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New German government’s program: Key policies and controversies

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The parties likely to lead Germany’s next government are starting coalition talks, with a series of policies expected to come to the fore, including the systematic turning away of asylum seekers at the border.

The center-right Christian Democratic Union (CDU), its Bavarian allies CSU, and likely coalition partners, the Social Democrats (SPD), announced on Saturday that they would begin formal coalition talks.

Friedrich Merz, the likely next chancellor, stated on Saturday that in the informal exploratory talks, party leaders had identified a series of policy compromises as the basis for formal negotiations, which were the result of “very, very intensive” discussions.

“This was no easy task,” added the CDU leader.

According to the preliminary policy agreement (Sondierungspapier) of the coalition partners, seen by Euractiv, compromises that are “painful” for both sides are on the table, starting with government financing.

Last week, leaders presented plans for a debt-financed, pioneering investment package, which was not well-received by some in the fiscally conservative CDU.

In addition, the most controversial issues related to immigration, economy, and labor policy have been decided.

Here are the key policies agreed upon so far:

Border controls to be increased

Border rejections: The parties promised to turn people away from the German border, even if they apply for asylum, one of the CDU’s most controversial promises, which the SPD had previously criticized for violating EU laws. As a compromise, it is stated that such rejections will be carried out “in coordination with European neighbors,” but no details are provided.

More border controls: Merz promised to “significantly expand” existing controls at all German borders, which are exempt from the rules of Schengen, Europe’s passport-free travel area.

Dual citizenship will continue: The parties will not withdraw legislation that facilitates obtaining German citizenship and dual citizenship, despite it being one of the CDU’s key promises. On the other hand, “supporters of terror, antisemites, and extremists” with dual citizenship may be stripped of their German citizenship.

Economic growth targets

Commitment to growth: The leaders set a goal of returning the German economy, which has been in recession for two years, to a growth potential of over 1%.

Protection of industry: Germany’s flagship industry will be supported by limiting energy prices, reducing bureaucracy, and a state agency that will help employ skilled labor abroad. The coalition will “avoid” penalties for the automotive industry that violate European CO2 targets, but there is no mention of reversing the controversial ban on the sale of new gasoline cars from 2035.

Tax cuts: The tax burden for businesses and the “middle class” will be reduced through tax law reforms.

Higher minimum wage: The parties find it “achievable” to increase the minimum wage by 17% next year, from €12.82 to €15, a key promise of the SPD.

Trade agreement with America: In addition to its known support for the EU’s free trade agreement with the Latin American Mercosur bloc, the parties want to revive free trade negotiations with the US.

Restriction of social benefits: As a promise of the CDU, the generous but controversial unemployment benefits introduced by the previous government will be reorganized, including total benefit cuts for those who refuse to work.

Green deal in danger

However, among the critics of the agreement are the Greens, whose support is needed for the two-thirds majority required to pass the financing package.

Green co-chair Felix Banaszak said the document “further distanced” the party from support and criticized the fact that “climate protection financing plays no role” in the document.

Anton Hofreiter, the Green Chairman of the European Affairs Committee of the Federal Parliament, said, “There is very little about fundamental improvements in our security policy.”

Aside from the financing plans, the document only confirms Germany’s responsibility for Europe’s security and its continued support for Ukraine.

Europe

Historical revisionism surfaces in Germany over post-war borders

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History is being rewritten in Germany, and the issue of post-World War II territorial arrangements and the displacement of German settlers (“East Germans”) is being brought back into the mainstream media.

The German Federal Parliament has banned all representatives of Russia and Belarus, successor states to the Soviet Union which liberated a large part of Germany including Berlin, from the commemoration ceremony for the 80th anniversary of the Nazis’ surrender.

On Sunday, Russia’s Ambassador to Germany was prevented from attending commemoration ceremonies held at the Sachsenhausen and Ravensbrück concentration camps. Both concentration camps were liberated by the Red Army at the end of April 1945.

