Europa Archive - Atlantik-Brücke e.V.

“2029 is the Red Line”: SACEUR-Talk on Europe’s Defense Buildup

Mateusz Borkowski — Thu, 11 Jun 2026 16:59:31 +0000

At the Atlantic Bridge’s SACEUR talk during the ILA in Berlin, Breuer and Grynkewich called for pace and honesty – and set 2029 as a binding deadline for Europe’s defense buildup.

This year (June 11, 2026), the Atlantik-Brücke hosted its traditional SACEUR talk at the ILA aerospace show in Berlin. The high-profile discussion brought together General Carsten Breuer, Chief of Defense of the Bundeswehr; General Alexus Grynkewich, NATO’s Supreme Allied Commander Europe (SACEUR); Airbus Defence and Space CEO Michael Schöllhorn; and OJ Sanchez of Lockheed Martin – to discuss Europe’s progress in defense, but also to lay bare its remaining gaps, as the continent works to restore its military credibility. The panel was moderated by Robert Wall (Aviation Week).

“This is the first time that the Atlantik-Brücke has held its traditional talk with the Supreme Allied Commander Europe and the Chief of Defense of the Bundeswehr in public,” said Sigmar Gabriel, Chairman of the Atlantik-Brücke, in his welcome remarks. “It is also our premiere with General Alexus G. Grynkewich. And General Carsten Breuer is a steadfast partner in our security policy dialogue.”

“Even six to eight years ago, I couldn’t have imagined holding a discussion about the shift in attitude within the Bundeswehr and the defense industry,” Breuer affirmed.

“2029, this is where it counts. And this is the reason why I put a red line on all our timescales in the Ministry of Defense.”

[related] A recurring theme of the discussion was time. Breuer described how he has drawn a firm deadline in his ministry’s planning: “2029, this is where it counts. And this is the reason why I put a red line on all our timescales in the Ministry of Defense.” He repeatedly pressed for openness between politics, industry, and the armed forces, warning that timelines can no longer simply be pushed back. “We have to be honest to ourself,” he said, arguing that if a goal set for 2029 cannot be met, “then we have to discuss how to mitigate this, because there is no other chance.”

The panelists pushed back on the notion that Europe remains a “paper tiger.” “Most allies have increased their defense budgets. Last year, for the first time, all allies met the target set at NATO’s Wales summit,” said Grynkewich. He cautioned, however, that money alone does not create capability – it requires “delivery through an industrial base that’s healthy, that’s innovative.” “It would be wrong to say that Europe has no defense capability at all. The money is now being made available. We in the defense industry have to ramp up the innovation of our products,” Schöllhorn said, stressing: “The defense industry and the procurement system have to work even more closely together.”

The thorniest capability gap lies in long-range precision strike

The thorniest capability gap discussed on the panel lies in long-range precision strike. Breuer outlined a three-step approach – first relying on US capabilities, then procuring systems, and finally building a European solution – while acknowledging the uncertainty around the first two steps. His guiding criterion, he stressed, is availability by the 2029 horizon: systems must be procured “whenever they are available,” depending on what the market and development timelines allow. “We have to establish transparency about the red lines of our objectives. That means by 2029 we have to have been honest with ourselves. After that, we can no longer afford any delays. If a specific goal is at risk, we have to ask ourselves how to mitigate the resulting threat.”

“As for Europe’s capabilities in long-range precision strike, it’s clear that within NATO and from the US perspective we need certain air and maritime capabilities under certain conditions,” Grynkewich emphasized. And he analyzed: “Long-range weapons help the alliance establish deterrence in the short term. In the medium and long term, long-range precision strike has to be complemented by cyber and space capabilities. For that, research and development has to be adapted.”

“Lockheed Martin is rapidly ramping up its industrial manufacturing capacity. All our systems have to contribute to enabling long-range precision strikes,” Sanchez assured.

“Whoever is able to master the data, is gonna have a decision advantage.”

Both generals converged on a deeper point: networking matters more than individual platforms. “It is all about the data,” Grynkewich said. “Whoever is able to master the data, move it more quickly, apply more effective algorithms to it, is gonna have a decision advantage.” The two industry representatives reiterated the call for common standards, and Breuer warned against deferring standardization: “Don’t delay it because we don’t have the time.”

On the alliance’s future shape, Grynkewich framed a lighter American burden as a strength rather than a retreat. Asked what a transatlantic alliance looks like if the US carries less of the load, he answered: “It looks stronger. It looks more sustainable.” He situated this within a “NATO 3.0” concept that gives Europe a more balanced voice.

Asked about a hypothetical scenario in which Russia were to attack the Baltic states, the SACEUR was unequivocal: “Absolutely we’re ready to fight tonight. We’re ready to fight tonight across all 32 nations.” Breuer added: “Our problem is not within the alliance. Our problem sits in Moscow, and therefore we have to do something against this.”

“Absolutely we’re ready to fight tonight. We’re ready to fight tonight across all 32 nations.”

Breuer closed the discussion with praise for the transatlantic partnership: “I’m absolutely glad to have an American SACEUR here, because this provides – apart from General Grynkewich himself – that transatlantic link, which is also what the Atlantik-Brücke is all about. I think it’s good, and we should keep it this way as long as that’s possible.”

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What the Iran war teaches about partnerships

Mateusz Borkowski — Mon, 27 Apr 2026 12:00:39 +0000

The attack on Iran marks the end of unilateral U.S. action — at least in the view of our CEO, Julia Friedlander. In a speech delivered at the Berlin Capital Club on April 23, 2026, she explores how sanctions gave way to military force, why Trump represents a political era that has passed, and why this conflict is not only America’s concern, but Europe’s as well. You can read her full speech here.

“How many of you were surprised that the United States attacked Iran? And how many were surprised that they did this exclusively on Israel’s side? I would argue that any American president, under these circumstances, would have seriously considered military action against Iran — a weakened regime, diminished proxies, concrete intelligence — a tempting golden moment after half a century of containment and countless rounds of sanctions.

[related] The Obama administration, too, considered military options. In 2014, Iran was — according to some intelligence assessments — only months away from a so-called breakout. Yet diplomacy still had a chance at that time, not least because Russia and China were equally interested in a multilateral agreement and in curbing Iran’s uranium enrichment. The negotiations, backed by a United Nations Security Council resolution, lasted eighteen months. They were hard-fought, though far from airtight.

Unable to secure a treaty due to Republican opposition in Congress and pressure from Israel, the United States was forced to negotiate a legally non-binding „agreement“. That agreement was time-limited and did not cover Iran’s support for regional proxies or its ballistic missile activities, but most critically, it was not a treaty. After several attempts to persuade the European signatories to expand sanctions and push Iran to extend the terms of the deal (a task I was involved in at the time), Trump ultimately took pleasure in tearing it apart in 2018.

In the years that followed, sanctions were imposed wherever possible — not only on Iran, but also on Venezuela and Russia — essentially maximum pressure against what felt like every oil-producing nation. The more Trump and later Biden rhetorically escalated sanctions, the more the entire concept lost its effectiveness. Switzerland, acting as the U.S. protecting power in Iran, carefully noted the steady flow along long-established smuggling routes into Turkey, Iraq, and Afghanistan. And the first shadow fleets began to emerge — much like those operating today in the North Sea. From sanctioned Iran across the Atlantic to sanctioned Venezuela, oil tankers continued to move through international waters.

„’Kinetic’ sanctions are a rather striking way to prevent the financing of terrorism.”

The next step, then, could only consist of bombs. The United States already had some experience in this regard. When the Islamic State expanded across the Middle East in 2014 and captured Mosul, it seized a branch of the Iraqi Central Bank that, thanks to continued U.S. payments, was filled with cash reserves in dollars. Physical money, after all, cannot be frozen by sanctions once you march in. So we bombed it — the first „kinetic sanctions“, ladies and gentlemen, in early 2016. An interesting method of preventing the financing of terrorism, wouldn’t you say? And notice the terminology: Ukraine now refers to its strikes on Russian energy infrastructure as kinetic sanctions. And when sanctions failed to bring down Maduro, the United States ultimately resorted to his abduction. The illusion of a quick and clean sanctions regime was replaced by the illusion of a quick and clean military operation. But of course, it is not that simple.

Our New Alliance

The era in which the United States could act unilaterally is over. So too is the time when it could make such decisions and only ask its allies in hindsight: are you with us or against us? Trump’s belated appeals for support once it became clear that the war would quickly grow more complicated than planned are relics of a hegemonic world order that both the United States and Europe assumed would last forever. That is how America operates. That is how thinking in the Situation Room works. One commands instruments of power that others can hardly even imagine, and becomes blind to their limits. The United States can no longer afford to act in this way. Building alliances is slow and demanding — in the past, avoiding that effort was considered bad form. Today, it is a fatal mistake.

I respect that Chancellor Merz, in his first statement, refrained from judging the decisions of Germany’s partners. For it is one thing to comment from the outside and quite another to be in a position where decisions must actually be made. In the end, there are only two options: to press the button or not. And let us be honest: it is not a tenable position for a country like Germany, which seeks to have a voice on the global stage, to say: We are glad the Ayatollah is gone and we support the elimination of Iran’s missile capabilities, but the war itself is illegal. Of course, I also respect the decision of all European governments, under these circumstances and given the two protagonists, Trump and Netanyahu, not to take an active role in the conflict. Even if one were willing to subject oneself to the shifting moods of the U.S. president, what role would Europe have been expected to play in any case — assuming it was not merely a symbolic gesture of deference to the „Big Daddy“ of NATO, but a tactically meaningful contribution? Ideally, Europe would have been involved, but under different conditions.

“The United States wants partners on equal footing, not dependencies”

Believe me: the National Defense Strategy published earlier this year is not a second Clausewitz. But there is one passage that will stay with me and with my generation of security experts in the United States for a long time: „With rare exceptions, allies have too often been content to rely on the United States for their defense while reducing their own defense spending and instead investing in social welfare and other domestic programs. However, the blame does not rest solely with them. It was, of course, their sovereign decision to underinvest in defense. But that decision was often encouraged by earlier U.S. policymakers who mistakenly believed that the United States benefited from allies who were dependencies rather than partners.“ It reads: dependencies, not allies. What does that mean? It means that the United States wants partners on equal footing, not dependents. Trump is a relic — the final incarnation of a hegemony that no longer exists.

