Latest news with #IfWKiel
Yahoo
13-03-2025
- Business
- Yahoo
Europe could replace most US aid for Ukraine, study shows
Europe could replace most of the US financial and military aid for Ukraine if Washington permanently ended its support, a new analysis released by the Kiel Institute for the World Economy (IfW Kiel) in Germany showed on Thursday. "Our data show that Europe would be able to compensate for much of the US aid - but only if policymakers act decisively," Christoph Trebesch, research director at IfW Kiel said. The only exception is military intelligence, where Europe does not have comparable capabilities, the institute said. European governments have spent an average of 0.1% of their gross domestic product (GDP) per year on bilateral aid for Ukraine, IfW Kiel notes. If the United States withdrew its support permanently, European countries would need to increase their spending to 0.21%, which would represent an increase from the current €44 billion ($48 billion) to €82 billion per year, according to the institute. To reach this amount, EU institutions would have to increase their spending from €16 billion to €36 billion. Germany would need to boost its spending from €6 billion to at least €9 billion and France would have to spend some €6 billion compared to its current €1.5 billion. "If all of Europe followed Denmark's example and mobilized 0.5 percent of GDP annually, we could even significantly overcompensate for US aid," Trebesch said. The US military aid that would need to be replaced consists primarily of rocket artillery, ammunition for howitzer artillery and long-range air defence systems, IfW Kiel said. The institute said that to compensate for the loss of critical US systems and their ammunition, Europe could turn to the international market or purchase comparable systems. European governments could also order weapons, in particular drones, directly from Ukraine, it suggested.
Yahoo
13-03-2025
- Business
- Yahoo
IfW Kiel ties German growth forecast for 2026 to defence spending
Germany's Kiel Institute for the World Economy (IfW Kiel) expects the German economy to grow more strongly in 2026 than initially forecast. In the institute's spring forecast published on Thursday, it reported that researchers expect gross domestic product (GDP) to increase by 1.5% in 2026 up from 0.9% in its winter forecast. "The planned defence spending can give Germany a structural boost if it is spent correctly," said IfW Kiel President Moritz Schularick. The money would have to benefit German and European companies, he said. Schularick was referring to a plan by the parties hoping to form the next German government to enable a substantial deficit leeway through a special fund and credit-financed defence spending. On Thursday, lawmakers are meeting in Berlin to discuss an amendment to the Basic Law, Germany's de facto constitution, to allow Germany's strict debt rules to be relaxed. The proposal is for the creation of a special €500 billion ($545 billion) infrastructure fund, as well as the loosening of Germany's strict debt rules, enshrined in the constitution, to allow for increased military spending. IfW Kiel expects inflation to reach 2% next year, the unemployment rate to fall to 5.9%, revised down from 6.2% - and public debt to rise to 65.4% of GDP from the previous forecast of 63.3%. The growth projections hinge on lawmakers approving both the special fund and the fiscal reforms. For 2024, however, IfW Kiel still anticipates economic stagnation, in line with its earlier winter forecast from December.
Yahoo
13-03-2025
- Business
- Yahoo
More kit, better barracks: Germany's military in need of overhaul
After decades of low spending, Germany's likely next chancellor Friedrich Merz hopes to splurge billions of extra euros on rearmament by largely exempting defence from constitutional debt limits. It comes as US President Donald Trump's increasingly hostile stance towards traditional European allies has shaken faith in US commitment to the continent's security. Here's what Germany's armed forces -- the Bundeswehr -- are thought to need, and how they might get it: - What is the state of the Bundeswehr? - Germany cashed in a so-called "peace dividend" after the Cold War. Like other Western countries, it reduced the size of its armed forces and directed more spending to areas like welfare. This however left it heavily dependent on the protection of the United States under the NATO security umbrella, and it took the shock of Russia's full-scale invasion of Ukraine in 2022 for the situation to begin changing. Outgoing Chancellor Olaf Scholz announced a 100-billion-euro ($109-billion) fund to boost the under-resourced military, and there is now sufficient supply of basic equipment such as helmets and bullet-proof jackets. But over 80 percent of that money has now been spent, and Eva Hoegl, the parliamentary commissioner for the armed forces, told reporters on Tuesday that the military still has "too little of everything". The German military is still lacking equipment such as tanks, armoured vehicles and ammunition. Basic infrastructure is often not up to scratch, with Hoegl saying barracks are "largely dilapidated," and recruitment targets are not being met. - Do they have the right tech? - Apart from armour and munitions, the Bundeswehr needs technology such as satellites and air defence systems as well as capabilities that integrate artificial intelligence. "The Ukrainian battlefield showed how a tank worth 25 million euros can be destroyed by a drone costing 5,000 euros," head of the IfW Kiel think tank Moritz Schularick said in