Nazi Germany had massacred 27 million citizens of the Soviet Union and approximately a quarter of the population of the Belarusian Soviet Republic. Representatives of the successor states to these countries are no longer invited to German commemoration ceremonies.

The reason given for this is that Russia is waging an “aggressive war” against Ukraine. Ambassadors from several countries that have invaded foreign countries in recent years are expected to attend the commemoration in the Federal Parliament today, which decided to launch an aggressive war against Yugoslavia in 1999.

Threat of expulsion for Belarusian and Russian representatives

The non-invitation of the Russian and Belarusian ambassadors and other official representatives to the ceremonies marking the 80th anniversary of the victory caused a stir in early April.

At that time, a document classified as “strictly confidential,” sent from the Ministry of Foreign Affairs to federal states, districts, and municipalities, was leaked.

The document stated that “invitations should not be sent to representatives of Russia and Belarus for commemoration ceremonies organized by the federal government, states, and municipalities.”

The German Ministry of Foreign Affairs justified this decision with a warning against “propaganda, disinformation, and historical revisionism,” but a government spokesperson could not provide any examples of representatives from the accused countries engaging in such provocations at commemoration ceremonies.

The note from the Ministry of Foreign Affairs stated that if representatives of the two countries “appear unannounced,” the organizers of the respective commemoration ceremonies “can exercise their local rights.”

Thus, the ministry granted Germany the freedom to expel representatives of countries that suffered an unprecedented number of deaths as a result of the war.

“Holes” in Baerbock’s directive

In practice, the directive prepared by former Green Foreign Minister Annalena Baerbock was only partially implemented.

Russian Ambassador Sergey Nechayev was able to attend the official commemoration ceremony for the Battle of the Seelow Heights on April 16. This battle was the beginning of the Red Army’s final major offensive to liberate Berlin, and more than 33,000 Soviet soldiers lost their lives.

Nechayev also attended the commemoration ceremonies in Torgau on April 25, 1945, where Soviet and US soldiers shook hands for the first time during the liberation of Germany, but CDU State Premier of Saxony Michael Kretschmer accused Russia of committing war crimes in the Ukraine war.

Nechayev and his Belarusian counterpart were not allowed to attend the official commemoration ceremonies held at the Sachsenhausen and Ravensbrück concentration camps on May 4. The concentration camps had been liberated by the Red Army.

Axel Drecoll, Director of the Brandenburg Memorials Foundation, said that the Russian ambassador’s invitation had been explicitly cancelled; if the ambassador still came, he threatened that they would “enforce our local rules in close cooperation with security forces.”

War club in full attendance at the Bundestag

The Russian and Belarusian ambassadors were also not allowed to attend the commemoration ceremony held today in the German Federal Parliament (Bundestag).

On the other hand, ambassadors from all other countries represented in Berlin were invited. These included representatives of the other victorious powers of World War II. The participation of the US ambassador is not prevented by the US having launched an invasion of Iraq in 2003. The ambassadors of France and Britain are not prevented by their countries having launched an aggressive war against Libya in 2011.

Furthermore, it is known that the German Federal Parliament, the organizer of the commemoration ceremony, approved the aggressive war against Yugoslavia in 1999, in violation of international law.

Only objection from former CDU parliamentary speaker

Criticism of Russia’s exclusion was voiced only by former Federal Parliament Speaker and current head of the Konrad Adenauer Foundation, Norbert Lammert (CDU).

Speaking on ZDF television, he said he was “not sure” whether government directives, such as the note from the Ministry of Foreign Affairs, were appropriate.

According to him, in any case, the victims of the war must be commemorated, “regardless of current developments, no matter how painful, oppressive, and cruel they may be.”

Historical revisionism in German media

The exclusion of Russia and Belarus from Berlin’s commemoration ceremonies for the end of World War II goes hand in hand with efforts to reinterpret the actions of the Soviet Union during the war and after Germany’s liberation from Nazi rule.

