Connect with us

EUROPE

German government revises growth forecasts: Recession expected to continue into 2024

Published

on

Germany is facing a two-year recession for the first time since the early 2000s, prompting the government to slash its 2024 growth forecast for the Eurozone’s largest economy.

If Economy Minister Robert Habeck’s forecast for this year is correct, Germany will experience a two-year recession for the first time in more than 20 years, after output shrank by 0.3 percent in 2023. In 2002, the economy contracted by 0.2 percent, followed by a 0.5 percent decline in 2003.

“The economic conditions are currently unsatisfactory,” Habeck said on Wednesday. “But we are in the process of finding a way out of this situation,” he added.

The minister argued that Germany has made “real progress” in recent years in addressing the “short-term” factors—rising inflation, high interest rates, and surging energy costs due to the war in Ukraine and subsequent anti-Russian sanctions—that have depressed output.

However, Habeck pointed out that longer-term structural issues, such as “Germany’s serious skills shortage,” years of underinvestment in infrastructure, and excessive bureaucracy, continue to hold back growth.

Habeck, who also serves as vice-chancellor, predicted that GDP would shrink by 0.2 percent this year, a sharp downgrade from an earlier forecast of 0.3 percent growth.

With energy prices falling, ministers and economists had initially hoped the economy would see a temporary recovery this year. But a steady stream of pessimistic data in recent months has clouded the outlook. “The recovery has been postponed once again,” Habeck said.

Citing high labor and energy costs, a heavy tax burden, and political uncertainty, some companies are considering moving production to cheaper countries, raising fears of deindustrialization in Europe’s largest economy.

Despite these concerns, Habeck expressed cautious optimism that the economy would begin to recover next year, as lower inflation and easing interest rates, combined with rising real wages, are expected to boost consumer spending.

The minister suggested that “in the last three to four quarters, people have started to feel wealthier again.”

Habeck’s ministry expects the economy to grow by 1.1 percent in 2024 and 1.6 percent in 2026, driven by stronger private consumption, increased investment, and rising international demand for industrial goods.

However, Habeck emphasized that Germany’s economic challenges run much deeper, noting that the two pillars of the country’s success—cheap Russian gas and well-functioning global markets, both critical for a leading exporter like Germany—no longer exist.

According to Habeck, the first pillar has been undermined by the war in Ukraine, while the second has been destabilized by China’s “aggressive export strategy” and rising U.S. protectionism.

“Half of Germany’s growth has always come from exports, and this pillar is now under threat. We have essentially not grown at all since 2018,” Habeck said.

Despite his cautious optimism about short-term improvements, the Green minister suggested that Germany’s long-term growth potential remains low.

“Even if we did everything right—reduced bureaucracy, had the necessary skilled workers, and secured the needed capital—we would only be looking at a growth potential of about 0.6 percent,” Habeck said.

He attributed this to “the failures of past decades, not just the past few years,” pointing out that successive governments had not invested enough in infrastructure, digitalization, and the mobilization of skilled labor.

EUROPE

F-35 debate intensifies across Germany and Europe

Published

on

The debate over a potential withdrawal from the US F-35 fighter jet program is heating up in Germany and other European countries.

The background to this is that the jet can only be used with the approval of the US government, and restrictive provisions, for example regarding spare parts and software, make it impossible to escape dependence on the US in military operations with the F-35.

In Berlin, former “transatlanticists” in particular are pushing for withdrawal from the F-35 procurement program to achieve military independence.

Last week, a copy of the purchase agreement for the 35 F-35 fighter jets that Berlin decided to procure in March 2022 was leaked to the German magazine Stern. Details of the framework conditions for the purchase, which will cost €8.3 billion, thus emerged.

This purchase is being handled as part of the Foreign Military Sales (FMS) process, which is subject to strict rules. The F-35 purchase agreement grants Washington the authority to “terminate or suspend performance in whole or in part” without further notice “if required by the national interests of the US.” This means the US can unilaterally change the delivery time and quantity at any time. Contractual penalties are generally not provided for in the FMS procedure; legal recourse is excluded.

Once an F-35 fighter jet is delivered, no further modifications are permitted; spare parts and regularly required software updates are only available from the US manufacturer Lockheed Martin. According to the wording in the purchase agreement, “The customer is not authorized to carry out repair and maintenance work beyond the unit maintenance level.” This already guarantees that the German Air Force’s F-35s will only fly when the US administration wants them to.

Furthermore, the F-35’s basic software is kept secret. Therefore, it is impossible to check whether the jet can be influenced externally, but many assume this is possible. Data generated during operation, and especially during any mission, is collected and subsequently stored on Amazon Web Services, making it easily accessible to US authorities.

Finally, the US Foreign Assistance Act allows the US to “monitor the end-use” of the F-35 “at any time.” A “well-informed” source told the magazine Stern, claiming, “Targets, routes, indirectly tactics… US technicians are always on the plane.” An insider with “intelligence service knowledge” also explicitly confirmed this to the magazine, stating that “all mission planning is monitored in the US.”

