Europe
German industry turns to arms sector

In the wake of the war in Ukraine, a growing number of German companies are moving into the military equipment and services sector, breaking a widespread taboo against supplying the arms industry.
The Financial Times (FT) reports a surge in production and investment in military equipment and services. Engine maker Deutz, for example, saw its shares rise by more than 20 per cent last week after announcing plans to produce tank engines as well as motorcycles.
The engineering group is among the medium-sized companies, the backbone of the German economy, that have reconsidered or ended the ban on defence contracts.
Due to the legacy of industrial cooperation with the Nazi regime, parts of German business have long shunned the defence sector. Since February 2022, however, some key players in the country’s engineering supply chain, such as laser manufacturer Trumpf and components company Hawe Hydraulik, have targeted military contracts.
“Defence of freedom by military means if necessary…”
Cathryn Clüver Ashbrook, a political scientist and former director of the German Council on Foreign Relations, told the FT that long-held attitudes to the defence sector were changing rapidly. “After three years of war and heavy economic losses on the European continent, Germany is on the verge of a historic change,” she said.
“Russia’s war of aggression against Ukraine has certainly raised awareness in our society that freedom must be defended by military means if necessary,” said Daimler, which last month announced a new contract to supply 1,500 trucks to the Canadian military.
War industry no longer “stigmatised”
Karl Haeusgen, chairman of engineering firm Hawe Hydraulik, which will end its ban on defence contracts in 2022, said the Ukraine war and subsequent European pressure to increase military spending had reduced the “stigma” surrounding the defence sector.
“A large part of the defence supply chain has a completely different image than three or four years ago,” Haeusgen said.
The company used to have a policy of not supplying the defence sector, but now its board-level committee considers orders for its valves and pumps, which can be used in military equipment, including vehicles and ships.
“Civilian” production harmonised with military production
This shift also comes at a time when German industry is struggling to recover from weak demand from China. In contrast to the booming defence sector, the country’s car industry has been forced to announce large-scale redundancies at a time when the transition to electric vehicles is proving difficult.
Christian Mölling of the German Council on Foreign Relations argued that Germany is facing the opposite situation to Europe in the immediate post-Cold War period, when companies were faced with the need to convert military production to civilian production.
“They are rethinking how to use [civilian] production capacity, technology and procedures to be more efficient in the military world,” Mölling said.
Work shifts from automotive to defence
Continental, one of the world’s leading automotive suppliers with 200,000 employees, recently launched a plan to transfer hundreds of workers to the German defence company Rheinmetall.
Peter Sebastian Krause, a Rheinmetall executive, said at the time that the Continental workers would bring “extremely valuable” skills to the company.
Laser manufacturer Trumpf, whose customers include the semiconductor industry, including chip-making equipment company ASML, is another company considering lifting the ban on defence supplies.
The company’s lasers are subject to export restrictions, including to China, because the German government considers them to be “dual-use”, with both civilian and military applications.
Hagen Zimer, the company’s head of laser operations, said defence companies had shown interest in military applications for the company’s lasers, such as shooting down drones. The laser could be a powerful defence tool, Zimer told the FT, adding that without the technology “it would be impossible to defend against a multi-pronged attack of 200 drones in war zones”.
Lufthansa enters the military industry
Lufthansa Technik, a wholly-owned subsidiary of the airline group that services around one-fifth of the world’s active fleet, officially launched a military aircraft services division last year. The unit, which has become a fast-growing business, will help maintain Germany’s Chinook helicopters and F-35 fighter jets.
“Based on our relationship with the German government, we decided to take a bigger step into defence in 2019,” said Lufthansa Technik chief executive Michael von Puttkamer, adding that the €100bn earmarked for military restructuring “is an opportunity to step further into the sector”.
“We believe that entering the defence sector is not only a great business opportunity, but also a way to support the ability of our German armed forces to defend our country,” Puttkamer said.
Susanne Wiegand, CEO of tank parts manufacturer Renk, said increased “synergies” between Germany’s civil and defence manufacturing sectors could benefit both sides.
“This is a great way to develop technology. Innovations come from the military world and find their way into civil applications and vice versa,” Wiegand said.
