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German Mittelstand warns of rising protectionism

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German companies, which form the backbone of the German economy and dominate 95% of the global export market in their respective niches, have outlined their expectations for 2025.

The so-called Mittelstand companies, often referred to as “family enterprises” rather than traditional SMEs, have voiced concerns about the anticipated rise in protectionism by 2025. They urged policymakers to adopt a pragmatic approach when negotiating free trade agreements.

A survey conducted exclusively for WirtschaftsWoche by the business associations Die Familienunternehmer and Die Jungen Unternehmer reveals that few expect a resurgence of free trade. Instead, over 75% of respondents fear the continued expansion of global protectionism by 2025.

In this context, approximately 820 business leaders surveyed in October called for greater pragmatism in European trade policies. A majority advised that the signing of new European free trade agreements should not be conditional on compliance with stringent environmental or social standards in partner countries. Only 31% of respondents supported such conditions.

“Increasing protectionism poses a significant threat to Germany’s position as an export powerhouse,” cautioned Marie-Christine Ostermann, President of the Association of Family Businesses. She added, “Eliminating non-tariff trade barriers simplifies bureaucracy, delivering a cost-free boost to growth. The German government must actively support this.” Ostermann emphasized that free trade agreements not only reduce tariffs but also create new jobs, thereby promoting widespread economic growth.

Open markets, she explained, are essential for ensuring economic stability, not just in Germany or Europe, but globally.

On a cautionary note, Ralph Ossa, Chief Economist of the World Trade Organization (WTO), warned of a “new narrative of globalisation.” He observed that many citizens and policymakers increasingly view trade as a contributor to inequality and environmental degradation rather than a solution. Consequently, Ossa does not foresee improvements in globalisation in the near future, as the global economy remains at a crossroads where key trade policy decisions will have profound impacts.

A recent study by the United Nations Conference on Trade and Development (UNCTAD) projects that global trade will reach a record level of nearly $33 trillion USD by 2024, driven primarily by a 7% growth in the services sector. However, UNCTAD’s outlook for 2025 is less optimistic, warning of potential trade wars and escalating geopolitical tensions.

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US officials’ visit to Greenland sparks controversy amid political tensions

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As negotiations to form a new government continue in Greenland, a Danish territory, following recent elections, senior officials from the Trump administration are scheduled to visit the island next week.

According to individuals familiar with the trip who spoke to the Financial Times (FT), US National Security Advisor Mike Waltz, Usha Vance (wife of Vice Presidential candidate J.D. Vance), and the Secretaries of Defense and Energy will be in Greenland from Thursday to Saturday for a “private visit.”

A source familiar with the visit confirmed that Waltz and Energy Secretary Chris Wright will tour the US military installation, Pituffik Space Base, in Greenland.

Danish and Greenlandic officials have indicated they are open to an increased US presence on the island but are not receptive to a takeover of the base.

The FT reported that the visit has caused consternation among Greenlandic and Danish officials. Jens-Frederik Nielsen, the leader of Demokraatit, which won this month’s elections, stated that the timing of the visit, amidst ongoing coalition negotiations and local elections, “once again shows a lack of respect for the people of Greenland.”

Greenland’s outgoing Prime Minister, Múte Egede, added that the visit “cannot in any way be described as a harmless visit by the wife of a politician” and that its “sole purpose is a show of force against us.”

US President Donald Trump has repeatedly expressed his desire to acquire the Arctic island and has even considered the possibility of using military force to take it over from the NATO ally. Trump’s eldest son, Donald Jr., also visited the island in January for a “private visit.”

Danish Prime Minister Mette Frederiksen responded to the new US visit, stating that it “cannot be seen independently of the public statements” made by Trump and other officials.

“As the Kingdom of Denmark, we want to cooperate with the Americans. But this must be a cooperation based on fundamental values such as sovereignty and respect between countries and peoples. We are serious about this issue,” Frederiksen said.

