Policy shift coming in Europe

Investment Analysis Clubs Macro Economic Trends and Risks
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… especially Germany.

Background - Germany has been starving its military for decades by means of an ever-shrinking defense budget (now 1.5% of GDP), reaping what was a comfortable peace dividend.

Putin’s aggression demonstrates that was way too comfortable. Other principles go out of the window, too:

In a historic announcement to parliament, the German chancellor, Olaf Scholz, has said a fund of €100bn (£85bn) will be set up immediately to boost the strength of the country’s armed forces, as he also announced a sustained increase in defence spending over the coming years. Scholz admitted that the urgency of the Ukraine crisis had forced Germany’s decision to invest in the military, telling the emergency session of the Bundestag: “It is clear that we must invest significantly more in the security of our country, in order to protect our freedom and democracy.” He called it “Germany’s historical responsibility” to ensure that Vladimir Putin “does not turn the clocks back”.

The move came after the government made the surprise announcement on Saturday that it would be sending weapons and other supplies to Ukraine, including 1,000 anti-tank weapons, 500 surface-to-air Stinger missiles and thousands of gallons of petrol. The decision marks a historical break with Germany’s postwar pledge to not export weapons to conflict zones. …

https://www.theguardian.com/world/2022/feb/27/germany-set-up…

BRUSSELS (AP) — The European Union plans to close its airspace to Russian airlines, fund weapons purchase to Ukraine and ban some pro-Kremlin media outlets in its latest response to Russia’s invasion, European Commission officials said Sunday.

The measures, which Commission President Ursula von der Leyen said she expected to be endorsed, would mark the first time the 27-nation bloc finances the purchase and delivery of weapons and equipment to a country under attack.

“Another taboo has fallen. The taboo that the European Union was not providing arms in a war,” said the EU’s foreign policy chief Josep Borrell. …

https://www.wane.com/news/eu-shuts-airspace-to-russian-airli…

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… especially Germany.

Background - Germany has been starving its military for decades by means of an ever-shrinking defense budget (now 1.5% of GDP), reaping what was a comfortable peace dividend.

SB

That started within a few months of the fall of the wall. They reduced the length of the draft a couple of times to a point where it almost made no sense. Much of the money saved went to the Unity funds to raise the standard of living in the former East Germany. Even with the 10% unity tax it was never enough to accomplish equality and eventually they accepted it would take longer.

People started wearing T-shirts with “Give Us Back Our Wall” on them. Lots of good stories … too many.

Tim

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Much of the money saved went to the Unity funds to raise the standard of living in the former East Germany. Even with the 10% unity tax it was never enough to accomplish equality and eventually they accepted it would take longer.

Chancellor Kohl promised ‚blossoming landscapes‘ in Eastern Germany’s future back in 1990 (later he admitted he never believed that himself in view of the dire figures he had available at the time). But… he won the elections.

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