BERLIN/WARSAW/BEIJING (our own report) – With exports to China and the United States declining, German companies look to Central and Eastern Europe as crucial markets. German exports to the world’s two largest economies have recently seen significant falls, but rising sales to Central and Eastern Europe have more than offset the lost business. Trade is growing particularly strongly with the Visegrád Group economies. In the first half of 2026, German exports to Poland rose by 9.2 per cent, and to Czechia by 14 per cent. Over the same period, they fell in value by 12.4 per cent to China and by 6.5 per cent to the US. In fact, Germany now exports almost 50 per cent more goods to Poland than it does to China. Germany’s business-promoting association for Eastern, Central and Southeastern Europe, the ‘Ost-Ausschuss der Deutschen Wirtschaft (OA)’ says this is a “key region for German exports” and argues for the EU single market being expanded eastwards and south-eastwards by bringing more states into the European Union. At the same time, China’s economic influence is also growing in Eastern Europe. In fact, Chinese companies are not merely operating as competitors to German companies but are increasingly being integrated into European production chains. Read more

BERLIN/WASHINGTON (our own report) – The German government is releasing a part of Germany’s emergency diesel reserves - unnecessarily. This coordinated move by Europeans to ease market tensions will boost US President Donald Trump’s flagging campaign for the American mid-term elections. Trump is keen to avoid a painful fuel crisis shortly before the elections because significant sections of his voter base are threatening to defect. US farmers, for example, are facing record-high diesel prices and are threatened with economic ruin. The chief cause of an unprecedented hike in diesel prices is the US-Israeli war on Iran. While 19 per cent of all global diesel exports came from the Middle East last year, the Iranian response to being attacked means that a large proportion of this supply source is missing. At the same time, Ukraine’s drone attacks on Russian refineries are damaging Russian diesel production. Although German politicians regard these hits with schadenfreude, it is bad news for the global economy. Moscow has now moved to halt exports. As the world’s second-largest diesel exporter, Russia is making the diesel market even tighter. Trump reacted last week by forcing Europe’s G7 economies, including Germany, to release part of their emergency reserves under the threat of the US cutting of all future American diesel supplies to Europe. Europe’s, and especially Germany’s, dependence on the US is also acute when it comes to crude oil and liquefied natural gas imports. The US share of European LNG imports has risen to around 60 per cent. Read more

TEL AVIV/BERLIN (our own report) – Israel’s far-right government is stepping up its cooperation with radical right-wing parties in Europe. The AfD, too, has become a potential ally. Following systematic efforts to build ties with parties affiliated to the Patriots for Europe (PfE) group in the EU – including France’s Rassemblement National (RN) and Belgium’s Vlaams Belang (VB) – Israeli ministers are now also reaching out to the Freedom Party of Austria (FPÖ). Israel’s Minister for the Diaspora, Amichai Chikli (Likud), for instance, has described a speech by FPÖ leader Herbert Kickl, in which Kickl declared his party to be the “new protectors of Jewish interests” as an “historic turning point” in relations “between the FPÖ” and “the State of Israel”. Shortly after Germany’s last federal election, in February 2025, Chikli was talking up possibilities for cooperation with Germany’s far-right Alternative for Germany (AfD), provided it could distance itself from certain figures who have glorified Nazism. The deepening of relations with Europe’s far right accompanies Israel’s use of systematic violence to strengthen its power. Berlin, for its part, hopes to gain greater influence in the Middle East by supporting Tel Aviv. Those in Germany who speak out against their government’s involvement find themselves subjected to an unrestrained smear campaign in the public sphere. Read more

