Germany: Economy in Free Fall, All Money Goes to Defense

More data – “disappointing” to say the least – on the state of the German economy. According to information released by the Federal Statistical Office (Destatis), in May 2024, “Germany’s exports fell by 3.6 percent compared to April, while imports fell by another 8.7 percent.” A total of €131.6 billion worth of goods and services were exported from Germany as of May 2024, while imports amounted to €106.7 billion.

In terms of destinations, German exports fell by 2.5% to the European Union and by 4.9% to non-EU countries. Most of the exported goods were shipped to the United States, while most of the goods imported by Germany still came from China.

After German automakers were forced to revise their growth forecasts downward since the beginning of the year, German national airline Lufthansa is also “expected to adjust its revenue forecasts for 2024 downward.” According to Lufthansa’s press release, “instead of the expected €2.2 billion this year, the airline will generate adjusted earnings before taxes and interest of between €1.4 billion and €1.8 billion.” Profit in the second quarter of 2024 fell to €686 million, a decline of more than 32% compared to the same period last year.

Instead, the defense industry is at work, exploiting the alleged “Russian threat” and awarding contracts left and right. The atmosphere in Germany has become increasingly heated, with many German media outlets accusing Defense Minister Boris Pistorius of “unleashing a new arms race in Europe.” For Pistorius, however, the planned deployment of US long-range weapons on German soil is significant: “We have a new threatening situation. Vladimir Putin has demonstrated what he is willing and able to do. Since we don’t have sufficient systems in this area, the Americans are temporarily deploying these systems until we develop our own with our European partners,” Pistorius said, rejecting accusations that it would start a new arms race. “Russia already has such systems in place. It’s just a matter of catching up on skills,” the German defense minister said after signing a contract with Franco-German arms company KNDS on July 12 for the delivery of 105 Boxer tanks, including 80 in the Rch 155 variant. As the German newspaper Spiegel wrote, “the first tranche of deliveries will include 80 vehicles worth about two billion euros; they are included in the economic plan of a special fund of 100 billion for the German armed forces.”

To justify the new multibillion-euro expenditures, Berlin has revived the specter of the “long arm” of the Russian secret services, which appear to be organizing plots and sabotage on German territory. Again, according to the weekly Spiegel, which cited unspecified German intelligence sources, “some agents linked to Russian intelligence services managed to infiltrate the European Union with the task of assassinating Rheinmetall CEO Armin Papperger, given Ukraine’s support.” And that’s because Rheinmetall has guaranteed the supply of weapons destined for Kiev and has also approved the construction of an arms manufacturing plant directly on Ukrainian territory. According to Spiegel, German intelligence suspects they may have been “delegates” of Russian intelligence services. In addition, according to the released information, “the Kremlin was planning further attacks on the heads of various European defense companies.”

Many German media outlets ridiculed the Spiegel’s “revelations,” writing that “little or nothing actually depends on Papperger, and decisions are not made in Düsseldorf, but quite somewhere else” (Rheinmetall headquarters is in Düsseldorf – ed.). And that for Moscow “it would be much easier to take down the future factory in Ukraine by launching a couple of hypersonic missiles that air defenses are unable to intercept.”

Nevertheless, following news of a “Russian plot” to assassinate the CEO of Rheinmetall, German Christian Democratic Union (CDU) MP Roderich Kiesewetter said that “stricter control is needed against Russian citizens who want to enter Germany.” According to Kiesewetter, “it is possible that Russian agents were among the 35,000 Russian citizens who have received tourist visas to Germany since 2022. We must strengthen control, and to do that we must also change the legal framework. Tourists should not be terrorists,” Kiesewetter said.