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German ‘Mittelstand’ expects the crisis to deepen in 2025

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According to a survey conducted by the German Mittelstand Business Association (BVMW), eight out of ten Mittelstand companies anticipate a rapid contraction of the German economy in 2025.

The Mittelstand refers to traditional German companies, many of which dominate up to 90% of the export market. These firms cannot be classified as classic SMEs (small and medium-sized enterprises). Companies within the Mittelstand category form the backbone of the German economy, particularly in terms of employment.

As reported in WELT, 58% of the surveyed companies expect an economic downturn. One in five companies is already preparing for a crisis within the next twelve months.

The survey also revealed that 40% of Mittelstand companies experienced a decline in turnover over the past year. Another 40% of respondents indicated plans to reduce investments in the coming year compared to the previous year.

Beyond the general economic outlook, Mittelstand companies are particularly concerned about the shortage of skilled labor: 62% fear they will be unable to fill vacant training positions in the upcoming year.

Christoph Ahlhaus, Federal Managing Director of the BVMW, stated: “Not only our economy but also confidence in the recovery has been shaken by the political upheavals of recent years. Anyone assuming political responsibility in Germany must clearly articulate how our economy can move forward again.”

Hans-Jürgen Völz, Chief Economist at the BVMW, emphasized the importance of implementing reform policies in areas such as red tape reduction, energy costs, the labor market, and social policy. These measures are crucial to restoring hope and encouraging companies to invest in Germany.

Völz added, “It is essential to focus on the 3.5 million Mittelstand companies rather than large corporations and organizations that can relocate globally. Well-meaning speeches praising the Mittelstand on Sundays must be matched by concrete political actions in parliament from Monday to Friday.”

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Germany holds first national veterans’ day since World War II

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On Sunday, June 15, Germany held its first celebration for military veterans since the Second World War.

Defense Minister Boris Pistorius joined current and former soldiers and members of the public for events across the country, including a “veterans’ village” constructed in front of the Reichstag building in Berlin.

This marks a historic shift in a country where anything that could be seen as a “display of militarism” has been considered taboo for decades.

The new commemoration, established by a parliamentary resolution passed last year, is designed to “express gratitude, appreciation, and respect” for the Bundeswehr, Germany’s federal army.

The German Bundestag emphasized that the day also aims to deepen the bond between the military and the German people. At the ceremony in Berlin, Bundestag President Julia Klöckner of the CDU described the Bundeswehr as a “parliamentary army,” stating that this places a special responsibility on lawmakers.

She also acknowledged the demanding and often stressful nature of military service, stressing the need to provide soldiers with appropriate support.

Chancellor Friedrich Merz also stated on the social media platform X, “The Bundeswehr is an integral part of our society,” adding that those who serve or have served in the military deserve widespread appreciation, respect, and recognition.

“There won’t be tanks and fighter jets. We’re not there yet. But we are taking a really good first step,” Lieutenant Colonel Michael Krause, head of the newly established national veterans’ office, told the Financial Times (FT), comparing it to major military events in other countries.

Germany is channeling money and resources into its armed forces in response to NATO’s concerns about “Russian aggression.” The new chancellor, Friedrich Merz, has pledged to make Germany’s military the “strongest conventional army in Europe.”

Sarah Brockmeier-Large from the Peace Research Institute Frankfurt said that the fact politicians finally agreed to hold a veterans’ day is “a symbol of a growing appreciation in German society that we need functioning armed forces and that soldiers provide a vital public service.”

Berlin’s role in two world wars created a deep-seated skepticism toward military power after 1945, particularly in West Germany, leading to the emergence of a strong pacifist movement.

For decades, the term “veteran” was mostly associated with those who fought in Adolf Hitler’s Wehrmacht, not with those who served in the Bundeswehr, which was founded in 1955 and placed under strict parliamentary control.

“We couldn’t be proud of our old wars. That’s why in the 50s, 60s, and 70s, there was no veteran culture in the German Bundeswehr,” said Patrick Sensburg, president of the German reservists’ association.

During the Cold War, when Germany was divided, the Bundeswehr only participated in operations outside NATO territory to assist with natural disasters.

After “reunification” in 1990, the National People’s Army of the German Democratic Republic was disbanded, and a small number of its soldiers joined the Bundeswehr.

The newly unified army soon began participating in combat operations abroad. German warplanes helped bomb the former Yugoslavia during the NATO-led Kosovo mission in 1999.

But the most significant event for the veterans’ movement was the participation of 93,000 German soldiers in the US-led war in Afghanistan over nearly 20 years. Initially declared a German peacekeeping mission, it evolved into a combat operation as Bundeswehr troops fought the Taliban.

A total of 59 German soldiers were killed in the conflict, which also claimed the lives of about 3,000 American and allied soldiers and more than 100,000 Afghan civilians.

Those who served in Afghanistan, including many who returned home with physical and psychological wounds, initiated a grassroots movement to establish a veterans’ day, inspired by events like Anzac Day in Australia and New Zealand, Armed Forces Day in Great Britain, or Veterans Day in the US.