Since last week, calls have been growing louder in Europe to avoid procuring F-35 jets if possible, or to withdraw from the agreement if a contract has already been signed. This was triggered on the one hand by the Trump administration’s decision to prohibit Ukraine from using US satellite data, and on the other hand by Washington’s continued efforts to acquire the autonomous Danish territory of Greenland.

For example, Danish conservative MP Rasmus Jarlov stated on X that he now regrets supporting Denmark’s decision to purchase 27 F-35 jets for its air force. Jarlov said, “I can imagine a situation where the US demands Greenland from Denmark and threatens to disable our weapons.” Jarlov argued that Copenhagen would then no longer be in a position to defend itself, making the purchase of US weapons “a security risk we cannot take.” He contended that Denmark will invest heavily in armaments in the coming years and should avoid American weapons wherever possible.

Some NATO countries are now considering abandoning the F-35. For example, Canada plans to withdraw from the F-35 purchase, but has already paid for 16 fighter jets due to be delivered early next year. According to Defense Minister Nuno Melo, Portugal, which previously planned to buy the US fighter jet, is also changing its mind. The French company Dassault Aviation has now offered to supply Rafale jets to the Portuguese government.

The Rafale is a fourth-generation fighter jet, unlike the fifth-generation F-35, but it is cheaper and requires no US components, thus offering independence from the US. French President Emmanuel Macron argued on March 16 that European countries should, in principle, switch from the F-35 to the Rafale; furthermore, the new Franco-Italian SAMP/T air defense system could be used instead of the US Patriot air defense system.

One challenge stems from the fact that a number of European NATO countries, such as the United Kingdom, Norway, the Netherlands, Belgium, and Italy, already possess F-35 jets. Many other countries, including officially neutral Switzerland, have placed binding orders for the aircraft.

Conflicting voices are also rising in Germany. Former “transatlanticists” in particular are distancing themselves from the F-35 procurement. Former Airbus CEO Thomas Enders, now president of the influential think tank German Council on Foreign Relations (DGAP), said last week, “Nobody needs the F-35”; Enders added that he “would be the first to cancel it under these new geopolitical conditions.” CDU foreign policy expert Roderich Kiesewetter also called for a “review of existing contracts with the US,” such as the F-35 purchase agreement, stating, “It is now absolutely essential to look for alternatives.”

Defense Minister Boris Pistorius, however, favors continuing with the F-35 purchase. One of the reasons he cites for this is nuclear sharing, whereby German Air Force fighter jets could drop US nuclear bombs in a war scenario. Observers note that dropping US nuclear bombs is already only possible on orders from Washington, making it irrelevant whether the F-35s could be paralyzed by the US as long as they are available solely for nuclear sharing. However, nuclear sharing itself is no longer considered secure.

Berlin has already transferred approximately $2.42 billion to Washington for the F-35 and has begun costly modifications at Büchel Air Base, where the US fighter jets are to be stationed.

Continue Reading

EUROPE

AfD aims to expand influence in European Parliament

Published

on

Months after the European Parliament (EP) elections, the right-wing Alternative for Germany (AfD) is gradually establishing itself in Brussels and even seeking to expand the parliamentary group it leads.

A series of scandals during the European Parliament elections in June had caused the AfD to distance itself from other right-wing European parties, leading to more isolation in Brussels than ever before.

However, becoming the second strongest party in the recent general elections in Germany at the end of February, along with support from Elon Musk and a bilateral meeting with US Vice President JD Vance, has given the AfD international attention and, at least in some eyes, renewed legitimacy.

The AfD’s newfound prestige is particularly noticeable in the EP, where international cooperation is a daily routine. Once a solitary faction forced to form its own group after the EP elections, the party now wants to expand the European of Sovereign Nations (ESN).

Party sources speaking to Euractiv confirmed that the AfD is in talks with at least two potential new members. Greece’s far-right Niki (Victory) party and Spain’s “anti-establishment” SALF party have recently held discussions with the ESN.

A source close to the negotiations said, “We expect SALF leader Alvise Pérez to join as early as April or May.”

Just a few months ago, the AfD had been sidelined by like-minded colleagues in Brussels, citing espionage investigations and “inflammatory statements.”

Ultimately, the AfD was expelled from the Identity and Democracy (ID) group, the former right-wing group led by Marine Le Pen’s National Rally, who feared that their German friends could cost them votes ahead of the European and French elections.

Without its former allies, the Germans struggled to form their own faction in Brussels because most candidates had found places in more established structures.

Together with another group of right-wing groups, the AfD formed the ESN in the EP.

Subsequently, attitudes toward the AfD and ESN softened, particularly with the support of the Trump administration. Even the French felt compelled to approach the AfD again in Brussels, inviting them, along with the European Conservatives and Reformists (ECR) group led by Meloni’s party, to cooperate on issues of common interest.

Leaders of the AfD’s sister party in Austria, the Freedom Party (FPÖ), are also pleased with the end of tensions between the Germans and other right-wing groups.

“I think cooperation is extremely important, and I also think it is extremely important that at some point, perhaps one day, there will be a significant right-wing group in the European Parliament,” said FPÖ MEP Petra Steger to Euractiv on election night in Germany.

