In the wake of the war in Ukraine, a growing number of German companies are moving into the military equipment and services sector, breaking a widespread taboo against supplying the arms industry.

The Financial Times (FT) reports a surge in production and investment in military equipment and services. Engine maker Deutz, for example, saw its shares rise by more than 20 per cent last week after announcing plans to produce tank engines as well as motorcycles.

The engineering group is among the medium-sized companies, the backbone of the German economy, that have reconsidered or ended the ban on defence contracts.

Due to the legacy of industrial cooperation with the Nazi regime, parts of German business have long shunned the defence sector. Since February 2022, however, some key players in the country’s engineering supply chain, such as laser manufacturer Trumpf and components company Hawe Hydraulik, have targeted military contracts.

“Defence of freedom by military means if necessary…”

Cathryn Clüver Ashbrook, a political scientist and former director of the German Council on Foreign Relations, told the FT that long-held attitudes to the defence sector were changing rapidly. “After three years of war and heavy economic losses on the European continent, Germany is on the verge of a historic change,” she said.

“Russia’s war of aggression against Ukraine has certainly raised awareness in our society that freedom must be defended by military means if necessary,” said Daimler, which last month announced a new contract to supply 1,500 trucks to the Canadian military.

War industry no longer “stigmatised”

Karl Haeusgen, chairman of engineering firm Hawe Hydraulik, which will end its ban on defence contracts in 2022, said the Ukraine war and subsequent European pressure to increase military spending had reduced the “stigma” surrounding the defence sector.

“A large part of the defence supply chain has a completely different image than three or four years ago,” Haeusgen said.

The company used to have a policy of not supplying the defence sector, but now its board-level committee considers orders for its valves and pumps, which can be used in military equipment, including vehicles and ships.

“Civilian” production harmonised with military production

This shift also comes at a time when German industry is struggling to recover from weak demand from China. In contrast to the booming defence sector, the country’s car industry has been forced to announce large-scale redundancies at a time when the transition to electric vehicles is proving difficult.

Christian Mölling of the German Council on Foreign Relations argued that Germany is facing the opposite situation to Europe in the immediate post-Cold War period, when companies were faced with the need to convert military production to civilian production.

“They are rethinking how to use [civilian] production capacity, technology and procedures to be more efficient in the military world,” Mölling said.

Work shifts from automotive to defence

Continental, one of the world’s leading automotive suppliers with 200,000 employees, recently launched a plan to transfer hundreds of workers to the German defence company Rheinmetall.

Peter Sebastian Krause, a Rheinmetall executive, said at the time that the Continental workers would bring “extremely valuable” skills to the company.

Laser manufacturer Trumpf, whose customers include the semiconductor industry, including chip-making equipment company ASML, is another company considering lifting the ban on defence supplies.

The company’s lasers are subject to export restrictions, including to China, because the German government considers them to be “dual-use”, with both civilian and military applications.

Hagen Zimer, the company’s head of laser operations, said defence companies had shown interest in military applications for the company’s lasers, such as shooting down drones. The laser could be a powerful defence tool, Zimer told the FT, adding that without the technology “it would be impossible to defend against a multi-pronged attack of 200 drones in war zones”.

Lufthansa enters the military industry

Lufthansa Technik, a wholly-owned subsidiary of the airline group that services around one-fifth of the world’s active fleet, officially launched a military aircraft services division last year. The unit, which has become a fast-growing business, will help maintain Germany’s Chinook helicopters and F-35 fighter jets.

“Based on our relationship with the German government, we decided to take a bigger step into defence in 2019,” said Lufthansa Technik chief executive Michael von Puttkamer, adding that the €100bn earmarked for military restructuring “is an opportunity to step further into the sector”.

“We believe that entering the defence sector is not only a great business opportunity, but also a way to support the ability of our German armed forces to defend our country,” Puttkamer said.

Susanne Wiegand, CEO of tank parts manufacturer Renk, said increased “synergies” between Germany’s civil and defence manufacturing sectors could benefit both sides.