I fear that this war will produce no winners, only losers — in economic terms: a net deadweight loss. Iran will need years to recover, regardless of whether sanctions are eased and the country complies with Western demands to limit uranium enrichment. Israel will have neither eliminated an existential threat posed by a theocratic regime nor regained international support — the images from Lebanon and Gaza are still too fresh. And the United States has once again demonstrated its unparalleled military and intelligence capabilities. But it has lost the political game.I am convinced that had Washington taken the time to build genuine alliances with Europe and the Gulf states, the process would have been slower, but it would also have strengthened its own position and likely avoided this outcome. In the end, Iran was never as close to the bomb as many assumed.

„The United States took a shortcut — and the bill is now coming due.“

The United States took a shortcut — and the bill is now coming due. Meanwhile, Russia and China are operating in the background, providing Tehran with intelligence and material support. This is a far cry from 2015, when they still sat together with the West at the negotiating table. Yet wars in a world in transition are like immersion blenders. For that reason, not everything is negative. Ukraine is emerging as a global leader in drone defense and is concluding agreements with Gulf states. These countries — particularly the Emirates, which long flirted with Iran — are now taking action against illegal Iranian financial flows. Lebanon and Israel are discovering a shared adversary in Hezbollah. And, most importantly for this region, Europe is making further progress in defining itself in security policy.

Step by step, information is emerging about an allied mission to secure shipping lanes in the Strait of Hormuz. These are good news — first, for European security structures: a coherent military response by European actors in the European interest, without U.S. leadership. Second, for Europe’s relations with the Gulf states and other trading partners. Gradually, we are moving toward a European NATO capable of territorial defense — not without the United States, but alongside it, on equal footing. Not a dependency, but an ally.

Ladies and gentlemen, we are currently witnessing a global conflict in fragments. Imagine, for a moment, we were still living in Europe’s colonial world — it would be incomparably worse. What Europe does with the fragments now will be decisive: new alliances with Gulf states, missions to secure sea lanes, support for Ukraine. This is the beginning of a return to global politics for Europe. And that is why this war is also Europe’s war.”

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“The U.S. positions on Russia Are Not Compatible With Our Own Security Interests”

Pia Kauer — Tue, 27 Jan 2026 10:11:57 +0000

Norbert Röttgen, member of parliament and foreign policy expert, calls for Europe to urge the United States to comply with international law, while maintaining close ties. This includes continuing to invest in transatlantic relations. His commentary was written in German, read the original here.

With the re-election of Donald Trump as president, the role of the United States in the world — and with it the transatlantic relationship — is shifting at a pace few would have predicted. Under Donald Trump, the security of Europe is no longer an integral part of American interests in the way it was for decades after World War II. This change brings uncomfortable truths and consequential decisions for Europe. We want to continue working with the U.S., but at the same time we must recognize that we are now responsible for our own security.

[related]The truth is that even long before Trump, the U.S. had urged Europeans to do more for their own security and to shoulder a greater share of the burden within NATO. We Europeans often ignored these calls out of convenience. Now we must rapidly become capable of defending ourselves so that we never have to be defended. We must rise to this responsibility because the future of Europe and our free, democratic way of life depends on it.

The recently published U.S. National Security Strategy makes clear how the United States views its role abroad and how it sees Europe. Strategically, the U.S. is focused on maintaining dominance in the Western Hemisphere against external political and economic influence. In this framework, democratic rule-of-law states in Europe are at times seen as part of the problem, while reducing tensions with Russia is cast as a goal in order to achieve a type of strategic stability. In pursuit of that goal, pressure is being applied — especially on Ukraine.

For Europeans, these positions are not compatible with our own security interests. Europe’s security depends on the failure of Putin’s war of aggression in Ukraine. Only by preventing Russia from achieving its aims can we stop military force from once again being seen as a legitimate tool of state policy — not just in Europe, but elsewhere, for example as a model for China regarding Taiwan. An end to the war that rewards aggression would not bring peace; it would destabilize Ukraine and further erode the foundations of the European security order.

The authority of international law is non-negotiable for us Europeans. It applies equally to both strong and weak states and is, for many, the most important protection against the predatory actions of militarily stronger neighbors. That is why, in full solidarity, we must also insist that the U.S. uphold international law and must not let it be relativized.

Europe missed the opportunity to put itself in a position where it has the capability to act independently in world affairs. We must make up for that now. This includes continuing to invest in transatlantic relations, which are more than government-to-government ties. They encompass politics, economics, and — above all — the connections between people in the U.S. and Europe that often go back generations and tell the shared and fateful history of our continents. Despite all difficulties, that story is not yet finished.

Norbert Röttgen, Member of the German Bundestag (CDU/CSU), is the deputy parliamentary leader of the Christian Democrats in the German Bundestag. He is also the deputy chairman of Atlantik-Brücke.

To read more on the question of whether the United States is still Europe’s partner, also see the pro comment by Metin Hakverdi, Member of the German Bundestag (SPD), Coordinator for Transatlantic Civil Society, Cultural, and Information Policy Cooperation of the Federal Government at the Federal Foreign Office and board member of Atlantik-Brücke here: “Strategic Decoupling would be damaging for Europe”

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„Strategic decoupling would be damaging for Europe“

Pia Kauer — Tue, 27 Jan 2026 10:10:20 +0000

Transatlantic Coordinator Metin Hakverdi continues to see the United States as Europe’s partner – he sees it as in the continent’s own interest. His commentary was written in German, read the original here.

“Are the United States still Europe’s partner?”

These days, it might be tempting to say no. National security strategy, tariffs, Venezuela, Greenland — there are plenty of reasons to question our relationship with the U.S. No doubt: the Trump administration enforces its interests in drastic ways, strains our alliance with territorial demands, carries ideological conflicts from U.S. domestic politics into Europe, and openly supports European right-wing populists.

[related]And yet, on sober reflection, the United States are still our ally and should remain so. That is not just a legalistic statement with regard to our NATO alliance, which continues despite some fears. It is also neither nostalgia nor habit.

Beyond daily politics, the U.S. on the one hand — and Germany and Europe on the other — objectively share a wide range of common interests. We are closely connected economically and militarily. Europe currently lacks sufficient conventional capabilities and credible nuclear deterrence to protect itself in the near term. We can only face the challenges posed by China and Russia together.

Our economic relations with the U.S. are of outstanding importance, creating jobs and prosperity on both sides of the Atlantic. Research, supply chains, and investments are deeply intertwined. A strategic decoupling would be economically self-damaging for Europe. Even in our own security and economic interest, we should not burn bridges. Partnership with the U.S. is (also) sober interest-based policy.

At the same time, this does not mean a free pass. Europe must strengthen its own sovereignty and set clear limits. Regardless of how American policy develops in the future, Europe must take on more responsibility. A stronger Europe is not an alternative to the transatlantic partnership, but its prerequisite: if the U.S. drifts further away, Europe must be capable of acting on its own; if they draw closer, Europe is a resilient partner.

Furthermore: the transatlantic relationship is far more than the relationship between individual governments, more than Berlin and Washington, D.C. Our partnership is based on a myriad of contacts and networks at all levels — in politics, the economy, and civil society. And yes, at its core on our shared values. Politics can change, but these transatlantic bonds are enduring. They must, however, be tended to despite all adversity.

The alternative to partnership with the U.S. would be sobering: strategic dependence on authoritarian powers or European great-power fantasies without real basis. Neither is in Europe’s interest. The real conclusion, therefore, is this: the United States are still Europe’s partner. But Europe must make this partnership more European so that it remains transatlantic.

Metin Hakverdi, Member of the German Bundestag (SPD), serves as the Coordinator for Transatlantic Civil Society, Cultural, and Information Policy Cooperation of the Federal Government at the Federal Foreign Office. He is a board member of Atlantik-Brücke.

Also see the contra position of Norbert Röttgen, MdB (CDU/CSU), deputy parliamentary leader of the Christian Democrats in the German Bundestag and deputy chairman of Atlantik-Brücke here: “The U.S. positions on Russia are not compatible with our own security interests.”

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US intervention in Venezuela: power politics instead of international law

b.wild — Wed, 07 Jan 2026 16:09:49 +0000

Venezuela reveals the crisis in the transatlantic partnership. With its military intervention, the US has made clear what it has already demonstrated in other contexts: it only supports international institutions and procedures as long as they serve US power claims and interests.

By Prof. Dr. Michael Hüther

Geopolitically, the year 2026 began with a bang: the U.S. military special operation in Venezuela. What is initially surprising is that President Trump—who had claimed he wanted to resolve conflicts worldwide and make peace—has made it clear that he does not shy away from the use of military force. Any hopes of a Nobel Peace Prize can likely be shelved at the White House. Geopolitics has always been power politics; such actions are well documented across different eras and have not lost relevance in recent times. Whether the U.S. power-political calculus will succeed remains to be seen, as the explicit reactivation of the Monroe Doctrine, including the “Roosevelt Corollary,” is unlikely to generate enthusiasm in the southern part of the American continent.

[related] In any case, the U.S. government is sending a signal: it may no longer wish to be the universally engaged hegemon, but when it comes to specific power interests, it is prepared to act decisively. The Venezuela operation also sends a message to Putin and Xi Jinping: military “special operations” are not an exclusive instrument of autocratic regimes, and when the United States chooses this path, one should expect precision, effectiveness, and efficiency. This implies that the U.S. will not limit itself to threats and loud gestures outside the American continent—such as in Iran—if an opportunity for a shift in power presents itself. The chance to weaken the so-called “Axis of Evil,” as coined by George W. Bush in 2002, or to break out strong links in that chain, will not be missed.

There are few moral arguments against the removal of violent rule and corruption. Accordingly, no German commentary fails to point out that neither Maduro nor his wife deserves a tear. For some political and journalistic commentators, a sudden gain in moral altitude suffices to legitimize a breach of the law. Historical precedents are readily invoked. Those especially well-versed cite the case of Noriega in 1989, when the U.S. acted similarly in Panama. But repetition does not create international legal legitimacy, and the United States did not justify its actions by invoking a humanitarian emergency or human rights violations in Venezuela; instead, repeated reference was made to Venezuelan oil reserves.

“However, a repeated act does not constitute legitimation under international law.”

The U.S. military operation in Venezuela stands in contradiction to international law. This does not become irrelevant simply because great powers sometimes behave differently. In any legal system, violations do not invalidate the underlying legal principles. International law, however, does not derive its force—as national legal systems do—from comprehensive codification and undisputed jurisdiction, but rather from the historical practice of dominant states and the institutions that have emerged from it. All of this was ignored by the United States. Equally ignored—presumably deliberately—were the consequences of this action for the standing of international law in the context of “great power competition.”

