makes up to $3 million available to European charities, think-tanks and individuals willing to advance a political agenda described in the programme documentation as addressing "national sovereignty, migration, censorship and lawfare challenges in line with shared political philosophy, law and our common western civilizational heritage".

Speaking at a press conference on Wednesday, the German chancellor said his government would not tolerate external meddling in the state elections scheduled for September. "For our part, we do not interfere in American elections. Conversely, I do not want the American government or institutions close to the government to interfere in German elections," he said. The remark was a pointed response to the State Department's announcement, which former US officials say represents a months-long effort to redirect government funds toward far-right parties and aligned civil-society groups across Europe.

The grant programme and its ambiguous eligibility

The initiative, formally titled "Developing Civilizational Bonds, Democratic Resilience and Rule of Law in Europe", is being run by the Bureau of Democracy, Human Rights, and Labor (DRL). That bureau was established under President Jimmy Carter as a Cold War instrument to challenge Soviet and right-wing authoritarian regimes. Under the current administration it has been repurposed. The notice specifies that "individuals" and "governmental institution" may apply, without further definition of either category. A former State Department official told reporters the language is deliberately vague: "There seems to be an effort by the State Department to put the thumb on the scale of elections in Europe, giving an unfair advantage to right-wing parties with resources that they would ordinarily not get."

The $3 million ceiling per award is modest by US foreign-assistance standards, but it is large enough to sustain a small think-tank or advocacy group for a year. The programme does not publish a total budget figure. State Department spokespeople insist the funds "are solely meant to support human rights" and "are not available to political parties". However, the eligibility text does not explicitly exclude party-affiliated foundations, and German law treats party-affiliated foundations as part of the party structure for financing purposes.

German legal barriers to foreign party funding

Merz's reference to illegality is grounded in the German Political Parties Act, which prohibits parties from accepting donations from foreign governments, foreign state-owned enterprises, or foreign individuals who are not German citizens. The ban extends to party-affiliated foundations, the Konrad-Adenauer-Stiftung (CDU), Friedrich-Ebert-Stiftung (SPD), and their counterparts, which perform much of the parties' international outreach and political education. Violations can trigger fines of up to three times the illegal donation and, in extreme cases, loss of state funding. The Federal Constitutional Court has upheld the restriction repeatedly, most recently in a 2021 ruling concerning donations routed through European party networks.

The September state elections, in Brandenburg, Saxony and Thuringia, are already shaping up as a test for the Alternative für Deutschland (AfD), which polls suggest could become the largest party in at least one eastern state. Any perception that US funds are flowing to AfD-aligned organisations would dominate the domestic debate. Merz's coalition partners, the SPD and Greens, have echoed his language. The Federal Returning Officer, who oversees party financing, has not yet commented on whether the State Department programme would trigger an investigation.

A pattern of confrontation with European capitals

The grant scheme does not exist in isolation. Since January, Vice-President JD Vance has used speeches in Munich, Paris and Warsaw to attack European policies on migration, abortion access and online content moderation. In London last month, Sarah B Rogers, a senior State Department official who has spoken at events organised by the UK's Prosperity Institute, a think-tank combining economic libertarianism with social conservatism, claimed British police were making thousands of "freedom of speech" arrests. The UK government rejected the allegation. Rogers also pledged $500,000 in US funding to "promote digital freedom" during a visit to Dublin earlier this year.

In December, the administration's national security strategy described Europe as facing "civilisational erasure" and welcomed the growing influence of "patriotic European parties". The phrasing mirrors rhetoric used by Hungarian Prime Minister Viktor Orbán before his party's electoral defeat earlier this year. That defeat cut off a significant funding channel for European conservative networks that had relied on Hungarian government grants. The State Department programme could partially fill that gap.

The Bureau's Cold War origins and its repurposing

The Bureau of Democracy, Human Rights, and Labor was created in 1977 to coordinate US support for dissidents in the Eastern Bloc and to pressure right-wing dictatorships in Latin America. Its annual budget has grown from roughly $40 million in the 1980s to more than $500 million today, distributed through grants to NGOs, trade unions and media outlets. The bureau's mandate requires it to "promote democracy, human rights and labor rights globally". Critics argue the current programme inverts that mandate by targeting elected governments in NATO allies. A former DRL official, speaking on condition of anonymity, said: "The bureau's career staff are deeply uncomfortable. They were hired to support independent courts and free presses in authoritarian states, not to fund culture-war campaigns in Germany."

The State Department spokesperson's statement that the administration "remains committed to defending democracy and human rights around the world, including in Europe" uses the standard formula. But the programme's framing, "civilizational self-confidence and sovereignty from those who seek to undermine them", echoes the language of the European far right, which portrays the EU and national liberal institutions as the threat.

Potential beneficiaries and the UK dimension

Among the organisations likely to apply is the UK's Free Speech Union, founded in 2020 by Toby Young to challenge what it calls "cancel culture" in universities and workplaces. The union has campaigned against the Online Safety Act and supported legal challenges to workplace diversity policies. Its funding model relies on membership fees and private donations; a $3 million grant would transform its capacity. The Prosperity Institute, which hosted Rogers in London, is another candidate. It advocates deregulation, tax cuts and a restrictive immigration policy, and has built transatlantic links with US conservative foundations.

In Central Europe, the collapse of Orbán's patronage network has left a vacuum. Hungarian government grants previously supported think-tanks in Slovakia, Slovenia and Croatia that promoted "illiberal democracy". Some of those organisations have already approached US conservative foundations for replacement funding. The State Department programme offers a governmental alternative, albeit one that carries diplomatic risk for any recipient.

Why this matters

How we got here

What happens next