Europe
How Poland became Germany’s indispensable economic backyard
Border controls between Germany and Poland are facing increasing resistance from the German economy. A major factor in this is the critical role Poland plays for German capital.
Last week, Dirk Jandura, President of the German Foreign Trade Association (BGA), stated that serious damages would occur if trucks were caught in traffic jams and Polish workers could not reach their jobs in Germany on time.
The background to this is that Poland is extremely important for German industry. The country has surpassed China to become the fourth-largest market for German companies. One of the most significant reasons for this is Poland’s position as a low-wage location for labor-intensive activities in German companies’ production chains.
German companies supply intermediate goods to the neighboring country and then re-import them for further processing. This situation also boosts exports to Germany, which constitute one-third of Poland’s total exports.
According to an analysis by German Foreign Policy, 8.2% of all employees in Poland were dependent on exports to Germany in 2020. Poland’s dependent position in German production chains has also been stabilized with the help of EU funds.
A low-wage haven for German industry
With the end of socialist systems in Central and Eastern Europe, Western and especially German capital rapidly entered the region.
Germany played a significant role in Poland, as it did in other countries in the region. In the first phase of German-Polish economic relations after 1989, German investors participated in the privatization of state companies and opened their own factories in Poland. At that time, the focus was primarily on low production costs.
The removal of investment barriers with the EU’s eastward expansion in 2004 initiated the second phase of German capital’s spread into Central and Eastern Europe. At the same time, investments in the low-wage countries of Central and Eastern Europe were used as a tool to pressure trade unions in Germany, forcing them to accept major social cuts and the restructuring of the labor market, namely the “Hartz reforms.”
The economic division of labor between Germany and Poland
Simultaneously, simple tasks in particular were moved from Germany to Central and Eastern Europe, which led to the restructuring of production and the creation of new skilled jobs in the Federal Republic of Germany.
During Poland’s integration into the German production process, this led to a division of labor between the two countries that continues to this day. This means that low-value-added activities are carried out in Poland, while high-value-added activities are performed in Germany.
While know-how, modern means of production, and consequently complex work processes developed in Germany, simple and labor-intensive activities for the supply chains of German corporate headquarters predominate in Poland, as is the case throughout Central and Eastern Europe.
Poland became a lifeline for Germany during the Eurozone crisis
The financial crisis of 2008 marked the beginning of the third phase in German-Polish economic relations.
Poland was the only EU country that did not experience a recession, and this led to a further increase in German investments in Poland. In the years after 2008, the German industry’s focus on Central and Eastern Europe helped Germany increasingly recover from the Eurozone crisis.
Due to the shift to the East, Germany’s already low willingness to “share the costs of economic stability in Southern Europe” further decreased during the Eurozone crisis.
At the same time, Poland’s deep integration into German production chains was further strengthened by German investors being much more active than those from other EU countries.
The core activities of Polish factories were focused on exporting products to German companies. In this context, the Central European countries—the “Visegrad Four”: Poland, the Czech Republic, Slovakia, and Hungary—have a similar export structure dominated by four sectors: the chemical industry, metal production, the electrical industry, and the automotive industry. A strong export increase has been recorded, especially in the latter two sectors.
Poland is of critical importance to the German export market
Poland’s role as a producer of intermediate goods for German industry enabled the country to surpass China last year to become Germany’s fourth-largest sales market.
The reason for this is that most of the products Germany exports to Poland are processed in Polish factories and then exported back to Germany. Poland is therefore an important intermediate stage in German production chains.
Looking at the other side of the equation, in 2024, more than 27% of Poland’s total exports went to Germany. This rate is far above that of the Czech Republic and France, which account for just over 6% of Poland’s total exports.
Poland’s economic dependence on Germany is also reflected in the fact that in 2018, almost 10% of Poland’s gross domestic product was tied to trade with Germany.
More than 7% of this figure stems from the demand of German end consumers, while 2.6% comes from deliveries to German factories.
In 2020, 8.2% of all employees in Poland, or about 1.2 million people, were dependent on exports to Germany.