Trump and other US officials have hailed the results of the Greenlandic parliamentary elections, seemingly equating the voters’ preference for pro-independence parties with a desire for ‘Americanization.’ However, a recent poll showed that only 6% of Greenlanders want to join the US, while 85% are opposed.

All leaders of the current parties represented in the island’s parliament also condemned Trump’s behavior as “unacceptable.” Aaja Chemnitz, a Greenlandic member of the Danish parliament, told Danish television that the visit was an “untimely interference” in the island’s politics so soon after the elections.

“Anyone who tries to interfere but is not part of Greenlandic society should stay away. We are going through a particularly challenging period in Greenland’s history because we are very much affected by what is happening abroad,” Chemnitz said.

Martin Lidegaard, a former Danish minister and current opposition MP, said the visit crossed the acceptable line for both Denmark and Greenland.

“It will now be crucial for Denmark and Greenland to act together,” Lidegaard added.

Usha Vance’s office confirmed that she would be traveling with her son and a US delegation “to visit historical sites, learn about Greenlandic heritage, and attend Avannaata Qimussersu, Greenland’s national dog sled race.”

The organization behind the dog sled race told Greenlandic media that it had received a large but undisclosed sum of money from the US consulate in Nuuk, Greenland’s capital.

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Germany considers transferring Nord Stream 2 to US control

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In Germany, discussions are underway regarding the potential transfer of the Nord Stream 2 pipeline to US control. The pipeline became unusable following sabotage in September 2022. The aim is to resume the flow of Russian gas to Europe.

According to a report by Bild newspaper, negotiations are ongoing to reach an agreement.

Meanwhile, some politicians from the Christian Democratic Union (CDU), led by Friedrich Merz, who was recently elected as prime minister, have suggested that natural gas imports from Russia could resume after the war in Ukraine ends.

CDU Member of Parliament Thomas Bareiss stated that Nord Stream 2 could be used for supplies, saying, “If peace is restored, relations normalize, and embargoes gradually ease, then, of course, gas could flow again, perhaps through a pipeline now under US control.”

Jan Heinisch, the deputy chairman of the CDU group in the North Rhine-Westphalia State Parliament, also stated that Germany should consider buying Russian gas again if a “fair and reliable” peace agreement is signed in Ukraine.

Heinisch added, “Whether this will be done by sea or via a pipeline remains to be seen.”

At the same time, Heinisch emphasized that Germany should not be dependent on a single supplier and should avoid situations where prices are “dictated.”

Heinisch is involved in developing the energy policy of the future ruling coalition consisting of the CDU, CSU, and SPD.

On the other hand, Free Democratic Party (FDP) Member of Parliament Marie-Agnes Strack-Zimmermann claimed that the CDU is “already making efforts” to resume natural gas imports from Russia, undermining the country’s hard-won energy independence from Russia.

However, there are those within the CDU who do not want such cooperation to resume.

Party member Ruprecht Polenz said, “Vladimir Putin’s Russia can never be trusted again, and Donald Trump has shaken confidence in America. Therefore, the coalition agreement should rule out the reactivation of the Nord Stream pipeline.”

CDU foreign policy expert Roderich Kiesewetter also criticized this step.

Kiesewetter said, “Those who have always opposed sanctions, those who want Nord Stream to work again and want to pounce on cheap Russian gas again, those who do not care about the genocide suffered by the Ukrainian people, each of them would be extremely pleased with such a rapprochement.”

In addition, SPD Member of Parliament Michael Roth stated that Bareiss’s proposal was an inappropriate signal at the wrong time, coming from someone who had “obviously learned nothing from recent history.”

The German Ministry of Economy, led by Robert Habeck of the Green Party, stated that Nord Stream 2 has not been approved and has not received legal approval, and “there is no question of operating it at the moment.”

The party itself described Bareiss’s statement as “scandalous,” saying, “If Germany starts buying gas from Russia again, it would mean rewarding President Vladimir Putin for his war of aggression.”

Sources speaking to Bild newspaper previously reported that Richard Grenell, the former US Ambassador to Berlin and currently Trump’s special envoy, had traveled unofficially to Switzerland a number of times to discuss the commissioning of Nord Stream 2.

