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German industry lobby urges priority for growth and competitiveness

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A new policy paper published by the Federation of German Industries (BDI) calls for “making German industry, growth, and competitiveness the top priority” in Germany.

Based on this foundation, the BDI document sets out guiding principles for German foreign policy.

According to German Foreign Policy, the document, published last Friday (25 September), strongly emphasises that existing dependencies must be consistently reduced in both Germany and the EU.

The document highlights a “systemic rivalry” between the EU and China and advocates “de-risking”, particularly in the field of critical raw materials.

The BDI advocates a similar “de-risking” regarding the US as well. However, the document states that this should not come at the expense of long-term strategic relations with the US.

Expanding the EU’s “partnerships” worldwide with other countries and alliances is also among the policy recommendations.

Top priority: Growth

The BDI is the most influential association of German industry, representing 38 separate member associations, more than 100,000 companies, and approximately eight million employees.

In its latest policy paper, the association calls for “new economic policy orientations” in light of weakening growth and declining competitiveness in Germany and Europe, as well as fundamental shifts in global politics and the international system.

Titled “Principles of Economic and Trade Policy”, the document is published against the backdrop of ongoing debates on crisis and reform in Germany and calls for “making German industry, growth, and competitiveness the top priority”.

This document is understood not as a political wish list for day-to-day politics, but rather as a common guideline for member associations.

Finding of “systemic rivalry” with China

In its sections on foreign trade and European policy, the document highlights, on the one hand, the EU’s competition with China, classifying it as “systemic rivalry”.

Referring to China’s “state-driven” market distortions, it states that the implementation of existing measures to bolster the Union’s competitiveness remains inadequate.

Arguing that “de-risking” and reducing dependencies regarding the People’s Republic of China remain the correct approach, the BDI wants these steps implemented “more rigorously”.

According to the BDI, even if “de-risking” incurs costs, including those arising from Chinese countermeasures, “remaining passive is, in the long run, economically far more expensive and irresponsible in terms of security policy.”

According to industrialists, the EU in particular must reduce its strategic dependence on critical raw materials in response to the “challenge” posed by the Chinese economy to the “open social market economy”.

In addition, it seeks to ensure the “rapid and legally robust implementation of investment screening and export controls”.

This translates into tighter restrictions on investments by Chinese companies and exports to the People’s Republic of China.

Finally, the report highlights the need for new economic “defensive instruments”, including anti-dumping and anti-subsidy measures, to counter competitive distortions.

Ambivalent stance in relations with the US

At the same time, the document adopts a stance toward the US that is at times similar to the position taken toward China.

The document identifies a “progressive paradigm shift in US trade and industrial policy” and advocates a “self-confident” and “interest-driven European position”.

Furthermore, it proposes establishing an “enhanced transatlantic de-risking dialogue” aimed, on the one hand, at safeguarding European autonomy and, on the other, at developing shared transatlantic priorities regarding critical technologies and resilient supply chains.

Finally, the BDI advocates adopting appropriate countermeasures against US protectionist measures that weaken the competitiveness of European companies.

However, it is urged that this should not come at the expense of long-term strategic relations with the US.

Emphasis on new partners beyond the US and China

According to the BDI, beyond realigning its relations with China and the US, the EU must also expand its strategic partnerships with other regions of the world.

The goal is to build a “resilient network of like-minded partners”, “particularly for raw materials and key technologies of strategic importance”, offering “market access, investment protection, and the diversification of critical supply chains”.

Throughout this year, the EU has signed a series of trade agreements with countries and economic blocs across the world.

In January, a free trade agreement was signed with Mercosur, the South American trade bloc comprising Argentina, Bolivia, Brazil, Paraguay, and Uruguay. Bolivia is not a party to the agreement because it became a full member of Mercosur after the treaty text was finalised.

Eliminating tariffs on more than 91% of EU exports to Mercosur countries, this agreement was the culmination of negotiations that lasted more than a quarter of a century.

Also in January, the EU signed a trade agreement with India, regarded as the largest free trade agreement in India’s history.

Under the terms of the agreement, both sides aim to reduce or eliminate tariffs on more than 95% of their bilateral imports.

A comprehensive rapprochement is also taking shape in EU relations with Canada. Canada, whose relations with the US have deteriorated significantly due to Trump’s annexation threats, welcomes this development.

On 16 September, European Commission President Ursula von der Leyen formally invited Canada to become the EU’s first “associate member”.

Presenting this unprecedented offer to Canadian Prime Minister Mark Carney at the European Parliament, she stated that the EU and Canada “view the world from the same perspective”, for instance regarding the war in Ukraine.

Von der Leyen’s offer followed Carney’s call on ten EU member states to finally formally ratify the EU’s trade agreement with Canada, which was signed nine years ago.