Central and Eastern Europe compete for German investment
Another factor in favor of German industry is that the countries of Central and Eastern Europe compete regionally with each other to offer the most attractive investment conditions.
For example, in the mid-1990s, the Polish government established the first special economic zones, offering tax breaks for investments in structurally weak regions.
After joining the EU in 2004, the Polish Ministry of Economy launched a targeted aid program primarily for large companies. Until 2004, investment zones were determined by Warsaw. After Poland’s accession to the EU, foreign companies were able to choose their own locations.
Many companies followed their competitors or business partners, which led to a concentration of foreign companies in special economic zones that were already in a better economic position.
An example of how German companies benefit from regional competition in Central and Eastern Europe is Volkswagen’s (VW) plan to build six battery “giga-factories.”
Poland and Hungary have so far managed to outperform other candidate countries. Thanks to the competition between them, VW received the largest possible investment incentives through tax breaks, the construction of transport infrastructure, and the retraining of workers.
EU funds for Poland are actually flowing to Germany
Since joining the EU, Poland has had access to comprehensive EU funds. Most of these funds come from the EU Structural Funds, created to reduce regional disparities.
Between 2004 and 2018, Poland received just under 102 billion euros in funds. It used this money to expand road infrastructure, develop renewable energy sources, and finance environmental protection measures.
Poland is a recipient country in this context: it receives more funds than it contributes to the EU budget.
An important principle for accessing EU funds is national co-financing: Poland must contribute its own state funds to the supported projects.
Research shows that the EU’s cohesion policy has further deepened the German-Polish division of labor: German companies supply machinery, chemical products, and construction materials for EU-funded projects.
In this way, EU subsidies to Poland and the Polish state funds required for co-financing increase the profits of German companies.
In contrast, Central and Eastern European countries receive only a small share of the EU’s research and development funds. For example, 95% of the funds from the Horizon 2020 program (2014-2020) went to the EU-15 countries before the EU’s eastward expansion, especially Germany, the United Kingdom (before Brexit), France, Spain, and Italy.
The Central and Eastern European EU countries, however, received only 4.7%.
EU funds, therefore, act as a decisive lever in reproducing the existing division of labor within the EU. These funds contribute to countries like Poland remaining in a kind of “extended workbench” status for Germany.
Europe
Mutual accusations of blackmail and assault overshadow AfD state election congress in Germany
The Alternative for Germany (AfD) state congress in North Rhine-Westphalia ended in chaos on Sunday.
During the selection of the 22nd position on the candidate list for next year’s state elections, delegates aligned with the far-right Bundestag member Matthias Helferich proposed more than 100 candidates. This move was reportedly designed to block the vote in the town of Marl, halting progress on the list to force negotiations for subsequent positions.
Earlier in the candidate selection process, supporters of State Co-Chairman and lead candidate Martin Vincentz, who represents the moderate wing of the party, had prevailed. The defeat of Zacharias Schalley—a figure close to Helferich—by a candidate from the Vincentz camp triggered significant discontent within the radical wing of the party. Representing approximately 40% of the delegates, Helferich’s supporters reportedly demanded strong representation in the next state parliamentary group.
During the congress, Helferich claimed that Bundestag member Knuth Meyer-Soltau, a member of the Vincentz camp, physically assaulted him. Speaking to the newspaper WELT on Sunday, the 37-year-old Helferich described the incident:
“Meyer-Soltau was passing by the row where I was sitting. He was arguing with another member. When he turned back, while I was sitting in my chair, he shouldered me and shouted, ‘Shut up, you idiot!'”
Helferich added: “I do not know if he wanted to knock me out of my chair. However, because he insulted me in anger, I cannot rule out the possibility that this was a deliberate attack.”
An email exchange sent to the federal executive board and state management revealed that Helferich filed a criminal complaint on Monday.
“Meyer-Soltau hit my chair and my body, either intentionally or through negligence”
In the complaint filed by Helferich, he stated: “Meyer-Soltau hit my chair and my upper body hard, either intentionally or through negligence; I was only able to avoid falling by holding onto the edge of the table.” The complaint also named two witnesses.