When German politicians—including the Chancellor—explained their striking silence in the first hours by claiming that “the legal assessment of the U.S. operation … is complex” and therefore requires time, they missed the point. What is complex is the political assessment, not the legal one. Despite all historical influences, the core principles of the Westphalian system remain clear: it asserts sovereignty over territory as the foundation of modern statehood and establishes the principle of non-interference in the internal affairs of other states, as well as the principle of the legal equality of states regardless of their size or internal political order. This is the basis of most Europeans’ criticism of Russia’s war of aggression. Yet even when two actors violate international law in the same way, the political meaning is not necessarily the same.

For Europeans, the political complexity of the Venezuela operation stems from the increasingly questionable transatlantic partnership and Europe’s existing unilateral dependencies on the United States. Negotiations over Trump’s tariffs were always accompanied by a latent American hint that the U.S. need no longer remain engaged in the Ukraine war, which is viewed as a European conflict. The balance of power within the West has shifted because the United States—as outlined in its National Security Strategy—has little confidence in most European states; it diagnoses cultural decay and seeks to counter it by supporting nationally oriented forces. For the Trump administration, security expenditures are justified only in the direct self-interest of the United States, hardly in NATO’s alliance interest, and certainly not in the defense interest of Europeans.

As a result, what has long been necessary remains central for Europe: the development of hard power—through adequate defense efforts, through deeper European integration among those willing, and through strengthening competitiveness. Only in and through Europe can an effective response in the competition among great powers succeed. Given its attractive living conditions, cultural diversity, differentiated educational systems, and other aspects of soft power, the continent—and the EU—has no reason to hide.

This also requires international credibility, particularly in the realm of rules-based international relations. This is crucial because Europeans appear to be the only actors with a distinct will and a deeply rooted historical experience in this area. With the Venezuela operation, the United States has once again demonstrated what it has already manifested in other contexts—the World Trade Organization, the Paris Climate Agreement, and the International Criminal Court founded in 1998: it supports international institutions and procedures only as long as they serve U.S. power claims and interests. This includes the assertion of both the will and the ability to enforce U.S. law extraterritorially.

“In Europe, you can no longer rely on the openness and accessibility of international markets.”

Europe and Germany should be neither naïve in terms of power politics nor careless with international law. This insight goes hand in hand with the recognition that references to a legal system must never be dismissed as mere moral folklore, and that violations of international law can scarcely be morally offset. Otherwise, Europe will not be able to play an appropriate role in the newly emerging global structure. “Europe first” must be the central response to power politics—or more precisely: Europeans must find the courage to use their economic size and significance for clear interest representation. This presupposes that deviant behavior by opportunistic actors within the EU—such as Hungary—has strict consequences, with the principle of the rule of law being firmly enforced.

Economically, all of this means that Europe can no longer rely on the openness and accessibility of international markets and must therefore pursue a Europe-centered trade system through accelerated free trade agreements. This may appear unrealistic given agricultural resistance in France, Italy, and Poland, but the seriousness of the situation must be recognized here as well. Political leadership is required—both European and national. At present, there are few signs of it anywhere. Yet, as so often in history, pressure from circumstances creates new options for action. This begins with coherent communication in the current situation: a violation of international law remains a violation of international law, and power politics only ever escapes it temporarily.

About the author: Hüther has been head of the German Economic Institute (IW) in Cologne since 2004. From 1995 to 1999, he was secretary general of the German Council of Economic Experts. In between, he worked as an economist in the private sector at Deka-Bank. Hüther is deputy chairman of Atlantik-Brücke.

This article was first published in Süddeutsche Zeitung Dossier.

The text first appeared in German and was translated with the help of AI.

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“Those who avoid risk miss opportunities”

b.wild — Mon, 15 Dec 2025 13:01:33 +0000

Global power relations are shifting, geopolitical tensions are rising: Germany therefore needs more willingness to take risks, bureaucracy reduction, and strategic diversification of supply chains. Germany can secure its role as an economic and geopolitical power, but this requires more courage and the readiness to take new paths.

By Katherina Reiche

Germany today stands at a crucial turning point. For decades, export strength was the foundation of our economic success and made us one of the leading economic nations with a strong voice in Europe. The ability to export goods and services worldwide was synonymous with economic strength and international influence. But the days when Germany automatically benefited from global growth are over.

The international dynamics have shifted, other countries are developing faster, and the challenges for our economy have become more complex and multifaceted. The causes of this development are as varied as they are profound. Structurally, a thicket of regulations has spread in Germany, increasingly burdening companies. Energy costs have risen due to political decisions and ideological commitments, while the welfare state has expanded further. These factors have weakened the competitiveness of our economy and slowed innovation. Added to this is a cultural component: in Germany, failure is often seen as a stigma, and the willingness to take risks is low. Especially in a time when technological innovations progress ever faster and new business models emerge, this attitude can become a disadvantage. Those who avoid risks miss opportunities—and in a world that is changing ever faster, this is a serious problem.

Changed foreign policy conditions

The international political framework has also fundamentally changed. Trade conflicts, tariffs, and export bans are expressions of a new geoeconomic world order in which economic interconnections increasingly become the arena of geopolitical interests. The USA and China deliberately use economic power as a political instrument, and Germany is at the center of a global tension between open markets and power-political interests.

[related] The forces that once supported our economy now often act against each other, putting our competitiveness under pressure. The economically liberal world order as we knew it is a thing of the past. Today, economic interconnections have become a field of geopolitical tension, and Germany must assert itself in this new reality. In this changed environment, successful economic policy is inseparably linked with an active and strategic foreign economic policy. It is no longer enough to rely on open markets and growth. Rather, we must strategically use our economic strength to help shape international rules and represent our interests.

“Today, more than ever, the economy is a central instrument of geopolitical shaping.”

Stabilizing transatlantic relations, diversifying our trade and supply relations, and strengthening multilateral structures such as the World Trade Organization are central tasks to be tackled decisively.

Deepening the European single market

Europe must become more competitive again. This means reducing unnecessary bureaucracy and deepening the European internal market. Only in this way can we withstand and use the tensions in the global system to our advantage. Resilience arises from competitiveness, and this must again become the guiding principle of European economic policy.

The European Union must once again focus on being a driver of strong competition and no longer see itself as a regulatory brake. Initiatives such as the investment booster and tax reliefs are important steps to increase attractiveness for direct investments and to establish new companies. Foreign greenfield and expansion investments in Germany have recently declined, and the number of settlement projects has also decreased. This shows how urgently action is needed. Security must become a guiding principle, especially in dealing with China. Relations have become more complex, structural imbalances and dependencies threaten to solidify. China has almost monopolized the mining and processing of rare earths and uses this position deliberately as a political instrument. A well-thought-out risk management and targeted reduction of one-sided dependencies are therefore indispensable.

Germany and Europe must protect their key areas and strengthen the resilience of their economy to be able to exist in an increasingly fragmented and regionalized world order. For the global economy is evolving away from a unified, liberal order towards a system of competing geopolitical blocks. Regional alliances and spheres of influence are gaining importance, protectionist measures and new alliances shape the international order. For Germany and Europe, this means strategically managing economic interconnections, reducing dependencies, and increasing resilience against external shocks.

Free trade agreements offer great opportunities

Diversifying our trade and supply relations is key to keeping supply chains stable and opening up new markets. The free trade agenda of the European Union must be strengthened, and relations with Latin America, the Indo-Pacific, and Africa also offer great opportunities. The MERCOSUR agreement and free trade agreements with Mexico, Indonesia, and other countries are important milestones to open up new sales markets and deepen economic cooperation. At the same time, the multilateral trading system with the World Trade Organization remains a central anchor of stability, which needs to be strengthened but also reformed. The WTO stabilizes the global trade order and creates predictability and security—values that are particularly important in a world shaped by volatility. Foreign trade promotion and development cooperation must be more strategically aligned. Funding programs should be targeted at the needs of companies and also include new sectors such as the security and defense industry. Development cooperation must contribute to competitiveness, for example through support for large infrastructure projects and the development of new raw material sources.

“We must be prepared to challenge old ways of thinking and break new ground.”

Cross-departmental working groups dealing with project awards, raw materials, and Africa are an important step to intensify cooperation and exploit synergies. Today, economy is more than ever a central instrument of geopolitical design. Energy, infrastructure, technology, and supply chains are no longer only issues for companies but also for states. Governments worldwide no longer only secure their borders but also networks, data flows, and raw material sources. This is where the world order of tomorrow is decided, and Germany must be ready to actively represent its interests.

The state must ensure stable conditions

The challenges are great, but they also offer opportunities. Germany has proven in the past that it can master crises and reinvent itself repeatedly. The ability to adapt, drive innovation, and open up new markets is part of our economic DNA. But for this, we must be willing to question old mindsets and take new paths. This means showing courage, taking risks, and accepting failure as part of the innovation process. Only in this way can we master the technological transformation and secure our competitiveness in the long term.

The role of the state is clear: it must provide stable conditions that offer companies planning security and investment incentives, without paralyzing the economy through excessive regulation. Politics must have the courage to consistently implement reforms to make Germany future-proof. Debates on lifetime working hours, social security, bureaucracy, and defense capability must not be shied away from. Control over money and goods flows, infrastructures, and key technologies becomes the central lever of power. Companies are no longer merely objects of state policy but central actors themselves in the global competition for resources and influence.

They must adapt their business models to the new realities, drive innovation, and seek international partnerships. Digitalization and globalization offer enormous opportunities but also require flexibility and readiness for change. Germany must assert itself as a strong, resilient, and innovative economic power. This requires courage, determination, and willingness to take new paths. Only if we preserve and further develop our economic strength can we influence the new world order and represent our interests.

The world out there will be better if Germany has influence in it. Our economic strength will also be the foundation for this in the future.

About the author: Katherina Reiche is Federal Minister for Economic Affairs and Energy.

[Disclaimer: This text was originally written in German. The English translation was produced with the help of AI.]

Der Beitrag “Those who avoid risk miss opportunities” erschien zuerst auf Atlantik-Brücke e.V..

“A whole-of-society effort”

b.wild — Mon, 15 Dec 2025 12:54:10 +0000

We stand at the threshold of a new world order. For more than 30 years, we have lived in peace in Europe. That is over. If the West fails to defend our liberal values, we will become the plaything of autocrats.