In 2012, an attempt by then-defense minister Thomas de Maizière to introduce the idea failed due to widespread political opposition.

“I think it was too early,” said military historian Sönke Neitzel, noting that at the time, Germany’s combat operations in Afghanistan were still seen as something that “should never have happened.”

But the pressure from former soldiers and the associations established to care for them continued.

Last year, German lawmakers approved a new plan to celebrate veterans “publicly and visibly” every year on June 15. Defense Minister Pistorius called it a “strong, important, and, yes, overdue sign of appreciation and gratitude.”

There is still opposition to the idea. Die Linke (The Left Party), which received 9% of the vote in the February parliamentary elections, organized an event in Berlin on Sunday titled, “We will not celebrate your wars.”

The party argued that the new veterans’ day was designed to “make war acceptable” and create “cannon fodder” for the German armed forces, at a time when military leaders are warning they need to recruit tens of thousands of additional soldiers in the coming years.

In the eastern states, formerly part of the German Democratic Republic, there is widespread opposition to Germany being one of Ukraine’s largest arms suppliers, partly due to the region’s historical ties with Russia.

But Katja Hoyer, a historian and author of the book Beyond the Wall: East Germany 1949-1990, argued that East Germans, who are disproportionately represented in the lower ranks of the Bundeswehr, still show broad support for the military and those who have served in it.

“The idea of rearming and strengthening the Bundeswehr is not a problem for many East Germans. There is a difference between the attitude towards the military in general and the attitude towards this conflict [in Ukraine],” she said.

The establishment of an annual event has been welcomed by veterans, although some remain cautious.

Thorsten Gärtner, a senior sergeant in the Bundeswehr who served five tours in Afghanistan and suffers from post-traumatic stress disorder, said he still does not always feel comfortable wearing his uniform on public transport in Berlin.

“I hope that one day it will be like in other countries, like the US, with an ID card for veterans and a 10% discount everywhere. I doubt that will happen. It’s not yet accepted. It will take a very long time,” Gärtner said.

Meanwhile, Prince Harry of the United Kingdom also released a video message in German to commemorate Germany’s first Veterans’ Day.

In his message, the Duke of Sussex wore various ceremonial medals, including the Afghanistan Campaign Medal, the Golden Jubilee Medal, the Diamond Jubilee Medal, and the Platinum Jubilee Medal.

Beginning his message in fluent German, the prince greeted viewers with “Guten Tag Deutschland” (Good Day Germany) before switching to English.

Prince Harry claimed it was a “great honor” to be tasked with delivering a message to the Germans on their inaugural Veterans’ Day. He said, “The warmth, enthusiasm, and unwavering support shown by the German people to our global community of wounded soldiers was truly impressive. You have certainly delivered on your promise to create a home of respect.”

Prince Harry praised the strength and resilience of veterans, describing them as “living testaments to resilience and moral courage.”

“Today, let us together renew our commitment to serve one another, to protect the freedoms that define who we are, for the enduring promise of peace, dignity, and democracy,” he added.

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A state dedicated to Israel: Germany

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In the escalating conflict following Israel’s attack on Iran, Germany stands out as the European nation providing the most substantial and unconditional support to Tel Aviv.

While the federal government approves of Israel’s actions against Iran and does not criticize the killing of civilian scientists, it objects to Iran’s retaliatory measures.

Friedrich Merz, leader of the Christian Democratic Union, commented on the attack against Iran on Friday, stating, “We affirm Israel’s right to defend its existence and the security of its citizens.”

Merz also announced that his government is preparing for “possible attacks by Iran against Israeli and Jewish targets.” In a statement before heading to the G7 summit in Canada on Sunday, he said, “Tehran must immediately stop the bombardment of civilian targets in Israel.”

Israel’s Embassy in Berlin has been closed indefinitely since Friday. The federal government has also increased security for Jewish institutions.

Merz stated on Friday that security officials were taking the necessary precautions.

He also reiterated Germany’s position that Iran should not develop or possess nuclear weapons. “This would pose a threat to Israel, the Middle East, and the entire international community,” Merz claimed.

Arguing that Iran’s nuclear program constitutes an “existential threat to the state of Israel,” Merz defended the country’s “right to defend its existence and the security of its citizens,” calling it “Israel’s legitimate right.”

Merz had also previously guaranteed that his government would not touch Prime Minister Benjamin Netanyahu, despite an arrest warrant issued by the International Criminal Court (ICC).

Before formally becoming chancellor, Friedrich Merz had said, “I promised that we would find the ways and means for Netanyahu to visit Germany and leave again without being arrested if he plans to do so.”

Foreign Minister Johann Wadephul echoed these sentiments on Friday, stating that Berlin would “stand in solidarity with Israel.”

Wadephul also announced that Germany, France, and the United Kingdom are prepared to hold urgent talks with Iran regarding its nuclear program to de-escalate tensions in the Middle East.

The German minister, who is currently holding talks in the Middle East and will visit Egypt, Lebanon, Jordan, Oman, and Israel, stated he is trying to contribute to reducing tensions between Israel and Iran. He alleged that Tehran had previously missed opportunities for constructive dialogue.