Carney argued that this would make all parties “more resilient, more independent”, and more prosperous.

Known as the Comprehensive Economic and Trade Agreement (CETA), which provisionally entered into force in 2017, the agreement between Canada and the EU has not yet been ratified by ten EU member states.

This is primarily due to concerns that Canadian agricultural exports could harm European farmers.

Industrial bosses want wage suppression

In addition to foreign trade and European policy, several other areas are addressed in the BDI policy paper.

For instance, one section addresses “economy, competition, regulation, and industrial policy”. Here, it is stated that Germany as a business location needs growth-enhancing measures and structural reforms.

“High labour and energy costs, alongside the high tax burden on labour and capital”, rank among the most critical areas where reforms are deemed necessary.

The BDI also advocates introducing “spending discipline” to prevent massive public expenditure, including military build-up and infrastructure, from spiralling out of control.

In the section titled “Digital and Innovation Policy”, it is noted that technological sovereignty and resilience must be advanced.

This encompasses the “expansion of common European data spaces, further development of an integrated digital single market, simplification of digital regulation, and robust cybersecurity architectures”.

Furthermore, it demands that Germany and the EU expand their capacities across the entire semiconductor supply chain, from research and design to basic chemical products and system integration.

Europe

Trump midterms calculus halts Israeli strike plan against Iran

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A comprehensive military operation planned by the Israeli military for 10 October did not take place because US President Donald Trump chose to avoid a broad conflict before the 3 November congressional midterm elections.

Preparations had been made on the orders of Prime Minister Benjamin Netanyahu for an aerial bombardment meant to last several days, according to a report by the Financial Times citing sources familiar with the matter.

The list of targets included nuclear facilities and locations associated with the Iranian leadership, along with power stations and other civilian infrastructure sites.

The planned strikes were projected to exceed the joint operation launched by the US and Israel in February in terms of intensity.

White House Deputy Press Secretary Anna Kelly told the newspaper: “The United States is not going to strike Iran at any point before the midterms.”

Kelly argued that the administration in Tehran was in distress both economically and militarily, adding that the blockade imposed on Iranian ports and US efforts to secure oil shipments through the Strait of Hormuz were producing results.

Speaking to the newspaper, one source addressed the possibility of strikes resuming in the coming weeks, saying: “There’s either going to be a deal or a strike.”

The same source reported that Washington aims for a comprehensive settlement that resolves the conflict over both the Strait of Hormuz and the nuclear programme, although it remained unclear whether the US would have participated directly in the cancelled operation.

Another source said the preparations for the operation might have served as leverage to pressure Tehran in negotiations, adding that the final decision on any new military step rests with the US president.

Hegseth reviews updated target list in Israel

An Israeli official said US Secretary of War Pete Hegseth visited Israel on 19 October to meet with Netanyahu and senior representatives.

Another source stated that the Israeli side presented an updated target list to its American counterparts, compiled with fresh intelligence and incorporating civilian infrastructure sites that had not been struck earlier this year.

The Pentagon did not respond to questions regarding the meetings, while Netanyahu’s office and the Israeli military declined to comment.

Despite the postponement of the operation, Trump and Netanyahu continued to issue military warnings to Iran in public.

In a video released on 19 October, Netanyahu addressed Trump, saying: “Donald, you said we need to finish this, and we will finish it together.” Speaking on speakerphone, Trump responded: “You’re a great warrior, and we’re going to prove it very soon.”

These engagements between the leaders coincide with critical election cycles in both countries.

Parliamentary elections in Israel are scheduled for 27 October, one week before the vote in the US.

Most public opinion polls in the country show the opposition bloc holding a narrow lead over Netanyahu’s coalition, though neither side commands a clear majority.

Axios, a US-based news outlet, previously reported that the Pentagon instructed military planners to finalize strike plans against Iran, though the directive specified no date and Trump had not reached a final decision.

On 15 October, CNN reported on plans to use the GBU-43/B munition, known as the “mother of all bombs”, against Iranian nuclear facilities, with US officials who spoke to the broadcaster expressing scepticism about the weapon’s ability to destroy deep bunkers.

While Tehran announced that it remains open to a diplomatic solution, it declared that any potential operation would draw a fierce response.

Iranian Foreign Minister Abbas Araghchi stressed that if its adversaries chose military conflict, the response would be “much harsher than before”.

Following the joint operation launched by the US and Israel on 28 February, Iran retaliated by striking targets across the region and restricting maritime passage through the Strait of Hormuz.

Although the parties reached an agreement in June covering a ceasefire and negotiations to lift the blockade in the strait, reciprocal strikes between the US and Iran have not ceased.