Europe
Merz urges Brussels to secure a US trade deal within days

German Chancellor Friedrich Merz is demanding that Brussels sign a trade deal with the US within days.
Bringing the issue to the agenda of today’s EU leaders’ summit, Merz described the European Commission’s negotiating strategy this week as “too complex.”
Calling for greater urgency and focus in negotiations with the US president, Merz said he would convey this demand to other EU leaders, alongside Emmanuel Macron and Giorgia Meloni.
The leaders are eagerly awaiting an update from the EU’s executive body during dinner on its talks with the Trump administration.
Concerns are growing that if Brussels and Washington fail to reach an agreement, “reciprocal” 50% tariffs will be imposed on all goods starting July 9.
The bloc, which had previously dismissed the recent UK-US trade deal—a pact that imposed a 10% baseline tariff while offering some relief for car and steel exports—is now coming to terms with the reality that securing a better outcome will be challenging.
“I still hope that a trading power like the EU, with its 450 million people, will have more leverage than the UK,” a senior EU diplomat said on Wednesday.
The German chancellor stated that the priority must be to protect Europe’s key industries—particularly Germany’s automotive, manufacturing, semiconductor, pharmaceutical, steel, and aluminum sectors—from the sector-specific tariffs that Trump has either imposed or threatened to impose.
However, Trump is heavily reliant on these tariffs, having implemented the highest rates since the Great Depression of the 1930s to compel manufacturers to move production to the US and close the nation’s trillion-dollar trade deficit.
The US trade deficit with the 27 EU member states reached a total of $232 billion in 2025, accounting for approximately 19% of the total figure.
Underpinning Merz’s demands is a persistent concern that Brussels might establish a broad framework centered on a flat 10% tariff for most common goods, rather than isolating sectoral tariffs on items like cars, which he argues harms German exporters.
Another EU diplomat noted that keeping a broad-based tariff in place was “not a task we gave the European Commission,” adding, “We hope the Commission will try to find a solution for the most at-risk sectors.”
Merz’s call to “get the job done” faces two primary obstacles. First, the EU negotiating team has warned that Washington will likely offer only minor concessions, such as limited tariff reductions tied to restrictive quotas, after which full tariff rates would apply.
This is a far cry from the zero-tariff agreement Merz had initially hoped to achieve and closely resembles the UK deal, the only one struck with Trump so far.
Meanwhile, negotiations with the US on Germany’s biggest demand—automobiles—are proving particularly difficult.
Merz and German automakers are pushing for a mechanism that would allow them to offset their vehicle imports into the US with models they export from their American production facilities.
Economy Minister Katharina Reiche presented such a proposal during her visit to the US earlier this month. Both BMW and Mercedes-Benz operate large factories in the US that produce certain models for global export. However, considering the EU exports over 750,000 vehicles to the US annually, it remains unclear how much relief a limited quota agreement would provide to car manufacturers if Trump rejects this proposal.
Brussels, on the other hand, is hopeful that Trump’s long-standing desire for the EU to align with US automotive regulations will serve as a strong enough bargaining chip to ease the pressure on the auto sector.
In a scoping paper sent to member states in May, the Commission revealed it had offered to align with US regulations on autonomous vehicles. This is seen as a major concession, especially after similar discussions on automotive reciprocity led to the collapse of a transatlantic trade deal a decade ago.
Europe
Germany plans to cut all funding for Mediterranean migrant rescue ships

The German government reportedly plans to cut all funding for groups that rescue migrants in distress while crossing the Mediterranean Sea.
According to the Foreign Ministry, the new budget plans from Finance Minister Lars Klingbeil do not allocate any funds for migrant rescue groups.
In recent years, the German government has provided these teams with approximately €2 million (about $2.3 million) annually. In the first half of 2025, around €900,000 in aid was provided to groups such as Sea-Eye, SOS Humanity, and Sant’Egidio.
Sea-Eye responded to the news with sharp criticism of the new German government.
“We are filling a gap in the Mediterranean that European countries, including Germany, should be closing,” said Gorden Isler, the group’s chairman, adding that without funding, Sea-Eye might be forced to cease its operations.