In an interview with the German public broadcaster ARD late on Saturday (June 14), Wadephul said, “I hope this is still possible. Germany, France, and the UK are ready. We are offering Iran urgent negotiations on the nuclear program, and I hope the offer is accepted. This is also a crucial precondition for de-escalating this conflict so that Iran poses no danger to the region, the state of Israel, or Europe.”

Speaking from Oman on Sunday, Wadephul argued that the conflict could only end if all parties applied pressure on both Iran and Israel.

“There is a shared expectation that both sides must make a serious attempt to stop the cycle of violence in the coming week,” the minister said.

When asked if he believed the Iranian government could fall, Wadephul stated that he did not think Israel intended to overthrow the regime in Tehran.

Touching on Gaza, Wadephul called the humanitarian situation in Palestine “unacceptable” and urged Israel to grant unrestricted access to aid organizations.

“The hunger, death, and suffering of the people in Gaza must end,” said Wadephul, while asserting that Hamas was responsible for the conflict, adding that the group must release the hostages abducted during its attack on Israel on October 7, 2023.

In his first week in office, following visits to France, Poland, and Ukraine, Foreign Minister Johann Wadephul traveled to Israel.

The German state’s approval of Israel’s attacks on Iran and the killing of Iranian civilians appears to be linked to the “Staatsräson” (reason of state) doctrine formulated during the Angela Merkel era. This is based on the idea that ensuring Israel’s existence and security also ensures Germany’s own existence and security.

The previous “Green” Foreign Minister, Annalena Baerbock, had also given her full support to Israel’s indiscriminate occupation in Gaza.

In her speech to the Federal Parliament on October 10, 2024, Baerbock stated, “Self-defense does not just mean fending off terrorists; it means destroying them. When Hamas terrorists hide behind people, behind schools… civilian places lose their protected status because they are abused by terrorists.”

Baerbock added that she had clearly communicated to the UN that “civilian areas can lose their protected status because they are abused by terrorists.”

In 2024, Israel purchased goods worth $91.5 billion worldwide. Israel’s largest exporters were China with $19 billion, the United States with $9.4 billion, and Germany with $5.6 billion.

Germany primarily exports vehicles, pharmaceuticals, machinery, and electronic products to Israel. For instance, in March 2025, Germany’s top exports to Israel were pharmaceuticals (€43.5 million), motor vehicles and caravans (€43.5 million), and railway or tramway locomotives and wagons (€30.4 million).

Germany announced earlier this month that it had approved arms sales to Israel worth nearly half a billion euros since October 2023.

In response to a parliamentary inquiry from the Left Party, the German government stated that from October 7, 2023, to May 13, 2025, export licenses for arms shipments totaling €485.1 million ($554.3 million) were granted to Israel.

The approved exports include a wide range of military equipment, including weapon systems, ammunition, radar and communication devices, and parts for armored vehicles.

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Post-Brexit reset falters as France targets UK defense firms

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Despite a post-Brexit reset, France is attempting to exclude British arms companies from the EU’s defense industry program.

A diplomatic source told The Telegraph that Paris is trying to limit member states wishing to purchase weapons under this program to those manufactured predominantly within the bloc.

The European Defence Industry Programme (EDIP) is being touted by the European Commission as the most significant overhaul of the continent’s industrial base. Under the program, EU funds will be channeled into joint procurement projects and the production of weapons, ammunition, and other military equipment.

The EDIP, which has been in preparation for six months, is part of a broader race to spend €800 billion on defense by the end of the decade.

French diplomats have insisted that this vehicle should only be used to support companies based in the EU, Norway, and Ukraine. This would mean that member states seeking to make purchases under the program would be limited to technologies where at least 85% of their components are produced within the bloc.

This demand means the United Kingdom, which recently signed a major defense and security agreement with Brussels, would be excluded from most projects financed by the EU budget. London would also be barred from joint procurement projects under the EDIP program.

An EU diplomat told The Telegraph, “Just a month ago, we solemnly declared that a new page had been turned in our relations with the United Kingdom and that a new era had begun. But at the first opportunity to put those words into action, we closed the book.”

There are also concerns that France’s hardline stance could lead to potential EU funding cuts for factories producing Patriot surface-to-air missile defense systems because they are based on US technology.

This decision comes at a time when NATO’s European allies and Canada have been warned that they need to increase their air defense systems by 400% to counter a potential Russian attack.

“It seems self-defeating not to invest in the only available air defense system just because it’s American-made,” the diplomat added.

French President Emmanuel Macron has been insistent that EU defense plans should be used to strengthen the continent’s own industry rather than allowing funds to be invested in foreign companies. Many EU countries, such as the Netherlands, Romania, and Greece, base their defense strategies on purchasing American systems like the Patriot air defense batteries.

To address these concerns, discussions are underway to allow technology transfers from defense companies outside the EU to those within the bloc. However, insiders suggest this mechanism will get bogged down in bureaucracy, making it practically impossible to secure funding.

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