In his letter to the party leadership, Helferich wrote: “Since numerous similar incidents of electoral law significance occurred at the state election congress, I believe the duty to maintain party order falls to the Federal Executive Board.”
Meyer-Soltau, a 61-year-old lawyer like Helferich, denied the allegations. Speaking to WELT on Sunday, the lawmaker said: “I reject the accusation being made.”
Meyer-Soltau suggested that Helferich viewed him as a powerful opponent because he had previously acted as the negotiator for the state executive board in the party’s expulsion proceedings against Helferich before the Federal Arbitration Court. The party court recently rejected the expulsion request.
“It is clear that this situation has not had a positive impact on our relationship,” Meyer-Soltau said. “Mr. Helferich, having suffered a heavy defeat at the nomination meeting, is clearly seeking satisfaction through other means. I will hand the matter over to my lawyer and take legal action.”
A letter sent to Helferich by Meyer-Soltau’s lawyer, which was leaked to the press, stated: “My client has never insulted you or physically assaulted you.” The letter demanded that Helferich cease repeating the claim and sign a cease-and-desist declaration carrying a contractual penalty.
Additionally, Meyer-Soltau’s lawyer filed a criminal complaint with the Dortmund Prosecutor’s Office for defamation. The petition submitted to the prosecutor’s office stated: “The accusation of physical assault is highly defamatory, calculated to permanently damage my client’s public reputation, and socially discredit him.”
Allegations of blackmail made against delegates at the congress
Allegations of threats against delegates also emerged at the state congress in Marl. Helferich ran against Klaus Esser, a close associate of Vincentz, for the 13th position on the candidate list. Esser, who needed just one vote to be elected in the first round, only secured a majority in the second round of voting.
Following the announcement of the results, a delegate took the stage to claim that before the second round, a state executive board member from the Vincentz camp went to the rows of the Wuppertal district association and threatened that a state lawmaker from Wuppertal would be expelled from the parliamentary group if the necessary votes for Esser were not delivered. The delegate announced that a complaint would be filed regarding the matter.
A spokesperson for AfD Co-Leader Alice Weidel told the media outlet “The Pioneer”: “Weidel does not approve of this situation. Such things must not happen.”
Other allegations of threats were voiced through the hall microphones during the congress. One delegate claimed that a candidate had been threatened by a district councilor and a district chairman.
“He was told that if he did not withdraw his candidacy, he would have no future in this party. There are numerous witnesses who can confirm this,” the delegate asserted.
Another delegate reported that a young woman was pressured by a district chairman who asked whether she would “lend herself to this game and submit to blackmail,” warning her that the situation would have “consequences for her in the district association.”
Marco Vogt, the Deputy Chairman of the Düsseldorf AfD and an ally of Helferich, said during his candidacy speech that young members who participated in the list disruptions had been threatened by their employers present in the hall.
Another candidate, a municipal councilor from Würselen, stated that a district administrator from the Aachen region had issued an implicit threat, telling him he would make many enemies in his own association if he did not withdraw his candidacy.
Candidate Leon Biallawons directly targeted lawmaker Knuth Meyer-Soltau, saying: “I tell you clearly, dear Knuth, I will not allow myself to be threatened by you. Because, dear Knuth, it is not you but the grassroots who will decide who succeeds in this party, and the grassroots will assert their will in the long term.”
Meyer-Soltau declined to comment on these allegations, stating: “I do not wish to comment on such baseless claims.”
Other tactics were used to slow down the proceedings at Sunday’s congress. One delegate requested a 30-minute recess because “there is an ice cream truck outside,” though this request was rejected. The convention manager, Julian Flak, was heard calling out to a delegate: “Take that garden furniture outside immediately!”
A message shared on Saturday in a chat group close to Vincentz stated that the “self-proclaimed patriotic group” had threatened to completely block the congress. It was alleged that the core group led by Helferich planned to deliberately disrupt the flow of the congress to force their opponents to the negotiating table.