By Carsten Breuer

International conflicts and their effects are increasingly coming into our consciousness with great force. They are becoming topics of conversation not only on news programs, talk shows, and in surveys, but also at the kitchen table at home. The defense of our security has long ceased to be an abstract task—it is a concrete necessity. This is especially apparent when looking at Ukraine. Russia’s illegal war of aggression has lasted nearly four years. Above all, it is a war of attrition. We see high-tech drones in trench warfare, archaic violence in war crimes in Bucha, and battles to the bitter end in Bakhmut. Putin’s neo-imperialist ambitions have already cost hundreds of thousands of lives. And there is no end in sight. Russia switched to a war economy some time ago.

Its military now receives more spending than all other policy areas combined. Weapons and ammunition are being produced at full speed or, in some cases, refurbished from old stockpiles. Not all of this goes directly to the front, but also to new military units currently being established along the entire NATO eastern flank. Personnel-wise, Putin is preparing for further confrontations: by the end of 2026, Russian armed forces are expected to grow significantly again, to around 1.5 million soldiers. That is twice as many as before the war began on February 24, 2022. According to military analysts, Russia could be capable of launching large-scale attacks on NATO territory within a few years.

[related] Not necessarily as a campaign of conquest, but perhaps as intensified provocation right at the brink of open war, aiming to undermine the Western alliance system, weaken NATO’s security guarantees, and expand its own sphere of influence in Eastern Europe. This is not a prediction, but a plausible possibility. We must take seriously the intentions and goals behind this massive rearmament. Putin is not interested in expanding his massive empire by a few square kilometers. He wants a new world order, and he wants to achieve it through force. Analysts view 2029 as a potential “culmination point,” but the threat is already real today. Putin has long viewed himself as being engaged in a “(shadow) war” against the West. This is evidenced by the increasing number of hybrid attacks that Europe is exposed to.

Even in Germany, we observe a wide range of systematic attacks in the gray area between peace and war: cyberattacks on critical infrastructure, severed data cables in the Baltic Sea, sabotage planning, drone-assisted espionage, disinformation campaigns on social media, and even foiled attack plans. All these “pinpricks” are intended to shake confidence in our state. They aim to undermine the cohesion of our societies. Germany plays a particular role—as Ukraine’s main supporter in Europe and as a hub for the Allies in deploying to NATO’s eastern flank. These hybrid attacks strike us—deliberately scalable and capable of being scaled—at the boundary between internal and external security, specifically at the intersection of different responsibilities. It is essential to act in a coordinated fashion at this point of entry, both nationally and internationally.

“Russia’s quest for power remains, for the foreseeable future, the greatest and most immediate threat to the Euro-Atlantic area.”

Russia’s quest for power will remain, for the foreseeable future, the greatest and most immediate threat to the Euro-Atlantic area. But it is by no means the only one. Across the globe, other crisis hotspots demand our vigilance. The conflict in the Middle East—or rather, conflicts—continue to concern us and require action. Crises overlap, blend into one another, and reinforce each other. And every conflict has the potential to have global effects. This can be seen, for example, with North Korea, which is supporting Russia in the war against Ukraine with soldiers and weapons. Resources flow back—not only financial, but military expertise and, above all, weapons components, including those for carrier rockets that can be equipped with nuclear warheads. Thousands of North Korean soldiers are fighting against Ukraine—and dying for Russia.

“We must view all the seemingly separate crises and theaters of war in the world as a whole.”

The losses are immense, but this way North Korean soldiers gain combat experience. Their baptism of fire against Ukraine increases the combat effectiveness of all North Korean armed forces. What is already clear: this destabilization through such interactions is occurring not only in Europe but also in East Asia. These complex interconnections make it clear: we must view all these seemingly separate crises and theaters of war around the world holistically, from a 360-degree perspective. We must recognize and discuss dependencies, interactions, and connections at all levels of action. In military terms: we have to consolidate the strategic situation, draw the necessary conclusions—at the speed required. And right now, that speed is very high. We are at the threshold of a new world order. In this period of upheaval, the West—and we—bear the responsibility to defend our liberal values with resolve. If we do not engage, we risk becoming the plaything of autocrats. This is not only a moral duty, but a fundamental realpolitik self-interest.

A world in which the rule of law is replaced by the law of the strong is something we cannot and must not accept. And in terms of global challenges, the world is shrinking: crises, and possible solutions, are moving closer together. This challenges us as never before. And it won’t get easier. That is why readiness is today not only our own currency, but that of the entire NATO. For more than 30 years, we have lived in peace in Europe. That is over, and it is hard to get used to. But we have no choice. Credible deterrence is our “best-case scenario.” At the NATO Summit in The Hague in June 2025, all 32 Allies agreed on how and with what military means they will position themselves in the future. They set out, in binding terms, who will take responsibility in which areas.

After the United States, Germany provides the second-largest so-called capability package. We are on the way to becoming the engine of European defense. This means, for example, that we will establish new combat troop units, broaden our industrial base, and strengthen multinational cooperation. Ultimately, it also means that in the future we will spend 3.5 percent of GDP on defense and 1.5 percent on military infrastructure. With the help of the special fund, we have already set many things in motion: we have ordered tanks, ships, aircraft, drones. We expect key deliveries this and next year; unfortunately, armaments are not available off the shelf like at the hardware store around the corner. With the constitutional amendment that exempts defense spending above 1 percent of GDP from the debt brake, we have made another major step to cope with the expanded range of orders.

We have put security first. We now no longer have a time-limited special fund, but an uncapped budget. Uncapped, however, does not mean unlimited. More than ever before, we must justify every cent to the parliament. We can do that. And we will do so. We have already prioritized which capabilities the Bundeswehr needs most urgently. These include systems for air defense, as well as ammunition and means for electronic warfare, among others. It is important that not only the Bundeswehr now has planning certainty, but also industry and startups that must first ramp up their capacities. Equally important is looking well beyond 2029 at the future of warfare. That is why we must think and plan in at least two categories: In the short term, until 2029, the priority is readiness. In the long term, far beyond 2029, it is anticipation, flexibility, and keeping pace with disruptive developments.

Because we now have new technological possibilities that are changing the established paths of technology development and military strategy. In the past, the military was the driver of technological development—today, it is the reverse: technological progress generates strategic challenges. Long term, this will also influence the development of our doctrine and lead us to rethink war—even down to the battlefield. The innovation cycle for drones in Ukraine, for example, is about two weeks. We need to be similarly agile in peacetime—even without war dictating it. Threats on the battlefield force armed forces to constant adaptation. Therefore, we must also become more flexible, agile, and consequently faster in procurement. Wherever necessary, we must also break new ground. We must ask: Where are we not looking today—what do we not yet know, what can we not yet grasp?

But also: How do we ensure the Bundeswehr becomes both a driver of technology and can quickly and reliably incorporate new technologies? There are cooperation opportunities, for example, in the digitization and flexibilization of defense systems through software-based control, in Software Defined Defence. The use of artificial intelligence to analyze data or to support military decision-making is another field where armed forces depend on research and development in business and industry. Therefore, there must be close coordination between business and military strategy development.

“The responsibility for our security and freedom cannot rest solely on uniformed shoulders. It is a task for society as a whole.”

Clearly, the current threat situation can only be met with a comprehensive societal effort, with united forces—state and private. The armed forces are only as strong as the defense industry that stands behind them. It is not only about the ability to innovate, but also about the willingness to take risks—for a higher good.

Soldiers are trained to take risks. They must be able to fight and win. Because they have to win. This does not only apply to soldiers. NATO currently has around 500,000 men and women in high readiness. But for me it is equally clear: responsibility for our security and freedom cannot rest solely on uniformed shoulders. It is a task for society as a whole. Only together can we defend our country; only together can we deter. We must think and act holistically, even now in peacetime. We must become more closely and strongly interlinked. That lays the foundation for resilience. A combat-ready Bundeswehr is only one side of the coin. On the other side, we need equally resilient civil structures—in other words: a society capable of defense.

Both together create the prerequisites for credible deterrence. We soldiers may be the ones who win battles—but modern wars must be confronted by and with a society. The economy plays a major part. The better and faster we can equip our armed forces, the better we will be able to deter. And we must deter. The more credible our deterrence, the greater our chances of protecting the freedom so dear to us. The better our prospects of living in the future as we do now—and of preventing war in Europe. We will only succeed with this effort together—carried by the certainty that a life in freedom and security is worth it.

About the author: Carsten Breuer is a general in the German Army and, since March 17, 2023, the 17th Inspector General of the German Armed Forces.

[Disclaimer: This text was originally written in German. The English translation was produced with the help of AI.]

Der Beitrag “A whole-of-society effort” erschien zuerst auf Atlantik-Brücke e.V..

Responding to Global Shifts

b.wild — Wed, 01 Oct 2025 15:56:40 +0000

The 4th Transatlantic Forum on Geoeconomics took place in Brussels at a time of rising global tensions and economic uncertainty. It emphasised the urgent need for reinforced NATO commitments, increased European defence spending and a renewed US-EU partnership in trade and AI technology.

This year, Brussels—at the heart of European policy-making—hosted the 4th Transatlantic Forum on Geoeconomics on 30 September 2025. The discussions centred on transatlantic priorities, framed by escalating geopolitical tensions and growing economic volatility. The agenda drew heavily on high-level exchanges, most notably with US Ambassador to NATO Matthew Whitaker and EU Trade Commissioner Maroš Šefčovič, who brought both candor and nuance to their respective fields.

“America will protect every inch of the Alliance’s territory.”

Ambassador Whitaker sent a clear signal of enduring American commitment to NATO’s collective defense, insisting that “every inch” of the Alliance’s territory will be protected. He described how sustained diplomatic engagement had moved President Trump to a position of robust support for Ukraine’s sovereignty, emphasizing that a united front is needed to impose real costs on Moscow. Recent Russian drone incursions into NATO airspace—over Poland and the Baltic countries—were cited as stark reminders of persistent threats, but also as proof of the Alliance’s responsive capabilities and deterrence posture. Whitaker voiced frustration, however, that some European allies still “drag their feet” on defense spending, warning that failing to reach the newly established 5 percent GDP benchmark could undermine both credibility and deterrence. For Whitaker, a secure Alliance is inseparable from balanced burden-sharing—an aspiration now hard-wired into the “Hague defense commitment” but requiring vigilance to ensure meaningful year-over-year increases.

“Fostering a climate for innovation will be key to both economic and security resilience.”