The headquarters of Nord Stream 2 AG, the operator of the pipeline, is located in this country.

The sources claimed that the American side wanted to mediate the supply of Russian gas to Germany, but only at the level of private companies.

Prior to this, sources interviewed by the Financial Times had said that Matthias Warnig, the former CEO of Nord Stream 2 AG, was trying to reactivate Nord Stream 2 with the help of an American investor consortium that had drafted an agreement with Gazprom if sanctions were lifted.

A former senior US official familiar with the matter said, “The US will say, ‘Russia can be trusted now because there are reliable Americans involved.'”

The official added that if everything goes well, American investors will start making money “without doing anything.”

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Europe plans for US absence in NATO with 5-10 year strategy

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Europe’s major military powers are formulating plans to assume greater responsibility for the continent’s defense, reducing reliance on the United States.

According to a report in the Financial Times (FT), these discussions are driven by fears of a unilateral US withdrawal from NATO, exacerbated by repeated threats from former President Donald Trump to weaken or abandon the transatlantic alliance. The aim is to avoid the chaos that such a withdrawal could cause.

Four European officials familiar with the matter indicated that Germany, the United Kingdom, France, and the Scandinavian countries are among those engaged in these informal discussions.

The FT reports that their objective is to devise a plan that shifts the financial and military burden towards European capitals. The intention is to present this plan to the US before NATO’s annual leaders’ summit in The Hague in June.

The proposal would include firm commitments from Europe to increase defense spending and enhance military capabilities, with the goal of persuading Trump to accept a gradual handover that would allow the US to focus more on Asia.

Since Trump’s election, countries such as Germany, France, and the UK have moved to increase defense spending or accelerate already planned increases. The EU has also launched initiatives to boost military investments among its member states.

Officials estimate that it would take approximately 5 to 10 years of increased spending to elevate Europe’s capabilities to a level where they could replace most US competencies, excluding US nuclear deterrence.

One source stated, “Increasing spending is our only leverage: burden-sharing and moving away from dependence on the US. We are beginning these discussions, but the task is so enormous that many are overwhelmed by its magnitude.”

While US diplomats have assured their European counterparts that Trump will remain committed to NATO membership and Article 5’s mutual defense clause, many European capitals worry that the White House might rapidly reduce troop or equipment deployments or withdraw from NATO’s joint missions.

Officials noted that some capitals are hesitant to participate in burden-sharing talks, fearing it might encourage the US to act more quickly, while others believe that despite Trump’s rhetoric, he does not intend to make significant changes to the US presence in Europe.

Others are skeptical that the Trump administration, given its unpredictable nature, would even agree to a structured process.

One official questioned, “You need an agreement with the Americans, and it’s not clear whether they will be willing to do that. Can you even trust that they would stick to an agreement?”

Officials highlight ongoing and regular discussions, led by France and Britain, about establishing a “coalition of the willing” to support Ukraine in its war against Russia and to invest in European defense.

These discussions among more than ten European defense powers do not include the US.

When asked what a European pillar within NATO would mean and whether it is feasible, a senior Western official responded, “We are seeing it now: the UK and France are taking the initiative [on a guarantee force for Ukraine] without the Americans.”

NATO officials argue that maintaining the alliance with less or no US involvement is much simpler than creating a new structure, given the difficulty of recreating or renegotiating the existing military plans, capability targets, rules, command structure, and Article 5 for the continent’s defense.

Officials stated that for Europe’s core defense, the UK and other Atlantic maritime powers, the Scandinavian countries for the north of the continent, and Türkiye for the southeast defense will always be needed.

Marion Messmer, a research fellow in international security at Chatham House, noted, “Even without the US, NATO provides a structure for security cooperation in Europe. There are aspects that would need to be replaced if the US were to leave. But it provides a framework and infrastructure that Europeans are really familiar with. It does so much of the work that you would have to do from scratch if you were just setting up a different type of structure for just European members.”

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