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EU urges Britain and Canada to help close Ukraine’s €70bn budget gap

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The European Union plans to persuade Britain and Canada to step up their assistance to close Ukraine’s projected 70 billion euro funding deficit in 2027.

Brussels aims to raise the issue during summits with Canada on 29-30 October and with Britain on 20 November, according to a Politico report citing European officials and diplomats.

Ukrainian President Volodymyr Zelenskyy, speaking at a summit in Brussels earlier this month, said the country’s military expenditure would reach 155 billion euros in 2027, requesting an additional 70 billion euros from European leaders.

The administration in Brussels wants to bring other allies into play, noting that a previously approved 90 billion euro loan is insufficient to meet all the costs.

European Commission President Ursula von der Leyen recalled that the EU and its member states have shouldered 80% of external aid provided to Ukraine, saying: “We urgently need our other partners to step up their efforts.”

According to bloc data, the EU and member states have transferred more than 231 billion euros in resources to Ukraine so far.

Brussels will not tie aid plea to trade conditions

European officials emphasise that the call to increase aid does not constitute a criticism directed at Britain or Canada.

Speaking to the publication, a European diplomat said Brussels would not directly link support for Ukraine to conditions on trade or defence cooperation, adding: “The EU is not going to pull a Trump and openly make its goodwill toward partners contingent on what they give to Ukraine.”

The EU had previously taken part in a commitment to provide 90 billion euros in loans to meet roughly two thirds of Ukraine’s requirements in the 2026-2027 period.

The Brussels administration also expected to raise 45 billion euros from partners such as Canada, Japan, South Korea, Australia, and Norway, though a portion of these funds has not yet been allocated.

The government in London states that it has committed 25 billion pounds to Ukraine, while Canada has pledged military aid valued at 5.4 billion euros alongside 8.2 billion euros in direct financial support.

Emphasising that her country is an unwavering supporter of Ukraine, Privy Council of Canada spokesperson Catherine Séguin stated that they have committed roughly 26 billion Canadian dollars for military, financial, humanitarian, and development assistance.

Brussels is also urging Japan to increase its aid volume.

A source familiar with Tokyo’s position stated that Japan has provided around 20 billion dollars to Kyiv and could allocate additional funds in line with Ukraine’s request.

National Bank of Ukraine Governor Andriy Pyshnyy announced in a statement during the summer that about 200 billion dollars in direct budget financing had been provided by the West since the start of the conflict.

At the end of June, the Ministry of Finance of Ukraine calculated the country’s external financing requirements for the 2026-2029 period at 145.9 billion dollars.

Finance Minister Serhiy Marchenko stated that, despite the assistance coming from the West, the country’s financing needs continue to remain elevated.

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EU rejects US proposal to resume Russian gas flows through Ukraine

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The European Commission has rejected a peace plan proposal from the US administration that entails resuming Russian natural gas purchases via Ukraine.

Commission spokesperson Paula Pinho stressed that Brussels has not changed its stance.

Pinho recalled that European Commission President Ursula von der Leyen had previously stated clearly that no restrictions on Russia would be lifted until the conflict comes to an absolute end.

The New York Times reported that the US president’s new peace proposal includes Europe returning to large-scale Russian gas purchases through Ukraine.

According to the report, Special Envoy Steve Witkoff and Jared Kushner raised the matter during talks in Kyiv last month with Ukrainian and European officials, including Ukrainian President Volodymyr Zelenskyy.

Sources contacted by the newspaper noted that some European and Ukrainian officials believe Washington would seek to secure a share of Russian gas exports.

Under this plan, the objective is to channel a share of the profits to American companies or the US government.

Russian President Vladimir Putin had said Moscow was ready to work on supplying fuel to European nations, but noted that a signal must come from the other side.

Putin stated that Moscow must evaluate the feasibility and necessity of fuel flows to the Western market, adding that they would not wait for Europe to shut the door ostentatiously on energy supplies.

Kremlin spokesperson Dmitry Peskov remarked that European nations rejecting Russian gas would make them dependent on the US and deprive them of the ability to diversify their supply sources.

Peskov noted that the US sells gas at very high prices and that if European nations pay more for energy, their industries will suffer.

The EU plans to halt liquefied natural gas imports from Russia entirely by 1 January 2027 and pipeline gas by 30 September 2027.

Von der Leyen had previously announced that the bloc would reduce Russian gas imports to zero by the end of 2027.

Russia halted gas flows to Europe via Ukraine as of 1 January 2025, when the five-year contract between Gazprom and Naftogaz of Ukraine expired.

Putin had stated that Kyiv refused to extend the transit agreement. Following the closure of the Ukrainian route, the TurkStream pipeline remained the only operational corridor carrying Russian pipeline gas to Europe.

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