On the European side, Commissioner Šefčovič reflected on a fundamental transformation: Europe, he argued, began as a peace project but is now compelled to reassess its security and defense posture amid rapidly shifting geopolitical realities. He stressed the importance of treating the US as a strategic partner—not only by stepping up defense investment, but also by making Europe’s own defense sector more attractive to investors. Echoing Whitaker, Šefčovič acknowledged that without sustained economic growth, it is simply not possible for any government to invest 5 percent of GDP in defense—and that fostering a climate for innovation will be key to both economic and security resilience.

Some panels focused on trade and tariffs. The participants agreed that the current moment marks the beginning of a “new chapter in trade,” characterized by ongoing uncertainty and drastic shifts in global goods traffic. New US tariffs would force Europe to rethink its supply chains. In addition, Europe would have to carefully consider how much of its steel industry it would allow to migrate to China. Anahita Thoms, Partner, Head of Germany’s International Trade Practice, Baker McKenzie, made it clear that “tariffs hurt, but uncertainty destroys” and that a return to the old global trade order was not to be expected. Instead, Europe must diversify its trade relations, for example through new agreements with Mercosur, while at the same time stabilizing and deepening transatlantic economic relations, the panelists emphasized.

„Deep partisan devide is a real internal threat of the position of the US dollar.“

Another thread running through the Transatlantic Forum was the question of the US dollar’s global standing. Both American and European speakers noted that the dollar’s supremacy now faces internal threats from the ideological split in American politics. ‘We don’t really know when the decline of the US dollar started,’ said Selesha Mohsin, Bloomberg’s senior Washington correspondent. „Deep partisan devide is a real internal threat of the position of the US dollar.“ This has sparked a broader European reevaluation of payment systems and a search for greater financial sovereignty, with calls to create new platforms less exposed to external shocks.

„Europe is the only world region where the demand for energy has declined which is a sign of deindustrialization.“

In the critical field of energy, the Transatlantic Forum stressed that Europe is unique as the only major region experiencing declining demand. Andrew Puzder, the new US ambassador to the European Union, said: „Europe is the only world region where the demand for energy has declined which is a sign of deindustrialization.“ This trend, conference voices emphasized, must be confronted if Europe is to avoid long-term erosion of its industrial base and safeguard energy security.

„The AI race is decided by capital and talent.”

Finally, the discussion turned to artificial intelligence and digital competitiveness. Europe’s lag in generative AI adoption was framed as both a challenge and a call to action. „Only 37 percent of German companies use generative AI“, said Michael Hüther, Director & Member of the Presidium, German Economic Institute (IW). „AI is important for Germany to come back to the mid range of economic groth“, he stressed. And Jens Wiese, managing partner at Leitmotif, added: „The AI race is decided by capital and talent. European companies would be illed advised to sacrifice the transatlantic ties by trying to search more AI opportunities in China“.

The speakers at the Transatlantic Forum agreed that closing this gap will require pragmatic regulation, capital investment, and—most importantly—retaining the strength of the transatlantic relationship rather than seeking shortcuts in collaboration with other players. For now, only the US possesses the scale and dynamism needed to lead in AI, highlighting the limits of Europe’s fragmented financial markets.

Throughout the 4th Transatlantic Forum, the message was clear: the challenges of security, economic competitiveness, innovation, and resilience can only be met through renewed transatlantic solidarity—anchored in both shared values and real investment on both sides of the Atlantic.

Briefings on the Conference Topics

The following policy briefs offer a deep dive into the conference topics:

“Points of Vulnerability in the Battery Cell Industry” – Kai Müller, Chief Financial Officer of PowerCo SE, and Sören Pippart, Senior Expert for Public Affairs at PowerCo SE, outline Germany’s weaknesses and possible courses of action in the battery sector.

“Waiting for the Big Bang: Executing the European Defense Build-Up in Germany” – Robin Fehrenbach, Head of Analysis and Documentation at Atlantik-Brücke, Jakob Flemming, Senior Program and Research Manager at Atlantik-Brücke, and Julia Friedlander, CEO of Atlantik-Brücke, describe how Germany is attempting to become defense-ready in record time.

“The dollar in the fight for US primacy” – Martin Mühleisen, former official at the International Monetary Fund (IMF) and Nonresident Senior Fellow at the Atlantic Council’s GeoEconomics Center, analyzes how the US under President Trump uses economic policy as a tool to advance foreign policy priorities.

“How to dismantle a reserve currency” – Daniel McDowell, Nonresident Senior Fellow at the Atlantic Council’s GeoEconomics Center, reflects on whether the days of the dollar as a reserve currency are numbered and whether the euro is ready to take its place.

“The Road to Turnberry” – Elizabeth Baltzan, Senior Fellow at the Atlantic Council GeoEconomics Center and former advisor to the US Trade Representative, assesses the latest trade deal between the European Union and the United States.

“The summer of AI action plans” – Alisha Chhangani, Assistant Director at the Atlantic Council GeoEconomics Center, and Ananya Kuma, Deputy Director, Future of Money, at the Atlantic Council GeoEconomics Center, analyze the widening gap between the US, China, and Europe on artificial intelligence.

Watch a look back at the forum here:

Watch the full recording of the Transatlantic Forum here:

Watch here exclusive Video interviews with the Pannelists:

Der Beitrag Responding to Global Shifts erschien zuerst auf Atlantik-Brücke e.V..

“The course has been set for a modern NATO alliance”

b.wild — Fri, 26 Sep 2025 11:48:20 +0000

Our managing director Julia Friedlander spoke at the Berlin Banking Symposium (September 25, 2025) about America’s uncomfortable truths, new rules for global trade, and Germany’s future role in NATO.

By Julia Friedlander

Two weeks ago I was asked on a panel whether Trump was good or bad for Europe. I took the bait and said unequivocably yes, and after the audience did its requisite heckle, all of my co-panelists, none of us by any stretch a fan of the U.S. president, fell behind me. Why? I relayed this dynamic two hours later to my father-in-law, a long-professed West Berlin pacifist, over customary Sunday afternoon coffee and cake, and his response was: so we can get off our asses!

We are on our way to a new alliance, not based on unilateral dependency—either on American defense dominance or enforcement of WTO-related trade rules, but on mutual reinforcing capabilities and opportunities in both trade and defense. I’m not saying the road there will be easy—but although I will lament a few things throughout this talk, I am going to stick to my optimism.

An Overdue Breakup of the Comfort Zone

The Atlantik-Brücke wasn’t founded by a bunch of starry-eyed romantics, but by several intrepid German Jews who returned home after the war. Germany lay in ruins, and the only way back to growth and prosperity was to tie itself as closely to the occupying power, the hegemon. There was no other reasonable geopolitical choice, except risking further influence by the Soviet Union. Our founders were instrumental in convincing the Truman Administration to grant West Germany the Marshall Plan and to admit the new federal republic to NATO just a few years later. This was good Realpolitik. But after reunification, this dynamic made less and less sense. But the dynamic, where the US got to feel like the global policeman and continue to steer Europe because it felt good, and Europe could enjoy the fruits of dependence in security but independence economically, also because it felt so good, meant that no one dared break the addiction.

[related] As Germany rose to the third slot in the global economy and the European Union grew and consolidated its trade and regulatory power, the world was becoming multipolar, and doing so much more quickly than US politicians realized. No longer were the institutions such as the United Nations and the WTO, which we created as multilateral institutions in our image so that they acted in our image, acting in that image. But the US was still footing the bill for these institutions, buying the allegiance that was no longer there, or taking the US role as the beneficent hegemon for granted. This is why Trump says the “EU was founded to rip off the United States.”

Most European politicians when speaking in public refer to the EU primarily as a dovish peace project or decry its bureaucracy, when in fact, especially after the Lisbon Treaty, they know very well it’s a mechanism to compete globally, including with that beneficent hegemon. Economic liberals in America like myself have always cheered the EU on—we want strong sophisticated markets everywhere and that will lead to an overall increase in citizen welfare. But the new elites in America say, not so fast, how dare they regulate our companies when we’ve kept them from being mopped up by Russia for 80 years?

America’s Inconvenient Truths

When the US was an unchallenged hegemon, all this didn’t matter so much, but the country is now coming to terms with its own loss of economic power, and doing this rather inelegantly. So believe me when I say this: the tariff blackmail of the Trump Administration is not a sign of American strength, it is a sign of American weakness. Because the international institutions will not render the outcomes that suit America, America will resort to the next best thing, and this is where Trump is an expert: identify points of disproportionate leverage and exploit them. But you can only do this once or twice, and after that, your dragon has blown its fire.

Take note that although the EU caved to tariffs in its recent negotiations with the US, it held fast to its most sacred regulations where it has a strategic advantage, namely on agriculture and data. Why did the Administration rename the Department of Defense the Department of War? When I read that I honestly started laughing: wie unselbstbewusst kann man wirken? Does America really need that self-reassurance that we can fight a war? Does Pete Hesgeth have to show us all his war-fighting tattoos to prove to us he’s a warfighter? It’s like a signal to China that we feel threatened.

This self-confidence crisis suits Trumpland well. It’s his inclination to treat the global economy like a contractor for an Atlantic City casino, but I don’t think it was inevitable that his personal tactics would gain broader appeal. There is little resistance to his “dealmaking” right now because several administrations have tried to maintain American predominance through other means—and with mixed results. When it comes to China, both the first Trump Administration, of which I was a part, and the Biden Administration tried to double down on the big American tent—near-shoring and ally-shoring of critical industries where the line between civilian and military use was undefined at best.

“The Trump administration’s tariff blackmail is not a sign of American strength, but a sign of American weakness.”

The most prominent example was the government-wide regulatory effort through export controls and investment restrictions to slow China’s development of advance chips, which in turn would facilitate Beijing’s aggression against Taiwan. This ended in byzantine compliance problems, massive evasion through third-countries, and China doubling down on its own research and development, and all this culminated in the release of DeepSeek. Strategically, it was worth the shot, but just a few years later we see how naïve such policies might have been, or that we were just too late.

The Biden Administration even tried to host a “summit of democracies” with whom we would ideally “ally-shore” our economy. This turned into a spectacular failure because the US had to invite our steadfast NATO-Ally but imperfect democracy–Kaczynski’s Poland, but didn’t invite Hungary. I think that will have been the last time the US got to decide who made the cut. Last week, a group of DC think tankers gave a presentation to my team, showing that we are “losing” South Africa to the China, Russia, Iran nexus. They were certainly correct in identifying disturbing political trends in the country but did so through the traditional lens of good and bad. It supposes that these countries see the world in such a dichotomy, and also that the US has the authority to determine what that is in the first place.

