Speaker 1: From Bloomberg News and iHeartRadio. It's the big take. I'm Westkasova. Today,
Speaker 1: Germany cautiously rebuilds its military. Many people in Germany are
Speaker 1: wary of military force, and they're opposed to exporting German
Speaker 1: made weapons to other countries. It's one of the long
Speaker 1: lasting legacies of the nation's twentieth century history of aggression.
Speaker 1: For decades, Germany has marked its leadership in Europe with
Speaker 1: economic power, not military might. But the need to help
Speaker 1: Ukraine defend itself against Russia led German Chancellor Olaf Schultz
Speaker 1: to announce that Germany would reverse a ban on sending
Speaker 1: weapons into war zones and spend an additional hundred billion
Speaker 1: euros to upgrade the German military kin avafans of a
Speaker 1: tiding Usland's Leifan biltz today. Bloomberg Senior editor Alan Crawford,
Speaker 1: when I visited this region, the Ukrainian troops were just
Speaker 1: up the road and they were being trained on the
Speaker 1: Deliverer two tank explains how Germany's pushed to supply tanks
Speaker 1: and other heavy equipment to Ukraine has caused a boom
Speaker 1: in the country's defense industry, but divided the public and
Speaker 1: later in the show Doctor Bastian Giegrek. I think Germany's
Speaker 1: neighbors are not really worried about a Germany that is
Speaker 1: strong in NATO. I think they're worried about a Germany
Speaker 1: that is weak in NATO. He's a military analyst who
Speaker 1: argues Germany needs to do even more to prepare for
Speaker 1: threats today and in the future. Allen, in a story
Speaker 1: you've written for Business Week, you write how for many
Speaker 1: years Germany had avoided building up it's military. Can you
Speaker 1: just remind us of the history here? Well, Plenty has
Speaker 1: been written about the fact that the bundeswere the German
Speaker 1: armed forces have been underfunded for decades, and that they're
Speaker 1: in severe difficulty. They're really struggling to try and help Ukraine.
Speaker 1: It's actually one of the fascinating aspects of researching this
Speaker 1: article that I hadn't appreciated that. On the one hand,
Speaker 1: immediately in the wake of World War Two, then understandably
Speaker 1: there was no German army. It had been soundly defeated,
Speaker 1: and even there were suspicion of any personnel that were
Speaker 1: remaining in the ashes of World War Two. Then Germany
Speaker 1: it wrote a new constitution, which was it enshrined a
Speaker 1: pacifist attitude in this constitution, but very rapidly politics got
Speaker 1: in the way. Because of the Cold War, the onset
Speaker 1: of the Cold War, or then what was called the Bundeswair,
Speaker 1: the German Armed Forces were recreated effectively by the US
Speaker 1: and by the UK, by the victorious Allied powers, and
Speaker 1: it was allowed to come into being as a bulwark
Speaker 1: against the East, against the Iron Curtain, and at its height,
Speaker 1: at its peak in the nineteen seventies, there were half
Speaker 1: a million military personnel German Armed Forces and did something
Speaker 1: like seven thousand battle tanks. I mean, it was a
Speaker 1: huge force, all arrayed along the East German border. But
Speaker 1: then with the collapse of the Soviet Union and with
Speaker 1: the followed the Berlin Wall in nineteen eighty nine and
Speaker 1: then German reunification the following year, there was suddenly no
Speaker 1: need for these armed forces, so they were all decimated.
Speaker 1: And ever since then Germany has had a kind of
Speaker 1: mixture of this deep reticence because of its wartime crimes
Speaker 1: of really stepping up in military terms. It's been very
Speaker 1: wary of arms exports and frankly it's just been very
Speaker 1: reticent about throwing its weight about and now it's suddenly
Speaker 1: being asked to do exactly that. And the start of
Speaker 1: that was a big speech that Germany's Chancellor, all Aft
Speaker 1: Shaws gave and he announced this rapid military builder. What
Speaker 1: did he say in that speech? Three days after the
Speaker 1: Russian invasion, So February the twenty seventh, twenty twenty two,
Speaker 1: he appeared before an emergency session of the Bundestag, the
Speaker 1: German parliament, and he announced what he called in at
Speaker 1: sight in vendor, which is the German word which is
Speaker 1: kind of not that easy to translate, but it's effectively
Speaker 1: something like a historic change or shift in German policy. Yeah,
Speaker 1: that's why potent in Land's products alot of patidisa. And
Speaker 1: that meant that from now on, he said that Germany
Speaker 1: would meet NATO's target of spending two percent of the
Speaker 1: economic output on defense. He was overturning a long standing
Speaker 1: ban on Germany supplying weapons into conflict zones. That was
Speaker 1: so that he could allow Germany to send weapon right
Speaker 1: into help Ukraine. And he announced a one hundred bullion
Speaker 1: euros special fund for defense purchases to re equip the boondersware.