The two parties have always been close but recently split into two main groups in the EP: the Patriots for Europe (PfE) and the ESN.

The AfD now wants to stabilize and secure the ESN. “We do not provide information about confidential discussions. But you can be sure that at the end of the legislative period, the parliamentary group will be larger than it is today,” ESN Co-Chair René Aust told Euractiv.

Continue Reading

EUROPE

Calls for German nuclear armament grow louder

Published

on

Following some German politicians raising the idea of acquiring nuclear weapons, Frankfurter Allgemeine Zeitung (FAZ), one of the country’s most important newspapers, has launched a campaign advocating for Berlin to possess atomic weapons.

Although Germany renounced nuclear weapons, experts agree that Berlin has the technological capacity to produce its own nuclear weapons in the near future, stating that the necessary technology for uranium enrichment is available at research centers in Jülich and Gronau.

Rainer Moormann, a former employee of the Jülich Research Center, notes that experts believe the construction of a much larger uranium enrichment facility is inevitable, and this would make it possible to produce “the necessary quantity for a few nuclear warheads within three to five years.”

However, delivering nuclear weapons to their targets requires missiles, and Germany is relatively weak in the construction of long-range ballistic missiles.

Nevertheless, it seems possible to produce cruise missiles that could be equipped with nuclear weapons. For example, it is said that Taurus could be used in this way. For this purpose, a maximum period of five years is considered realistic.

The legal and political situation is more challenging. On the one hand, the Federal Republic of Germany ratified the Treaty on the Non-Proliferation of Nuclear Weapons on May 2, 1975, albeit with a significant delay. Therefore, if the German government wants to start building its own nuclear weapons, it will first have to terminate the treaty.

From a purely legal point of view, this is possible without further ado, but it is likely to have serious political consequences, as other states may follow Germany’s example and try to obtain nuclear bombs for themselves.

The biggest examples in this regard seem to be Iran, Saudi Arabia, South Korea, and Poland.

On the other hand, the Two Plus Four Agreement, in which the Federal Republic of Germany confirmed its renunciation of nuclear, biological, and chemical weapons and also accepted the upper limit of 370,000 Bundeswehr military personnel, also constitutes an obstacle to Germany’s nuclear armament.

This treaty cannot be terminated; any changes require the approval of the four allies in World War II and the countries that occupied post-war Germany (US, Britain, France, USSR-Russia).

Ernst-Jörg von Studnitz, one of the former German ambassadors to Russia, recently ruled that the clausula rebus sic stantibus principle of international law could be invoked, according to which treaty provisions can be terminated if the basic conditions under which a treaty was concluded change.

This is the case for Germany because the US nuclear umbrella is no longer considered reliable and there is a possibility of escalating conflict with Russia.

The Frankfurter Allgemeine Zeitung (FAZ) also embraced the essence of this argument in a widely read editorial on Monday. The newspaper argued that there were “good reasons” to speak of the elimination of the basis of the Two Plus Four Agreement and wrote, “A ‘commitment’ that harms the country cannot continue.”

In the headline of the commentary, FAZ argued that Germany “must loosen its old shackles.”

The political turmoil that would result from the termination of the Two Plus Four Agreement could be enormous. The Federal Republic’s possession of nuclear weapons would not only lead to strong reactions from the four former allies, albeit for different reasons.

For example, a large majority of the public still opposes such a plan. However, the results of various polls fluctuate significantly; moreover, the reluctance to a ‘German bomb’ is decreasing.

A Forsa poll conducted about two weeks ago showed that 64% of the population rejected the Federal Republic’s nuclear armament; the proportion of supporters remained at 31%.

But this rate is four points higher than in 2024.

A survey conducted by the public opinion research institute Civey in the same period also concluded that only 48% of the population explicitly rejected a German nuclear bomb. A year ago, this figure was still 57%.

Also, the proportion of those who support Germany’s acquisition of nuclear weapons rose to 38%.

Both polls show that the proportion of those who support Germany’s acquisition of nuclear weapons is much higher among those living in the former Federal Republic of Germany than among those living in the regions of the former German Democratic Republic (GDR).

Two employees of the Helmut Schmidt Federal Armed Forces University in Hamburg, in their article published in FAZ yesterday, argued that the nuclear weapons debate in Germany is “still characterized by moral reflexes and historically transmitted narratives,” probably also taking into account the insufficient public support for increased nuclear armament.

The authors instead call for a “measured reassessment” of the issue. For example, while pointing to the importance of “maintaining state functions even after a nuclear attack,” they write that the current debate should be expanded “to include important aspects of civil defense and social resilience.”

The authors argue that the German people will have to “learn to live with the bomb,” and for this, they point out that “a comprehensive, socio-politically based strategy that integrates the relevant military, political and social dimensions” is needed.

In short, while it is necessary to “persuade its own people” about the necessity of nuclear armament and to bear its consequences, it is emphasized that “traditionally” this task falls to the leading media.

Continue Reading

MOST READ

Turkey