New “Rules”

Against this backdrop, there is a strange relief in American transactionalism. American rhetoric, from the justification for military intervention in the name of democracy to words about the exceptionalism of our own political experiment, has become hollow, almost eyeroll-inducing rhetoric. If you are a millennial, as I am, chances are you will point to the financial crises that set back the earnings and savings potential of a generation and foreclosed on millions of family homes while the banks were bailed out, or that your generation fought two endless wars that ended with American retreat.

As the gap between rich and poor becomes painfully acute, as inflation and interest rates alternatively hit the working and middle class, many ask: is this what you’re calling exceptional? In that context, it’s only being honest if America says I’ll shown you mine if you show me yours. Donald Trump’s dealmaking, blackmailing America, may unfortunately be a more genuine impression of how the country has come to function than the words we may or may not have used to cloak the reality that America is a transactional place.

We have to remain cautious but open-minded about America’s drift to state-driven capitalism. Here, European firms can find strange comfort in the fact that Trump’s extortionary tactics are not reserved for foreign partners. There are many transactional domestic deals to be made as well. It is unprecedented for an American president to demand “golden shares” to approve a foreign acquisition or maintain a government subsidy, such as in the case of Nippon steel and Intel, or a share of profits in order to approve NVIDIA’s export license to China. The administration is also threatening firms that shutter mid-West factories with various penalties. The bi-partisan Chips and Science act passed under the Biden Administration offered tax incentives and loans to chip manufacturers who produced in the United States and created jobs. That was a carrot. Trump is trying the stick.

In Trump-land, businesses risk descending into cronyism and an economy of fealty. Trump’s definition of legal and illegal is what he can get away with and what he can’t, and whoever combines a request with praise, usually gets a green light. If we are trying out a brand of, forgive me, European-style nationalization, by taking shares in troubled industries of choice, then I absolutely wish we had a better ringleader. I never thought there would be all that much overlap between Trump and Biden, but this is a perfect example of the political horseshoe theory. Some of Biden’s left leaning trade advisors are welcoming Trump’s actions. Why? Trump is invoking state-driven capitalism to account for shortcomings in strategic sectors where market-driven decisionmaking has produced outcomes that are not aligned with employment targets or national security. I have long argued that the lines between national security and economic policy were falsely divided. Chancellor Merz also noted in his speech opening this year’s ambassador’s conference that there is no line between foreign and domestic policy.

“Global trade is proving surprisingly resilient, demand is robust, and customers are willing to accept a certain price premium.”

While we grapple with the Western world’s new embrace of industrial policy, trade economists are trying to determine whether the tsunami of market disruptions (war in Ukraine, corona, Chinese dumping, Trump) will have medium or long-term impacts on supply chains. Some friends of mine are developing artificial intelligence tools just for this purpose, because the multitude of factors extend beyond the capabilities of excel spreadsheets. In some respects, global trade is proving surprisingly resilient, demand is robust and customers are, generally speaking, willing to accept a certain price premium. But that doesn’t mean there has been no adaptation. Security of supply, political disruptions and shipping concerns have forced a regionalization of markets. Limited ad-hoc trade arrangements are sprouting up along the shores of the Indian Ocean, in Southeast Asia, and the Middle East. Presumably none of these mini-deals fall under the rubric of the most-favored-nation standard of the WTO. More like those of the Silk Road.

Is this a new blueprint for global trade rules? It is plausible, that a new set of concentric circles of aligned economic interests that extend beyond geopolitical tensions—such as the recent rapprochement between China, Japan, and South Korea—are the amoebic breeding ground for new trade standards. The positive spin would that, over time, a new version of the “most favored nation” principle develops, not based on price maximization but models that allow countries to protect certain domestic markets. And perhaps these new marriages of convenience will help mitigate physical conflict.

There are certainly areas where the laws of the jungle and ad hoc deals will dominate the market until new, non-governmental exchanges are established to regulate global prices. For example, a scramble for critical minerals will lead to one off deals with China or firm-based deals with mining countries such as Congo and South Africa, unless resource-rich democracies such as Canada and Australia, alongside the United States, develop a sophisticated market and pricing mechanism. Such mechanisms of course exist for the diamond industry and the oil, and grain. It’s important to look for positive outcomes and not only problems in the current environment.

Europe’s Gearshift

If they remain in their current form, Europe could stand to gain from America’s tariffs, but this will entail major internal reforms and not just new trade agreements. Germany has “discovered” Canada, as if the country’s vast natural resources and advanced manufacturing sectors just popped up like magic mushrooms since January. Still, the bloc cannot pretend that regionalization isn’t happening. Every time I see a minister jumping in an airplane to initiative trade negotiations with another corner of the globe, I shake my head a little. Mercosur is great, and so is a deepened partnership with Indonesia, but it cannot be easier to conclude a trade agreement with a country on the other side of the world than unwind barriers within the single market of the European Union. You cannot just look for other customers, hoping that external demand with be upheld. This is a palliative, a postponement of an inevitable restructuring of the European economy, and of the European institutions that were set up to deal with another set of global circumstances.

This is a banking symposium, so let me stop the capital markets beat once more. What is the tipping point on capital markets, when a compromise can be reached? At this point, it is almost willful negligence. Capital markets integration is not only a growth driver for businesses and finance institutions that will allow the immense wealth in Germany to contribute directly to economic growth. Can we really say that due to discrepancy in insolvency rules, European leaders willing to sell out their start-ups to America, or perpetuate an unsustainable reliance on tax revenues to uphold citizens’ welfare as they age?

“The arms industry is rapidly becoming the new flagship of European industry and a lifeline for deindustrialization.”

In the end, it’s not only the “elite” topic as often made out to be. Given the debate raging right now over pension reform, politicians have the opportunity to reframe as a matter of consumer choice. If you’re listening to podcasts these days, you may often be interrupted by an ad for stock trading platforms, which offers access to US markets via a license at the Lithuanian or Irish central bank. The demand is obviously there—why do we need to rely on these kinds of workarounds? Insurance providers describe how customers are rushing through the door to open market-based retirement accounts. There have to be more alternatives for long-term savings.

The defense industry is rapidly becoming the new posterchild for European industry and rescue mechanism for deindustrializiation. We’ve all read the headlines about Rheinmetall taking over automobile plants. But when building a military-industrial complex essentially from scratch, there are opportunities to avoid pitfalls that mire the US defense industry inefficiency—endless levels of contractors and subcontractors and consultants, long waiting times and price explosions that derive from an oligopoly of providers and monopsony consumer, namely, the state.

The finance industry has heard the call and is rapidly developing investment portfolios targeting defense and infrastructure. Given the interest of family offices and private equity in new technologies such as drones and artificial intelligence, private actors can hopefully provide incentives to avoid cost and production overruns. Poland just used eyewateringly expensive materiel to shoot down the inexpensive drones that Russia provocatively flew into NATO airspace, proving that the Alliance has prepared well for conventional war of yesterday and not today. And the European defense market is still a scrambled web of national interests and lack of coordination—which country can provide which capability and which company will do it? How do we build new military consortia? My hope is that the finance industry, which is inherently transnational, can provide a rubric to help consolidate politicians and contractors, because ministries by their very nature live in silos and cannot see out of them.

Conclusion: the New Alliance

We are at the beginning of the modern NATO Alliance, and a new Germany. This isn’t an easy moment. Two founding principles of the Federal Republic are being shaken to the bone. The first is the hegemony of the United States, and the second is the allegiance to the Israeli State. How will this country react to the scrappy, deal-making America that does not act in a normative universe or pay it forward to maintain an “international rules-based order” in its image? And how will Germany truly react when, as now seems highly probable, Israel formally annexes the West Bank, and plausibly shortly thereafter, Gaza? Friedrich Merz isn’t attending the UN General Assembly this week to tackle domestic issues. But his European compatriots are there, recognizing a Palestinian State, while the two pillars of Germany’s post-war foreign policy identity stand together, fiercely opposed.

Germany is the crux of this equation. This country can longer be populated by happy vassals. In the post-war period, and even after reunification, the US and other NATO Allies remained apprehensive of German strength, and that apprehension and lessons of history understandably pervaded the education system and public perception of the country’s role in the world. But at some point, that assessment flipped for Germany’s partners. I think the point may, ironically, have been after Germany’s abstention at the UN Security Council in March 2011 over the military operation in Libya against the Qaddafi regime. That was the beginning of my professional lifetime, and since then I cannot recall any conversations within the US government to keep Germany small—it was the opposite Through American disappointment came American expectations, when Germany’s abdication of responsibility became its greatest liability in the greater transatlantic theater. But Germany clung to the original narrative, perhaps because it was self-serving, or perhaps no one ever laid it out just so clearly as Russia now has.

If we can firmly pull back from these old dependencies, we may also lose some of the resentment with America and experience less anti-Americanism, even with Trump’s America. America is not a phenomenon, it’s a country, and it’s in trouble. I hope that, in helping to establish a new balance in the multipolar world we now inhabit, Europe can also help rescue American from its confusion.

Thank you for your time and I look forward to discussing this further with you.

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“You have to concentrate on cyber today”

b.wild — Thu, 18 Sep 2025 12:31:38 +0000

At an event held by the Frankfurt regional group on September 16, 2025, General Christian Badia spoke on “New threats – new responses? The future of NATO in a constantly changing security environment.”

Following the event, he emphasized in a video interview with Atlantik-Brücke the need for increased defense spending – specifically 5% of GDP or 3.5% for military investments – in order to meet the requirements of modern warfare, especially in the areas of cyber and space, which will be central to the future. In the past, the focus was on land, air, and sea forces, Badia said, but today cyber and space operations are crucial for dominance, which is why significant financial resources are needed for holistic capability development.

Despite the differing national interests of the 32 NATO member states, Badia emphasizes the alliance’s shared values. He describes how consensus-based decision-making is based on the search for alternatives, so that a rejection (“no”) often leads to an “alternative yes.” Over his 41-year career, the security policy landscape has changed constantly – from the Cold War to German reunification and out-of-area operations to new threat scenarios. Nevertheless, the community of values of the “free Western alliance” has always remained capable of action.

Badia is optimistic that, despite tensions between national sovereignty and common alliance interests, actions will always be taken in the interests of the West and that NATO plus its 35 partners stand on a stable, value-based foundation.