In recent days, leading media outlets have begun to view May 8th not as the end of the war, but as the beginning of events related to the “resettlement of the German-speaking population,” especially in Eastern Europe, particularly in Poland and Czechoslovakia.

These publications, of course, do not only speak of the “brutality of the Red Army.” For example, NDR had to admit the positive role of the Red Army by saying, “even if it ultimately played a decisive role in liberating Germany from Nazi terror.”

FAZ examined territorial arrangements in Eastern Europe

Regarding resettlement, Frankfurter Allgemeine Zeitung wrote last week that the “power politics” plans of the Soviet Union within the “long tradition of Great Russian imperialism” were of great importance.

The newspaper argued that “sufficient compensation” for “Poland’s loss of eastern territories” as a result of the state restructuring of Eastern Europe would have been “East Prussia or Upper Silesia.”

According to FAZ, the reason for the transfer of territories further east of the German Reich to Poland was “only that Stalin achieved this through cunning and deception.”

Historian Manfred Kittel, a lecturer at the University of Regensburg, claims that the “expulsion of millions of people to a shrunken Germany” gave the “Kremlin the opportunity to create an overpopulated crisis region in the heart of Central Europe.”

According to Russian plans, the “expellees from the east were to be a source of unrest and social decay.” According to the historian, the “Russian imperial context” was “at the center of concrete diplomatic preparations and the subsequent practical implementation of the expulsions.”

Kittel adds that “Great Russian imperialism existed long before Hitler” and “continues to exist today, even without Hitler,” citing the ongoing “war of annihilation” against Ukraine as an example.

During the Cold War, West Germany did not recognize the 1950 Zgorzelec Treaty signed between the German Democratic Republic and socialist Poland, claiming to be the sole legal representative of Germany.

Moreover, especially CDU politicians had objected to the shifting of German borders “westward” after the war and the expulsion of German settlers placed in Poland and the Baltics during the Third Reich period, keeping this issue constantly on the agenda.

Forever enemy: Russia

In Kittel’s perspective of “Russian-Soviet imperialism,” cooperation with Russia is only possible during periods when Russia is relatively weak.

In the 1990s and 2000s, the Federal Republic of Germany gained access to Russia’s enormous natural gas reserves through a certain degree of cooperation with Moscow, but when Russia regained its strength, conflict with it became inevitable.

This aligns with what the new German Foreign Minister Johann Wadephul said about the war in Ukraine during a phone call with two Russian satirists in early February.

In this conversation, Wadephul had said, “No matter how the war with Russia ends, Russia will remain an enemy for us forever.”

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European Peace Project calls for continent-wide action on May 9

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An independent group consisting of academics, artists, and business people, including political scientist Prof. Dr. Ulrike Guérot, one of Germany’s leading European experts, actress Isabelle Casel, and journalist Peter van Stigt, has launched a new initiative called the European Peace Project.

The project aims to put the future of Europe into the hands of its citizens and promote sustainable peace on the continent.

Announcing the project, Guérot stated in a post on her X (formerly Twitter) account that the initiative is a performative word action within the scope of an art project.

Guérot emphasized that the project is not an organization or NGO, but consists entirely of independent individuals.

The political scientist stated that the only reason behind the project is a sincere desire for sustainable peace, mutual understanding among peoples, dialogue, and the elimination of the causes of conflict.

The main event of the project will take place on May 9, 2025, at 5:00 PM. On this date, citizens in all countries across the European continent and in all European languages will simultaneously shout peace slogans from their windows, balconies, and squares.

The project organizers emphasize that the efforts of the European Union and national governments to drag Europe into war against Russia constitute a betrayal of fundamental European principles such as peace, democracy, freedom, and mutual understanding among peoples.