TEL AVIV/BERLIN (our own report) – Germany is systematically stepping up military, police and cybersecurity cooperation with Israel. The agreements formally concluded at the start of the year are now being implemented. The ‘Cyber and Security Pact’, signed in January, provides for closer cooperation between the respective police agencies and the establishment of a ‘Cyberdome’ in Germany. Berlin hopes its security cooperation with Israel will offer “practice-based know-how from a country with a high frequency of military operations.” Another agreement, concluded in February, enables greatly intensified military cooperation designed to make the Bundeswehr “war-ready” in practice. The idea is for Israeli ground forces to pass on to the German army the capabilities and experience gained in Israel’s past and current wars. With their “unrivalled expertise in the field of ground operations”, the Israel Defence Forces (IDF) are helping the Bundeswehr “adapt to an increasingly volatile global environment”. These steps to strengthen security collaboration with Israel are taking place against the backdrop of the ongoing wars for dominance in the Middle East. Read more

BERLIN/TEL AVIV (our own report) – Israeli defence contractors are increasingly moving into Germany, setting up a rapidly growing number of arms factories. Rafael, for example, plans to manufacture components for its air defence systems at what was Volkswagen’s automobile plant in Osnabruck. Meanwhile Elbit has announced the establishment of “up to eight” new production sites in Germany, which are expected to employ “well over a thousand” people. On the one hand, the new arms factories will contribute to the rapid rearmament of Germany’s Bundeswehr. On the other, they enable Israeli companies to manufacture the weapons needed by the Israeli armed forces at a safe distance. This strategy secures Israel’s arms supplies should the conflict in the Middle East escalate still further. It offers additional backing in the event, for example, of another war of aggression against Iran. The new forms of German-Israeli arms cooperation build on a longstanding partnership between the two countries’ arms sectors, which goes back as far as the mid-1950s. The Federal Republic can benefit, not least, from access to some of the high-end, high-tech capabilities of Israel’s powerful and battle-tested defence industry. Read more

WOLFSBURG (our own report) – The troubled Volkswagen Group is pushing ahead with the biggest corporate restructuring in its history. The radical shake-up of the automotive giant, bringing huge job losses, has been greenlighted by the Lower Saxony state government and the company’s main trade union, IG Metall. The group’s supervisory board unanimously agreed in early September to move forward with tough cost-cutting measures. Prior to this understanding on restructuring there had been public speculation about the Porsche and Piëch owner families entering into a power struggle with the state of Lower Saxony and workforce representatives. Group CEO Oliver Blume wants to slash the global range of models, reduce production capacities by around one million vehicles, and shed up to 100,000 jobs worldwide. The aim is to secure an operating profit margin of nine per cent, a figure that stood at just 3.8 per cent in the first half of 2026. The target now is to make savings of around 30.9 billion euros by 2030. However, inside the VW Group, management is already modelling an even tougher scenario that could require savings of more than 40 billion euros. The future of several German plants remains uncertain. The defence industry has now emerged as a potential alternative to automobile production. In Osnabruck, for example, VW is set on a future of producing arms in partnership with the Israeli defence firm Rafael. Hoping to rescue jobs, the IG Metall trade union welcomes the plans. Read more

BERLIN/WASHINGTON (our own report) – American energy experts are warning of a full-scale global energy crisis with prices for crude oil and natural gas skyrocketing. According to the US oil industry, there was enough capacity in the first six months of Washington’s war on Iran to compensate to some extent for the shortfalls caused by the blockade of the Strait of Hormuz. On the one hand, various Western states could draw on their strategic reserves; on the other, China has significantly reduced its imports, thereby easing demand pressures. But neither of these steps is likely to be sustainable. So further hikes in oil and gas prices have to be expected. Another critical factor is that Ukraine has managed to severely damage a number of Russian refineries with its drone attacks. This is leading to a diesel shortage: Russia, previously the world’s second-largest exporter, has completely halted diesel exports. While natural gas storage facilities in Germany and the EU are at their lowest levels ever for this time of year, Berlin and Brussels continue to insist on a total phase-out of Russian liquefied natural gas imports by early 2027. Most recent data shows that Russian supplies still account for 19 per cent of the EU’s liquefied natural gas imports. Read more