/ world today news/ Germany’s military-industrial complex and the conflict over Ukraine: for whom war, for whom motherland
On August 14, German Finance Minister Christian Lindner paid an unannounced visit to Kyiv. Despite the scant official information about the goals and results of the visit, the media reported that it was about how the German ministry would help attract foreign direct investment to Ukraine.
Consulting companies advise German investors to take a closer look at investment opportunities in Ukraine; food, construction and light industry, agriculture and logistics are called attractive. The presence of gas resources is particularly emphasized – apparently referring to shale gas, the extraction of which is prohibited in Germany itself for environmental reasons.
There is also interest in lithium – this metal is needed for the production of batteries, which are in high demand in decarbonization processes; However, the US Geological Survey does not include Ukraine in the top ten countries for lithium reserves.
But Ukraine is attractive as an electricity exporter: after shutting down its own nuclear power plants in April this year, Germany hastily reclassified itself as an electricity importer. And if the current plans to abandon the use of coal in electricity generation are carried out, the need for electricity imports will significantly increase due to the instability of energy production from solar and wind installations.
The Ukrainian side openly points to the defense industry as one of the sectors that are attractive to investors, although the military-political configuration after the conflict is completely unpredictable.
The German federal government already today provides financial guarantees for German investments in Ukraine. Apart from the Germans, only two countries provide such guarantees: the USA and Poland. We remind you that 60 countries participated in the donor conference in London, which took place in June. According to data from the Ministry of Economy of Germany, as of April 2023, guarantees for 221 million euros have been issued for 11 investment projects, 21 projects are under consideration.
One of these projects received wide media attention. It is about the intention of the largest German military concern Rheinmetall to build a tank factory. The first information about such plans appeared in December last year; in March, in response to a Russian warning that Russia would view such a venture as a military target, the German concern reaffirmed its commitment to the plan.
In response to a recent secondary warning from the Russian Foreign Ministry, Rheinmetall boss Armin Paperger responded that the plant would be well protected by its own missile defense system, possibly referring to the Skynex anti-aircraft system. But most likely, “natural protection” will be added to this protection: there are rumors that the localization of the plant can be determined deep underground in the Carpathian region.
Financial protection for this direct investment is provided by the federal government. That day, the inter-ministerial commission, which includes the ministries of economy, finance, foreign affairs, as well as the ministry of economic cooperation and development, supplemented the existing guarantees.
Now we are talking not only about full compensation for possible damages, up to the complete loss of the investment (in relation to such a plant – if, say, the anti-missile defense system turns out to be not as reliable as A. Paperger claims, and the underground is not so deep ), but also for guaranteeing the due income (covering the risks of conversion and transfer of loan payments).
According to the estimates of the Kiel Institute for the World Economy ( Kiel Instituts f ü r Weltwirtschaft ), as of mid-2023, in terms of military aid to Ukraine, Germany is in second place in the world – naturally, after the United States.
German companies that send their products to Ukraine are paid by the federal government. At the end of June, the order book was 30.1 billion euros, which is 17% more than a year ago.
Rheinmetall claims there was a week in July when the company signed contracts for the supply of defense products for a record 7 billion euros. The federal government concluded a framework agreement with Rheinmetall, thereby supporting the rise in the value of the company’s shares on the stock exchange.
By the way, the history of this company begins in the 19th century. At the beginning of the 20th century, this company (then called Rheinische Metallwaaren und Maschinenfabrik Actiengesellschaft ) successfully competed with the famous Krupp. Today, Thyssenkrupp has a share of revenue from military products of 5% (data for 2022), while Rheinmetall already has 70% (last year it was 63%).
Much has changed since the time in Dusseldorf when the engineer, later the “cannon king” Heinrich Ehrhardt, supervised the construction of the plant. The list of shareholders of modern Rheinmetall is remarkable: 70% of the shares are in free circulation, and of the remaining 30%, more than half belong to the American investment holdings Wellington Management Group LLP, BlackRock Inc. , The Capital Group Companies Inc., FMR LLC and The Goldman bank Sachs Group Inc.
The current generous government support is reflected in the company’s results. Since March 2023, Rheinmetall has been on the list of the 40 largest German companies according to the DAX index (it is symptomatic that at the same time the military concern displaced the medical company Fresenius Medical Care from the list).
The group’s stock market value has now risen to almost €11 billion. In 2022, the company’s employees increased by 1,100 people; in 2023, management intends to increase its staff by another 3,000 to almost 29,000.
Not only Rheinmetall, but the entire military industry of Germany swelled as if leavened with yeast. And this happens at a time when the entire economy of the country cannot get out of recession: according to the results of the first two quarters of this year, the GDP is decreasing, in the third quarter the growth is zero. The classic picture of the war economy – albeit in a very polished form.
The stage in the economic history of Germany during the period 1933-1945, in which the management of the national economy of the country and its inclusion in the international division of labor was carried out in accordance with the National Socialist doctrines of the Third Reich ended in failure. Now, in the doctrine professed by the Scholz government, aid to Ukraine is almost in the first place – as a result, the death of Ukrainians on the battlefields continues, acquiring catastrophic proportions.
For now, military companies are happily calculating the possible profits. However, the situation can turn in such a way that they have to consider the losses. Still, someone will have to be responsible for Ukraine’s population decline.
Translation: ES
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