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Europe’s unity is not an end in itself

Lea Berger — Mon, 25 Aug 2025 10:43:20 +0000

By Jakob Flemming

These and other questions, as well as Germany’s contribution to a capable Europe, were at the heart of the side session. The contributions of experts from four EU member states and the United States led to three key insights:

1. Europa is not united

The demand that Europe must “speak with one voice” in foreign and security policy, but also in (external) economic policy, is neither new nor particularly controversial in the political mainstream. Former Chancellor Angela Merkel was already using this phrase in 2019. Six years later, the formulation is probably even more common and is employed across the political spectrum, from EPP Chairman Manfred Weber to the Greens. Behind it lies the conviction that only a Europe acting in unity can wield geopolitical weight.

[related]Yet the reality is often quite different: Europe does not speak with one voice on many issues. Slovakia blocked new sanctions against Russia for weeks; on the question of security guarantees for Ukraine, not only Hungary and Slovakia break ranks; Spain refuses to commit to NATO’s 5% goal; Germany and Poland are at odds over border controls; and in Middle East policy, Europe is split into at least two camps. Across nearly all policy areas, one thing is clear: genuine unity looks different.

2. Europe does not unite through mere invocations.

Following this assessment, the question arises: how can Europe’s unity be achieved? One thing became clear during the side session: the constant repetition of incantations such as “Europe must now speak with one voice” or “Europe United” in response to “America First” will not bring about the desired outcome. The call to abolish the unanimity principle in favor of majority voting in the Common Security and Defense Policy may well be justified, but it is simply unrealistic.

Instead, participants voiced a desire for more leadership from the center of Europe, particularly from Germany. In the past, euphemisms such as “leading from the center” or “leading from behind” were often used. However, as one participant put it, what is truly needed is for Germany to lead plainly and directly from the front.

3. Informal alliances or “coalitions of the willing” are new options.

Yet even the best leadership cannot create unity where fundamental conflicts of interest prevent it. Therefore, unity must not be an end in itself if it comes at the cost of a diluted or entirely unclear position. Where possible, the alternatives are informal alliances or “coalitions of the willing.” In foreign and security policy in general, in Ukraine and Russia policy in particular, and also in trade policy, the message from the discussion was that informal coalitions of interest should form—capable of acting decisively and effectively.

An example of this emerged recently during the visit of European heads of state and government, together with Ukrainian President Zelensky, to the White House. From this meeting, a coalition could take shape that is prepared to guarantee Ukraine’s security after the end of the war. This path is the right one, because perhaps the most important insight of the GLOBSEC side session was this: an informal European alliance that acts decisively can be stronger than an ostensibly united but paralyzed Europe.

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Canada and the great power rivalry: What options are left for the EU?

b.wild — Thu, 14 Aug 2025 09:41:55 +0000

Canada is often seen as one of Europe’s last remaining like-minded partners on the global stage. In response to U.S. tariffs under President Trump and Washington’s growing geopolitical assertiveness, Ottawa has sought closer ties with the EU, particularly by broadening its economic diversification. Paradoxically, however, Canada’s resource sector remains dominated by China. Europe will remain geopolitically constrained unless it finally takes strategic action.

By Prof. Dr. Michael Hüther und Dr. Simon Gerards Iglesias

The recently concluded trade agreement between the United States and the EU marks a clear departure by the former guarantors of the post-1945 global trading order from a rules-based globalization founded on most-favored-nation treatment, reciprocity, transparency, and liberalization. What is emerging instead – replacing the free and multilateral exchange of goods and capital that benefits all parties – is inward-looking trade, justified in security terms and increasingly based on bilateral relationships.

In addition to a new tariff regime, the agreement commits the EU to increasing its annual energy imports from the United States to 250 billion USD by 2027 and to undertaking direct investments worth 550 billion euros by 2029. Although these tasks – especially investment decisions – ultimately rest with European companies, doubts persist about the EU’s actual need for imported energy, particularly oil and gas. In 2024, the total value of such imports amounted to 384 billion USD, with U.S. deliveries accounting for about 66 billion – just one quarter of the stated target.

“Closer cooperation with Canada could help Europe.”

The United States remains indispensable to the EU – above all in military and security matters, but also economically. Yet the EU must make far greater efforts than before to reduce this dependency. Closer cooperation with Canada could help in this regard, but Canada itself is a prime target of Donald Trump’s expansionism and is deeply enmeshed in the U.S. economy.

Canada, a natural resource powerhouse

Canada shares an 8,900 km (5,500 mile) land border with the United States and is bound by a trade agreement that has resulted in deep economic integration among the North American economies, particularly in the automotive sector. The USMCA agreement, which at Trump’s initiative replaced NAFTA in 2020, shields 95 percent of traded goods from the new tariffs he imposed on his northern neighbor. (Hughes, 2025).

Canada is a resource-rich country. One-fifth of its exports consists of critical minerals and metals, including aluminum, copper, nickel, platinum, and zinc. Over half of these exports are destined for the United States, followed by China, the UK, Japan, and the EU. Owing in part to the world’s largest yet untapped reserves of rare earth elements, Canada has become a target in the intensifying rivalry among major powers – a competition that is increasingly defined by access to and control over critical raw materials. Since 2016, a negotiated trade agreement has been in place between the EU and Canada, although it has still not been ratified by all EU member states. In the context of the Critical Raw Materials Act, they have also established a strategic partnership aimed at encouraging companies to source more raw materials from Europe and North America (Carry, 2024).

Europe’s dependence on raw materials

Russia’s war of aggression against Ukraine has brought Europe’s reliance on imported raw materials into political focus. Terms such as strategic autonomy, friendshoring, and resilience have since become staples of foreign economic policy discourse. Particularly, the dependence on rare earth elements from China is now widely acknowledged as a political commonplace. Yet, German and European companies have so far shown little evidence of diversification, especially when it comes to critical raw materials (Becker, 2025).

The picture is ambivalent. Figure 1 shows Canada’s share of total EU imports and of global exports for selected raw materials in 2024, focusing on its most important export commodities. This allows for a comparison of where Canada is over- or underrepresented in EU raw material imports. For uran elements, nickel ores, iron ores, arsenic, precious metals, and zinc, Canada’s share of EU imports is significantly higher than its share of the global market; for molybdenum, it is nearly equal. In the case of crude oil, copper, graphite, feldspar, and other rate earth elements, however, Canada is strongly underrepresented as a supplier to the EU. Many of these latter materials are classified as “critical” by the European Commission and that are of central importance for the green transition (batteries, wind power, steel products) as well as for strategic autonomy (electrical industry, semiconductors, aerospace).

These differences are largely explained by the fact that for most raw materials in Canada there is a monopsony – one principal buyer dominating the trade. In most cases, this buyer is the United States (e.g., nickel, arsenic, feldspar, graphite). However, in the category of “other ores and concentrates”, which includes rare earth elements, 99 percent of Canada’s exports go to China. China holds majority stakes in the largest Canadian mining companies and controls domestic processing, giving it complete command over the supply chain and raw material pricing (Carry, 2024). Over 90 percent of processing technologies for rare earths (magnets, specialty ceramics, and alloys) worldwide are controlled by China. For lithium and cobalt, the figure is 60 to 70 percent (Public Policy Forum, 2025), extending this technological dominance to foreign markets as well. Canada’s case shows how China entrenches its position in key technology markets abroad, making diversification a far steeper challenge for Europe.

Direct investment as geopolitical weapon

Canada possesses large reserves of critical raw materials that remain largely untapped but are economically viable. The country depends on foreign direct investment to exploit these resources, with 40 to 45 percent of mining investments coming from abroad (Leach et al., 2025). Since the COVID-19 pandemic, China has considerably increased its investments in Canadian mining and has been by far the largest investor since 2021. Nearly 50 percent of all new FDI activity in Canadian mining in 2024 originated from China, followed by the U.S. with 30 percent, while Europe accounted for only 13 percent (Statistics Canada, 2025). Between 2014 and 2019, Europe was the leading foreign investor in Canadian mining – a situation that has changed dramatically.

The EU and Canada are natural partners

To gain greater autonomy in the rivalry between the major powers, the United States and China, and to offer a genuine third alternative, the EU and Canada must deepen their partnership. Canada has recently tightened rules on foreign direct investment, particularly targeting Chinese companies (Borgers et al., 2025), yet still regards the United States as its most important partner. However, Washington’s growing expansionist ambitions run counter to Canada’s approach, which places strong emphasis on human rights (including Indigenous rights) and green sustainability (Sustainable Critical Minerals Alliance). The EU can build on these shared priorities, but it must also be prepared to temper its maximalist demands in international agreements.

The ongoing controversy over CETA has repeatedly centered on arbitration tribunals – mechanisms that are nonetheless crucial to transnational investments, especially in the high-risk mining sector. The fact that CETA still awaits ratification in several EU member states should serve as a warning. If the EU is to rank among the world’s technological and economic leaders, it must prioritize geostrategic considerations over its aspiration to be the global standard-setter.

About the authors:
Prof. Dr. Michael Hüther is Director of the German Economic Institute (IW) in Cologne and Deputy Chairman of Atlantik-Brücke. Dr. Simon Gerards Iglesias is personal advisor to the Director at the IW. This article first appeared as an IW short report.

References
Becker, Markus, 2025, Rohstoffabhängigkeit von China bedroht EU-Wirtschaft, https://www.spiegel.de/wirtschaft/seltene-erden-rohstoff-abhaengigkeit-von-china-bedroht-eu-wirtschaft-a-a0f210e6-983f-4dcc-865d-3ae8bfd69d7f?giftToken=0b2c997a-2065-4760-930d-1970fb89318c [13.08.2025]

Borgers, Oliver / Gudofsky, Jason / Kwinter, Gideon / Keogh, Erin, 2025, Foreign direct investment reviews 2025: Canada, https://www.whitecase.com/insight-our-thinking/foreign-direct-investment-reviews-2025-canada [13.08.2025]

Carry, Inga, 2024, Rohstoffpartner Kanada: ein (nahe-zu) perfekter Match. Die europäisch-kanadische Rohstoffkooperation in Zeiten des Friendshoring, SWP-Aktuell, Nr. 27

Government of Canada, 2024, Mineral Trade, https://natural-resources.canada.ca/maps-tools-publications/publications/mineral-trade#tbl3, [13.08.2025]

Hughes, Abby, 2025, The U.S. bumped its tariff on Canadian goods to 35%. How big of an impact will it have?, https://www.cbc.ca/news/business/what-in-canada-is-subject-to-35-per-cent-tariff-1.7600029 [13.08.2025]

Leach, Cynthia et al., 2025, Critical Capital: How Canada can tap foreign investment for its mineral riches, https://www.rbc.com/en/thought-leadership/uncategorized/thought-leadership/critical-capital-how-canada-can-tap-foreign-investment-for-its-mineral-riches/ [13.08.2025]

Public Policy Forum, 2025, How Canada could quickly develop critical materials, LINK [08.08.2025]

Statistics Canada, 2025, International Investment Position, https://ppforum.ca/policy-speaking/how-canada-could-quickly-develop-critical-minerals/ [13.08.2025]

Statistics Canada, 2025, International Investment Position, https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=3610000801 [13.08.2025]

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The US and Europe have to further increase pressure on Russia – and China

b.wild — Mon, 10 Jun 2024 13:36:49 +0000

Thank you, Julia, for the kind introduction and thank you to Atlantik Brücke and TBI for hosting me here today. I have visited Germany more often than any other country during the Biden Administration. This speaks not only to the depth, but also the breadth of the U.S.-German partnership on economic, climate, and national security, issues. But as you all know, the foundation of our partnership is deeper than our shared interests. Our people share the same values, including a deep and abiding commitment to promoting democratic values at home and abroad.