an interview with Der Spiegel news outlet. "The wars of the future will be fought with autonomous weapons systems supported by networked drones controlled by artificial intelligence." He said there was now an opportunity for the Bundeswehr to plan for the future and invest in next-generation technologies. Another priority will be reducing dependence on US technology. Given the shift in Washington, some have asked whether Germany should cancel orders it has made for 35 F-35 fighter jets with US weapons manufacturer Lockheed Martin. - How to secure long-term funding? - Like many militaries, Germany suffers from complex procurement procedures that can often delay projects. Systems are not seamless and digital enough while bureaucracy is "overwhelming", Hoegl said. Stable budgets guaranteed over the long term -- not one-off special funds -- will also be necessary to develop the industrial base needed to actually make military kit at scale, according to experts. "This is the only way for the state to negotiate contracts with better terms and conditions," security policy expert Claudia Major said in a recent media interview. "Complex projects take years to reach the armed forces." Costs can also be shared when Germany cooperates on projects with other European countries, as it is doing on developing a jet fighter and a tank. - Could Germany acquire its own nuclear weapons? - It is highly unlikely. Germany is restricted from acquiring such weapons due to international treaties it has signed, and the idea remains unpopular in a country still haunted by its Nazi past. Merz has, however, raised the idea of Germany working with Western Europe's nuclear powers, France and Britain, on a shared nuclear deterrent in the continent, after Trump's upending of the transatlantic alliance. Still, there have been calls in some quarters, including from far-right politicians, for Germany to acquire its own nuclear arms. A poll published this week suggested a slight increase in support for Germany developing nuclear weapons, with 31 percent in favour, although 64 percent remained opposed. jpl-smk-vbw/sr/phz
The Guardian
24-02-2025
- Business
- The Guardian
EU spends more on Russian oil and gas than financial aid to Ukraine
The EU is spending more money on Russian fossil fuels than on financial aid to Ukraine, a report marking the third anniversary of the invasion has found. The EU bought €21.9bn (£18.1bn) of Russian oil and gas in the third year of the war, according to estimates from the Centre for Research on Energy and Clean Air (Crea), despite the efforts under way to kick the continent's addiction to the fuels that fund Vladimir Putin's war chest. The amount is one-sixth greater than the €18.7bn the EU allocated to Ukraine in financial aid in 2024, according to a tracker from the Kiel Institute for the World Economy (IfW Kiel). Vaibhav Raghunandan, an analyst at Crea and coauthor of the report, said: 'Purchasing Russian fossil fuels is, quite plainly, akin to sending financial aid to the Kremlin and enabling its invasion. [It's] a practice that must stop immediately to secure not just Ukraine's future, but also Europe's energy security.' The researchers compiled trade data to estimate the value of Russian fuels that were sold around the world in the third year of the invasion. They forecast data for February 2025, which is not yet available, based on imports in January. In the calendar year 2024, the EU spent 39% more on Russian fossil fuel imports than it set aside for Ukraine. The aid figure does not include military or humanitarian contributions. Christoph Trebesch, an economist at IfW Kiel, which was not involved in the analysis, said there was a striking gap between how much aid donors had mobilised for Ukraine compared with past wars, with European donors spending on average less than 0.1% of GDP a year. He said: 'Many countries were more generous in past conflicts. Germany, for example, mobilised much more aid, more quickly for Kuwait's liberation in 1990/91 than it has for Ukraine in a comparable time period.' The report also found Russia earned €242bn from global fossil fuel exports in the third year of its full-scale invasion of Ukraine, with revenues since the start of the war 'now inching closer to the trillion figure' as the country adapts to sanctions. Russia gets up to half of its tax revenues from the oil and gas sector and has sought to bypass sanctions by moving fuels on a 'shadow fleet' of old and underinsured tankers. The obscure ships are responsible for transporting about one-third of its fossil fuel export revenues, according to Crea. On Wednesday, EU ambassadors agreed on new measures to target Russia's shadow fleet in the 16th round of sanctions since the war began. The Crea researchers estimated Russian fossil fuel revenues could fall 20% by beefing up existing sanctions and plugging gaps. The measures include closing a 'refining loophole' through which Europe can buy Russian crude that has been processed in another country, and restricting gas flows through the Turkstream pipeline. The report also called for a crackdown on liquefied natural gas (LNG). Europe has slashed its imports of piped Russian gas since the start of the Ukraine war but has sated some of its hunger for energy with shipments of super-chilled gas, including from Russia. Jan-Eric Fähnrich, a gas analyst at Rystad Energy, said the role of LNG in the EU and UK has grown dramatically since the start of the war, shooting up from a prewar high of 81.3mt in 2019 to 119mt in 2022. He said: 'Russia captured the spot as No 2 LNG exporter to Europe last year.'