“This is a great way to develop technology. Innovations come from the military world and find their way into civil applications and vice versa,” Wiegand said.

The first round of the snap National Assembly elections, called by French President Emmanuel Macron following his heavy defeat in the European Parliament elections, took place on 30 June.

According to preliminary results, Marine Le Pen’s National Rally (RN) party came first with around 33% of the vote, while the New Popular Front (NFP) came second with 28%. Macron’s alliance, All Together for the Republic (Ensemble), received 21% of the vote, while the conservative Les Républicains received 10%.

If no candidate in a constituency wins an absolute majority (more than 50% of the votes cast) in the first round, a run-off election is held.

This is the case in most constituencies. According to preliminary results, only 39 candidates from the RN, which has 297 MPs, have won an absolute majority in their constituencies.

The second round will take place on 7 July and will be between the top two candidates from the first round. However, any candidate who received the votes of at least 12.5 per cent of registered voters in the first round can also participate in the second round. The candidate with the most votes in the second round wins the seat, even if there is no absolute majority.

Therefore, even if the RN were to win the first round, it is currently uncertain whether they would have an absolute majority (289 seats) in parliament.

Le Pen wants ‘absolute majority’

Le Pen declared that her party had “practically wiped out” Emmanuel Macron after winning the first round of the election.

Speaking after the results were announced, Le Pen said she would seek an “absolute majority” in the second round of voting next Sunday.

Addressing her supporters after the polls closed, Le Pen said: “Democracy has spoken and the French have almost wiped out the Macron camp and put the RN and its allies in the lead. We need an absolute majority so that [RN leader] Jordan Bardella can be appointed prime minister within a week,” she said.

Le Pen was re-elected as MP for Hénin-Beaumont in the first round after winning more than 50% of the vote.

‘No vote for the RN’ statement by Mélenchon

Jean-Luc Mélenchon, leader of France Without a Front (LFI), the main party of the New Popular Front (NFP), said on Sunday that Macron’s alliance had suffered a “heavy and undeniable” defeat in the snap elections and called on the French people to vote against the far right.

The LFI leader said he would withdraw his candidates in constituencies where his party came third and the RN was leading ahead of the run-off.

“Our instructions are simple, direct and clear. Not one more vote, not one more seat for the RN,” Mélenchon said.

The LFI leader also called on voters to give “an absolute majority to the New Popular Front”.

“The country will have to make a choice,” Mélenchon said in a statement from his party’s campaign headquarters. He argued that the options for Sunday’s second round were “either the New Popular Front or national unity”.

Macron calls for a ‘broad alliance against the right’

For his part, Macron called for a “broad alliance” to prevent the victory of the “extreme right”.

“The time has come for a great, openly democratic and republican rally against the National Rally for a second round,” he said.

Prime Minister Gabriel Attal argued that “not a single vote should go to the National Rally”.

Warning that “the far right is on the verge of power”, Attal said his party would abandon its candidacy in 60 constituencies to support “republican” candidates against the RN.

Demonstration against the RN in Paris

Meanwhile, thousands of people took to the streets of Paris to protest against the RN’s victory.

“I’m really worried about the far right coming to power,” Alban, a 23-year-old student who requested anonymity, told POLITICO. Alban said they still had a week to go and would “keep fighting”.

Reuters later broadcast video of protesters setting off fireworks as they marched through Paris. BFMTV reported that 200 police had been deployed in Lyon to deal with the protests.

The ‘security cordon’ has collapsed and will collapse again

A week of political bargaining will now begin as centre and left parties decide whether to withdraw from individual seats to prevent the RN, long excluded from mainstream French politics, from winning a majority.

In the past, when the RN has made a strong showing in the first round of voting, centre and left parties have joined forces to prevent it from taking office under a principle previously known as ‘cordon sanitaire’.