I’ve come to Berlin on the back of a trip to Kyiv, where I had a chance to meet my counterparts and brave Ukrainians who have been resilient in the face of unyielding war. I was reminded that Ukraine remains a democratic country today because its people are willing to fight for freedom.

[related]Over two years ago, when Russia launched its full-scale invasion of Ukraine, the Kremlin expected to be in control of Kyiv within days and the entire country within weeks. But Ukraine stood up, and our coalition stood beside them, denying the Kremlin the quick victory it expected. And as the Ukrainian people fought off advancing Russian troops, we put in place unprecedented sanctions that cut off Russia’s largest banks from our financial systems and shackled the Kremlin’s war chest by immobilizing its sovereign assets held abroad.

In response to its strategic failure, the Kremlin has now committed nearly half a million troops to this unprovoked invasion and imposed a set of draconian capital controls to prevent money from escaping from Russia. As Russia’s strategy evolved, so did our approach.

On one end, the United States, Germany, and our coalition provided Ukraine with weapons to defend against Russia’s aggression on the frontlines and economic support to bolster its resilience on the home front.

On the other, we took steps to isolate Russia from the global financial system and cut off the Kremlin’s access to the goods they need to build everything from tanks to bombs. Simultaneously, we went after Russia’s main revenue source through a price cap that reduced Russia’s oil profits. Putin’s own spokesmen openly acknowledged that our sanctions and enforcement actions are impeding Russia’s ability to get the goods they need, limiting their profits, and further restricting their remaining financial channels.

One of our objectives in taking these steps was to force the Kremlin to make the hard choice between preserving the potential of its economy and continuing to fund its war of choice. Well, the Kremlin has made its choice. It has chosen to wage its illegal war over investing in the Russian people.

The War Economy

Putin has decided to turn Russia into a war economy, where the entire industrial base is geared toward his war in Ukraine. Gone is a commitment to building a prosperous Russian middle class connected to the world and expanding opportunity. The Kremlin is instead creating an economy inspired by the Soviet era—prioritizing guns over butter and military ambition over the welfare of its citizens.

Within this economy, Russia allocated 29 percent of Russia’s total budget this year for defense spending, more than double its 2021 level. Production of military-industrial goods has risen by 35 percent.

To do this, Russia is depleting its economic buffers, draining foreign exchange reserves and driving up inflation. Over a million young workers have left the labor force because of conscription or emigration. The Russian economy is less diversified today than prior to the war and will continue to move backwards. Meanwhile, Russia is nationalizing a wave of companies, including the autotrader Rolf, the chemical company Metafrax, and the metals producer Kompaniya Etalon. And the international private sector exodus shows no sign of reversing as Russia has revealed itself to be an unreliable trade partner for investors.

Beyond the data, you can see the Russian economy transforming in small but illustrative ways. A Russian bakery stopped baking desserts and started producing drones. A company that made camping gear for hikers pivoted to making sleeping bags for soldiers.

Perhaps the clearest example of the fundamental change in how Putin views the importance of industry to his military ambitions is the fact that he named an economic advisor, Andrey Belousov, to lead the Russian Ministry of Defense. What this should signal to us all is that Putin is focused on making sure the Russian economy can power Russia’s war machine.

Throughout this war, our actions have forced Russia into making difficult economic choices. First, it was to accept geopolitical and financial isolation in order to wage its war. Now, it is to abandon its domestic economic priorities to prolong its war. Each time Russia has made one of these choices, we have adapted our own policies in response to further increase pressure. We must do so again.

We must recognize that while the reconfiguration of Russia’s economy has real costs for the Russian people, it has the potential to make the Russian military stronger than it was before this war started. Russia’s ambitions are not just to replenish its war equipment but to build a stronger, more powerful military that surpasses what it had before the invasion began. Putin’s goal is to subjugate Ukraine, with his troops stationed at the border of Poland, Finland, and the Baltics. Failure to stop Putin now risks a resurgent Russia directly threatening NATO.

That’s why this war is not just an existential threat to Ukraine, but to Europe and our national security. And that’s why this is not a moment for incrementalism, but a time for our coalition to take decisive steps to cut off Russia’s access to the goods it needs to build the weapons the Kremlin wants. This includes looking to expand our sanctions and export control regime to capture the fact that Russia’s entire economy is now on a war footing.

Russia’s Main Partner

To be successful, we have to be clear-eyed about how the Russian military-industrial complex works. Right now, we know the Kremlin does not have the ability to build its war economy without external support. Russia has always needed goods from abroad to support its industrial base. For many decades, companies in this room and across the G7 provided the electronics, engines, and other components that powered Russian machinery. Our decision to cut Russia off from these goods made it more difficult for the Kremlin to build the tanks and bombs it needs to sustain its war of choice.

Russia has now adapted by deepening ties with Iran, North Korea, and particularly, China. Last year, Russia imported $5.2 billion worth of sensitive, dual-use goods from China-based suppliers, an increase of over 40 percent in just one year. The Kremlin knows it can only meet its military goals with China’s assistance. This is why President Putin was in China two weeks ago. It’s why he toured the Harbin Institute of Technology, which is known for research of rockets, missiles, and UAVs, and which recently opened a joint campus with St. Petersburg State University.

No other country has the capacity to supply Russia with the quantity of machine tools, microelectronics, and other goods the Kremlin needs to build weapons. Beijing may not be sending tanks or missiles to Russia, but the Kremlin cannot produce these weapons at scale or continue its war without the assistance of companies and financial institutions in China.

In addition, many of the goods from our coalition’s countries that are still being found in Russian military equipment are largely being transshipped through China. There is more we can and must do in our countries to prevent transshipment through third countries, but we must recognize that Chinese firms today are Russia’s indispensable partner in building weapons.

I want to be clear: our goal is not to shut down all bilateral trade between Russia and China. Our goal is to convince China to stop sending Russia a set of dual-use goods that are actively being used to prosecute a war Beijing has told us they want to see end. We have provided China and other countries around the world with a list of these dual-use goods that are being used to make weapons for the battlefield. Many countries have stopped selling these dual-use goods to Russia, but the partnership between China and Russia has only deepened.

And this partnership may seem like a distant threat to our companies and our countries. But we should remember that before this war started, we often talked about our concerns with Europe’s dependence on Russian gas and the need to diversify supply chains. That too was once a distant threat. But the consequences of inaction became apparent when Russia weaponized its energy exports. Once again, there are warning signs flashing. This time because of Chinese support for the Russian military-industrial base. We should not be blind to the fact that a growing Russian military with material support from Chinese companies will only grow in ambition.

Our Response

That’s why we must be explicit with every individual, company, and country that providing the Russian military-industrial complex with support is unacceptable.

This needs to start at home, including with companies within our countries. As Ukrainians have directly raised with me, Russian weapons found on the battlefield have American- and European-branded components. The United States is engaging with our manufacturing, distribution, and freight forwarding firms to build out better compliance regimes to prevent our goods from ending up in Russia. We need our allies to do the same housekeeping with their private sectors, and we need companies around the world to take similar steps.

When the private sector doesn’t act, we are ready to. That includes taking action against companies in countries that are facilitating transactions to help the Russian military industrial complex get these goods. We must also strengthen our domestic customs and export control enforcement in order to make sure that unscrupulous companies in our countries cannot support the Russian war machine.

Every country in our coalition and every member of NATO must also consistently and clearly communicate to Beijing that it is unacceptable for Chinese to abet the Russian military-industrial base. President Biden, Secretary Blinken, and Secretary Yellen have joined with European leaders to raise this issue in varying degrees with PRC leadership.

And while our words matter, our actions matter more. The EU as a whole is China’s largest export market, and China remains the largest exporter in key sectors like chemicals and machinery to the EU. We recognize the EU’s economic relationship with China is mutually significant, and we must make the choice stark for China: Chinese firms can either do business in our economies or they can equip Russia’s war machine with dual-use goods. They cannot do both.

We must make clear to Chinese companies that we are all prepared to use our sanctions and export controls to hold them accountable. And the United States, Europe, and all of our allies have to act together in following through by using our economic tools so that there is no daylight between our policies.

Of course, our preference is to not have to use these tools. Our economies are intertwined with China’s. We do not seek to decouple from China. We want a healthy economic relationship with China that benefits both sides. But if China does not put a stop to the trade of dual-use goods to Russia, we will have to take action to hold them accountable.

I recognize that if we are forced to take these steps, many in this room may worry about the economic repercussions to our companies and our economies. But my view is that failure to convince China to stop selling dual-use goods to Russia poses a significant threat to Europe’s national security – to global security – which in turn will disrupt our economic futures. A resurgent, militarized, and mobilized Russia would mean greater geopolitical challenges to our economies. It would mean a greater threat of economic coercion. And it would mean tough trade-offs between defense spending and other priorities at home.

When he was in China, Putin said that cooperation between the PRC and Russia “serves as one of the main stabilizing factors in the international arena.” I am doubtful that many of you think that an emboldened Russia would be stabilizing for the German, European, or global economy—that a Russian victory in Ukraine would be an economically preferable outcome for your companies. That’s why we have to take concerted actions to scrutinize our supply chains, adapt our business models, and stop Putin’s military ambitions.

And we don’t have endless time to deliberate. The Russian military-industrial complex is growing in size because Putin has gone all in. He is confident that with a reconfigured economy he can overpower Ukraine and challenge NATO. His confidence stems from the fact that he thinks he can wait us out—that our support for Ukraine will wane and that we will grow complacent in our response to his aggression. Let us prove him wrong.

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