The project asks participants to film and photograph their actions and send them to be published in a digital gallery to be created on the project website. In this way, it will be documented that European citizens are on the side of peace, not war.

Participation in the project is possible individually or as an organization. It is stated that everyone who participates will be represented by a peace dove symbol on an interactive European map in the coming weeks.

The project aims for broad participation covering all of Europe, from Dublin to Thessaloniki, Lisbon to Helsinki, and even Moscow.

The project website will also feature a function where participants can enter events in their own locations and find other participants nearby.

Additionally, artistic templates for materials such as posters, t-shirts, and stickers will be offered for project promotion. The project states that it needs enthusiasm, commitment, creativity, and financial support for the realization of this large event, and requests a donation of at least 1 euro from every registered participant.

The call text of the European Peace Project, titled “In Europe, we have something to say about peace,” includes the following statements:

May 9 at 5:00 PM: Time to give a sign for Europe’s peaceful future!

If the EU and their national governments want to drag us into war against Russia, it means they are betraying all fundamental European principles such as peace, democracy, freedom, and mutual understanding among peoples! Therefore, we, as European citizens, are taking the future of this wonderful continent into our own hands! We are launching the European Peace Project. On May 9, 2025, at 5:00 PM, let’s all together, in all countries across the European continent and in all European languages, shout PEACE from our windows, balconies, and squares with a performative word action! And afterwards, let’s celebrate!

You can find the call text here in many languages. If your country’s language or local language (Catalan, Welsh, Alsatian, etc.) is missing, please send us the translation! You can change the call text as you wish (remove or add things). In this case, please add your own imprint (VisdP) information below the text.

Join our peace action and fill out the contact form; this way we can inform you about all planning and events.

Please help us make this project big and meaningful!

For this, enthusiasm, commitment, and creativity are needed, as well as a little money. Therefore, we ask everyone who registers and participates here to donate at least 1 euro.

You can participate in the European Peace Project as an individual or as an organization. Everyone who registers will receive a peace dove on an interactive European map in the coming weeks, showing that you, your city, and your village are also participating in this action; with participation extending from Dublin to Thessaloniki, Lisbon to Helsinki, traversing all of Europe and the continent from end to end, reaching Moscow and even beyond!

Also on the site, there will be a feature where you can enter planned events in your location or find other participants near you; so you can gather for this action!

In the Art Work section on our website, we will be offering artistic templates for posters, t-shirts, stickers, badges, or flags to promote the European Peace Project in the coming weeks. You can print these yourself at a copy shop or via online order — as posters at bus stops, on trees, on billboards, on walls, or at your workplace.

You can creatively expand the basic idea of opening the window and reading the peace manifesto on May 9 at 5:00 PM with actions, art, performances, happenings, or flashmobs: You are the actors of the European Peace Project, and you shape this idea according to your own imagination!

Please film or photograph yourself at the window or in your square while making the call, and then send these pictures/videos to us. We will publish them in a digital gallery on this website after May 9, 2025, to document that European citizens are on the side of peace, not war!”

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Venture capital eyes opportunities in European defense

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Private investors and venture capital are poised to play a significant role in Europe’s rearmament, providing much-needed capital to help grow the defense industry and boost the region’s industrial resilience.

More than three years after the war in Ukraine began, European capitals have pledged billions of euros to invest in defense and new technologies, according to a report by the Financial Times (FT). Private equity and venture capital managers see a funding gap they believe they can help fill.

“Governments cannot be 100% successful on their own in rebuilding defense capabilities,” said Thomas Friedberger, deputy chief executive of Tikehau Capital, adding that the private sector would be essential to encourage investment in “defense, resilience, and sovereignty.”

The private equity group, which has raised nearly €450 million for a fund that will invest in companies focused on technologies used in both civilian and military applications, is one of dozens of firms pursuing opportunities in this sector.