Weidel accused of undermining efforts in chat group
On Sunday, in the same chat group, it was written that the sabotage action was being coordinated by Federal Deputy Chairman Sven Tritschler and Helferich. The message claimed that Tritschler had discussed the move with “his boss Alice Merkel”—a reference to AfD leader Alice Weidel. “This is a clear operation of attrition. We will not bow to an Alice Merkel,” the message read.
By Monday night, the ballot for the 22nd list position contained the names of 81 candidates. Some individuals who announced their candidacies withdrew before speaking. The results are expected to be announced next weekend.
The North Rhine-Westphalia AfD association has allocated a total of four weekends for candidate selection meetings. With the party projected by public opinion polls to win between 30 and 40 seats in the state parliament, competition for the top spots on the list remains intense.
An article titled “AfD-NRW Grassroots Resist Cartel Partyization,” published Monday on a Telegram channel close to Helferich, described the events as a “heroic act” and an “impressive reaction of an alert, idealistic grassroots.” The mass candidacy process was characterized as a “combination of Carl Schmitt’s partisan theory with a democratic liberation move unprecedented in AfD history.”
The article argued that if lead candidate Vincentz wants to translate polling success into a strong election result, he must unify the party by granting Helferich’s supporters viable, electable positions on the list.
Europe
EIB to unveil 15 billion euro tech initiative to scale European startups
The European Investment Bank (EIB) will announce a €15 billion initiative today, in collaboration with EU capitals and private investors, aimed at supporting the growth of European technology companies.
For decades, startups on the continent have struggled to raise the large-scale funding rounds necessary to scale on this side of the Atlantic, frequently turning to US investors or relocating abroad as they expand.
“We are catching up. Now we need to accelerate,” EIB President Nadia Calviño said.
Under the existing European Tech Champions Initiative, the EIB had already pooled resources with six EU governments to establish funds that invest in high-growth companies across the EU.
Calviño described the initiative as “very successful,” noting that it has supported 12 European “unicorn” companies valued at over $1 billion, including the German artificial intelligence translation firm DeepL.
The bank is now expanding the program with a new phase nearly four times the size of the original.
Twenty-five EU governments, alongside private investors such as Santander and Danske Bank, are expected to participate in the program.
This initial €15 billion aims to mobilize up to €80 billion in total investment. Calviño stated that this estimate is based on the multiplier effects achieved under previous programs.
As part of these efforts, the EIB also aims to attract European pension funds, which manage immense pools of capital but have historically allocated fewer resources to technology investments compared to their US counterparts.
In addition to the new funding, Calviño noted that the EIB will create a platform providing a single point of access for existing European scale-up initiatives, including the European Commission’s Scaleup Europe Fund, France’s Tibi initiative, and Germany’s Win initiative.
Europe
Germany to purchase US Tomahawk missiles to build own long-range strike capability
Germany will purchase Tomahawk cruise missiles from the United States and deploy them on German territory, Chancellor Friedrich Merz announced on Thursday.
The move marks a shift away from planned US deployments and toward Germany establishing its own long-range strike capability.
Merz told lawmakers that he finalized the agreement with the US government during the NATO summit in Ankara, adding that the talks held on Tuesday and Wednesday had exceeded his expectations.
“While we close a critical strategic gap in our defense, we are also working to develop our own European systems and deploy them in Europe,” the Chancellor said.
According to German government sources, Washington committed in a letter of intent signed on Tuesday to approve Germany’s acquisition of Tomahawk missiles and their land-based Typhon launchers in August.
The number of missiles and launchers Germany plans to purchase was not disclosed because the information is classified.
The planned acquisition appears aligned with US President Donald Trump’s pressure on European allies to cover their own security costs, such as by purchasing US weapons.
The fate of the Tomahawk procurement had become uncertain after Trump announced in May that he would reduce the US military presence in Germany.
That development was seen as a cancellation of a plan made under the previous administration to deploy a US battalion equipped with long-range Tomahawk missiles to Germany.
That original plan was designed as a temporary solution to serve as a strong deterrent against Russia while Europeans developed their own versions of such weapons.
Germany produces its own cruise missile, the Taurus, but its range of approximately 311 miles is three to five times shorter than that of the Tomahawk missiles.
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