After Jean-Marie Le Pen, Le Pen’s father and the decades-long leader of the RN’s predecessor, the National Front, unexpectedly defeated Socialist candidate Lionel Jospin in the 2002 presidential election, the Socialists threw their weight behind centre-right candidate Jacques Chirac, giving him a landslide victory in the second round.

Marine Tondelier, leader of the Greens, seen as the more “moderate” part of the NFP, made a personal plea to Macron to withdraw from some seats to prevent the RN from winning a majority.

“We are counting on you: withdraw if you come third in a three-way race, and if you don’t make it to the second round, ask your supporters to vote for a candidate who supports republican values,” Tondelier said.

Bardella hits Popular Front, not Macron

In his speech last night, RN leader Jordan Bardella, who wants to become prime minister if his party wins on 7 July, did not criticise Macron’s camp, but instead attacked the National Front.

Bardella said the New Popular Front was “an existential threat to the French nation” and accused the NFP of wanting to disarm the police and open France’s borders to migrants, and of having “no moral limits”.

“It is time to give power to leaders who understand you, who care about you,” the RN leader told voters.

AfD wants RN to win

The RN also received support from the Alternative for Germany (AfD), from which it had recently distanced itself.

AfD leader Alice Weidel said she hoped for a decisive victory for the RN in the French parliamentary elections, although she acknowledged that there was a rift between the parties that would be difficult to heal.

Weidel told the Financial Times that she was “hopeful” for the RN and optimistic that its leader, Jordan Bardella, would become France’s youngest ever prime minister.

Weidel said he had “full confidence in Bardella and the RN’s ability to shake up their country”, while Bernd Baumann, leader of the AfD in the Bundestag, said the RN’s popularity showed that the entire European right “has the wind in its sails”.

“Giorgia Meloni, Marine Le Pen, the FPÖ in Austria, all this is a confirmation for us and shows that we are on the right side of history,” Baumann said.

But Weidel conceded that the AfD and RN had little chance of overcoming the dispute that led to their expulsion from the Identity and Democracy (ID) group in the European Parliament in May, following a series of scandals involving the German party.

Weidel said the AfD was looking for new partners and was trying to form its own group.

Weidel also insisted that he had “no grudge” against Marine Le Pen, the RN’s parliamentary leader.

The European Union’s attempt to breathe new life into stalled negotiations between Serbia and Kosovo has collapsed after the Serbian president and Kosovo prime minister failed to meet as planned.

The meeting, which was due to take place almost a year after the two leaders last met, came after repeated failed negotiations.

Both Serbian President Aleksandar Vucic and Kosovo Prime Minister Albin Kurti met separately with EU representatives, but according to EU chief diplomat Josep Borrell, there was no progress in implementing the agreement and no trilateral meeting.

Talks between Serbia and Kosovo aimed at reaching a major agreement that would pave the way for the normalisation of relations broke down last year.

During a summit in North Macedonia in March, Vucic refused to sign the EU- and US-backed Ohrid Agreement, citing pain in his right hand that would “probably last for years”.

Diplomats continued to call for its implementation, but the unsigned agreement was not implemented by either side.

Borrell said the EU “will continue to put all its efforts and capacities behind the normalisation of relations between Kosovo and Serbia”.

Borrell said those efforts would continue next week when he hosts the two negotiators in Brussels.

Vucic blamed Kurti for the lack of talks, saying his Kosovar counterpart “did not dare to meet”.

Kurti countered that he had set conditions for talks with Vucic, including the surrender of Milan Radoicic, the former vice-president of Kosovo’s leading Serb party, who confessed to leading a commando team that ambushed a Kosovo police patrol in September last year.

As last year’s talks collapsed, riots broke out in Serb-majority areas of northern Kosovo.

Tensions escalated further after Pristina made the euro the only legal currency in its territory in February, effectively banning the use of the Serbian dinar.

This put pressure on Serbia’s ability to continue funding a parallel health, education and social security system for Kosovo Serbs.

Kurti defended the move as a means of stemming the flow of large sums of money from Serbia into Kosovo and bringing organised crime groups to heel.