Investments in European startups working on defense and related technologies reached $5.2 billion last year, a 24% increase despite a general decline in European venture capital funding, driven by investor interest in companies like software AI group Helsing and drone maker Tekever.

While private equity investment in the aerospace and defense sector has existed for decades, the sector has long been dominated by large buyout funds capable of operating in a highly regulated industry.

However, following the war in Ukraine and as governments seek to strengthen defense industry infrastructure, investor interest, including from venture capital funds, has rapidly increased.

US President Donald Trump’s cool stance towards NATO and calls for Europe to spend more on its own security have further accelerated these efforts. Many European venture capital firms, in particular, had previously been cautious about backing arms manufacturers due to the risk of violating environmental, social, and governance rules.

Managers believe they can play a role by investing in capital-hungry startups and also by helping larger players increase production capacity, thereby lowering unit costs.

“Private markets will play a significant role in bridging the defense funding gap in Europe,” said Ali Floyd, co-head of European private equity fund raising at advisory firm Campbell Lutyens. Floyd added that governments are “unwilling to spend more taxpayer money to finance defense investments, and there are a limited number of companies like Rheinmetall and BAE Systems that public markets can support.”

Michael Sion, a partner at consulting firm Bain & Co and author of a recent report showing the value of venture capital deals in the defense sector has increased 18-fold over the past decade, said the funding gap in Europe is “growing due to current questions about America’s commitments to NATO and Europe’s desire to provide more funding for Ukraine’s defense.”

The war in Ukraine has highlighted the increasing role that defense technology will play on the battlefield, from unmanned aerial vehicles and other autonomous systems to robotics and artificial intelligence.

Managers noted that private equity and venture capital funds can foster innovation by investing in early-stage technologies.

“We need private capital to build companies, take risks, innovate, and invest in research and development before production,” said Sten Tamkivi, co-founder of Plural, an early-stage technology fund with approximately €800 million in assets under management and an early backer of Helsing.

Many investors are seeking opportunities to capitalize on companies with broad portfolios that are underperforming or suitable for restructuring.

According to recent data from PitchBook, the number of deals in the global aerospace and defense sector rose to 274 last year, reaching the highest figure in the past decade. The total value of deals in the sector reached $36.8 billion in 2024, an increase of $10 billion or 37% compared to 2023.

“Historically, there is more interest from significant private equity firms in the defense sector now than there has been,” said James Dawson, a partner at boutique investment bank Gleacher Shacklock.

Dawson points to the successes achieved by US buyout group Advent International with its acquisitions of British companies Cobham and Ultra Electronics. Ultra Electronics produces submarine hunting equipment, as well as control systems for the Trident submarine fleet, which forms the UK’s nuclear deterrent.

Although the London government intervened to secure binding commitments from Advent regarding both acquisitions, the deals were approved.

“Everyone has seen Advent’s success and the success they’ve had with the government,” Dawson said.

Whether there will be more high-profile mergers and acquisitions in the sector remains unclear. British-listed explosives manufacturer Chemring received a £1.1 billion bid from US-based Bain Capital earlier this year.

According to Dawson, despite numerous discussions about more joint ventures, high valuations are an obstacle to mergers and acquisitions in the defense sector.

Despite the flow of money into the sector, challenges remain if Europe wants to build a defense technology sector using private European investor money.

Tamkivi from Plural said governments need to fix their procurement methods, which are known to be bureaucratic and prioritize large companies, and that governments must “ensure that if new technology companies are built in Europe and financed with private capital, they can access procurement flows.”

He added that Europe needs the right mechanisms to work with smaller companies. “How do you create a large company from an SME? That’s the venture capital game,” Tamkivi stated.

However, attitudes towards defense investments have changed significantly, and interest in the sector is unlikely to wane even if there is a ceasefire between Ukraine and Russia.

“The mood of investors, probably regulators, and probably governments too, is changing,” claimed Friedberger from Tikehau. “There can be no sustainable economic development without defense.”

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