Jamila Schäfer, a member of parliament for the opposition Green Party, also criticized the decision, stating that cutting the funds will not reduce migration but will only make the routes more deadly.
In a statement to the German news agency dpa, Schäfer said, “We pay the fire department to save lives on land. We should not let people drown at sea either.”
The Mediterranean remains one of the world’s deadliest migration routes, despite patrols by sea rescue organizations.
According to the Missing Migrants Project, more than 32,000 people have gone missing while trying to reach Europe since 2014.
Rescue operations have become more challenging in recent years as the number of people embarking on dangerous routes continues to rise, while the Meloni government in Italy has enacted a law that severely restricts rescue operations.
Europe
Weber warns against US dominance, urges European self-confidence

Manfred Weber, the German conservative and president of the European People’s Party (EPP), the largest group in the European Parliament (EP), stated that while they seek an agreement with the United States, they will not allow a Trump administration to push them around.
In an interview with Euractiv, Weber discussed the recent NATO summit, the development of Europe’s own defense, relations with the US, and the EPP’s agreements with its right-wing counterparts in the European Parliament.
“The message that emerged at the end of this week is that we will continue transatlantic cooperation and that the NATO family will stay together,” Weber said. He noted that this is a new reality for them, but one that US President Donald Trump has pushed them toward, emphasizing that Europe needs its own defense foundation within NATO.
The EPP leader welcomed the implementation of certain measures, such as Europe’s armament fund, SAFE, and borrowing options for member states. “However, our current national armies are not capable of defending Europe. We need a European command chain and joint European projects like a missile defense system, a satellite program, a cyber brigade, and a drone army,” he explained.
Weber called for “building a European security architecture,” which he wants to be “fixed and irreversible” as a European structure. He proposed establishing it by ensuring countries participate in pan-European programs through the next EU budget.
“Because if, theoretically, a far-right candidate wins in France tomorrow, then this architecture will be locked down. We must build a defense infrastructure where no country can act selfishly,” Weber argued. “German Chancellor Friedrich Merz says Germany has the largest army in Europe. And then I see the AfD’s 22% poll numbers, and as a true European politician, that worries me.”
When reminded that the EU has been largely ineffective in influencing Israel and Iran in recent weeks, Weber responded, “Europe is turning into a kind of think tank. We are observers, but I want Europe to become a real diplomatic power.”
Weber, who hails from Germany’s CSU party, asserted that reforming the decision-making processes within the EU is necessary to achieve this. According to him, unanimity is the most critical issue on the table. If it cannot be changed under the current Lisbon Treaty, member states willing to move forward—such as France, Germany, Italy, and Spain—should do so.
The EPP leader stressed that the EU wants and needs a trade agreement with the US. “But, yes, Europe accounts for 22% of the global GDP, while America accounts for 25%. We cannot let Washington push us around. We are self-confident, and we must show it. We have the tools; the European Commission has the tools,” he declared.
Responding to criticism about collaborating with right-wing parties instead of liberals and socialists on laws related to the Green Deal, Weber said, “Look at the political reality in Europe: in Poland, Romania, and even Portugal, Chega came in second, ahead of the socialists. So I ask the socialists and Renew to please reconsider what is happening outside the Brussels bubble.”
Weber stated that the “authoritarian wave” in Europe must be stopped and argued that the EPP is the most important party capable of doing so.
The EPP leader noted that they would never support a regulation requiring prior approval for media advertising. He argued it was “madness” to talk about reducing bureaucracy while the legislation’s content requires companies like BMW or Renault to get pre-approval from state authorities to make green claims about reducing CO2 emissions.
According to Weber, the EPP’s three fundamental criteria are being “pro-Europe, pro-Ukraine, and pro-rule of law.” He claimed he was heavily attacked for blocking some laws related to the Green Deal and the nature restoration law because he genuinely believed they were wrong, and now they see it is not working. “I am saying we must hold our line but remain ambitious. What I am trying to do is not ride the wave of public opinion but to act responsibly and find a good middle ground. This is the best method against populists,” he concluded.
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