Speaker 1: So that was momentous and healed at the time as historic,
Speaker 1: but subsequently he's commander criticism for it actually not quite
Speaker 1: meeting those targets. But to be fair, I think it's
Speaker 1: also a reflection of the fact that it's a difficult
Speaker 1: decision for Germany. It's like the tanker that you can't
Speaker 1: turn it around very rapidly. A lot of this money
Speaker 1: isn't we're only now seeing that it's starting to be spent.
Speaker 1: Ellen exactly what are the details of Shows's plan. Germany
Speaker 1: has Commander constant pressure to increase both the scale of
Speaker 1: what it's delivering to Ukraine and the hotency. You know,
Speaker 1: the heavy weapon rate is what we're now talking about.
Speaker 1: At the beginning, it was Germany famously supplied five thousand
Speaker 1: helmets and thought that that was enough. They've already lodged
Speaker 1: an order for IF thirty five aircraft from the US,
Speaker 1: of course, but they are also putting money into the
Speaker 1: German defense industry, so something like a third of that
Speaker 1: amount the government has said will be put into ammunition alone.
Speaker 1: They're also investing in these self propelled howitzers, which has
Speaker 1: got the wonderful German name Pansa Hulbitzit's five thousand, which
Speaker 1: is the p z H two thousand, which is a
Speaker 1: massive gun on wheels that they're buying several of those,
Speaker 1: both to replace items that they've already supplied to Ukraine
Speaker 1: and to build out the bundesware. They're buying high performance
Speaker 1: radar equipment made by this company hence Old, and they're
Speaker 1: buying this missile defense system this Irish tea, which is
Speaker 1: made in this small town in the south of Germany
Speaker 1: on the banks of Lake Constance called uber Lingen, but
Speaker 1: have actually come under criticism for not placing orders fast enough.
Speaker 1: But those were actually starting to see those come through now,
Speaker 1: so it's you know that by no means spent all
Speaker 1: of this money, and I think we'll see a lot
Speaker 1: more orders coming in rapidly. In January, German Chancellor Shows
Speaker 1: spoke to Bloomberg editor in chief Johan milcos Way about
Speaker 1: all these weapons systems. I think, after the United States,
Speaker 1: it is Germany and the UK that are delivering the
Speaker 1: most weapons to Ukraine, and we will continue to do so.
Speaker 1: As you know, we are absolutely active in doing the
Speaker 1: real hard stuff, and this is the case with all
Speaker 1: the artillery we delivered with our howar's this is what
Speaker 1: we did together with United States and UK when we
Speaker 1: delivered multi rocket launchers. It is what no one else did.
Speaker 1: And we are doing a lot in the question of
Speaker 1: defense with our Gappa tanks, with what we did with
Speaker 1: this Irish tea system that is now so successful that
Speaker 1: the whole world is looking at it because it seems
Speaker 1: to be nearly one hundred percent effective in fighting against
Speaker 1: the sides. Since Russia's invasion of Ukraine, you have seen
Speaker 1: these calls for Germany to step up production and export
Speaker 1: of arms to help Ukraine, and in particular Germany's Leopard
Speaker 1: two tanks. Can you talk about the significance of this
Speaker 1: tank and why it is so important now? Yes, I mean, frankly,
Speaker 1: the Leopard two tank in its latest iteration, it's the
Speaker 1: world's most commercially successful battle tank. Peaks on Germany from Poland,
Speaker 1: from other countries in Europe because they can't send the
Speaker 1: Leopard tanks that they have in their stores until Germany
Speaker 1: gives them the right to do so under re export law,
Speaker 1: So they're sitting there they wanted to go there. There
Speaker 1: are only two Western tanks which have been in production
Speaker 1: continuously for the past almost half a century. That's the
Speaker 1: German Leopard two and the US M one Abrahams tank,
Speaker 1: but the Leopard two is far more widely adopted. Most
Speaker 1: of the US Abrahams tanks are actually they're made for
Speaker 1: America for the American UN Forces, whereas the Leopard two,
Speaker 1: it's been bought by countries from Qatar to Turkey to Canada,
Speaker 1: right across Europe. When we come back, Alan describes his
Speaker 1: visit to the region in Germany where these weapons are
Speaker 1: built and where Ukrainian troops are being trained to use them. Alan,
Speaker 1: you write, the German companies that make these weapons are
Speaker 1: doing pretty well. There's a lot of new orders coming in.
Speaker 1: And you travel to the region in Germany where a
Speaker 1: lad of this military hardware is made. Where did you
Speaker 1: find there? Well, what is the first thing that you
Speaker 1: notice is that it's it's something of a kind of
Speaker 1: Bucolic area that it's known for its heath land and forests.
Speaker 1: It's a region that's to the south of Hamburg, to
Speaker 1: the north of Hanover in the state of Lower Saxony,
Speaker 1: you know, in the former West and it used to
Speaker 1: border East Germany, and it's very rural. There were all
Speaker 1: these kind of semi timbered houses and it's all very pleasant,
Speaker 1: but as soon as you arrive in this region, there's
Speaker 1: not much immediate evidence of the armed forces being all
Speaker 1: around and the defense manufacturers until you step out of
Speaker 1: the car, and then you're just hit by the noise
Speaker 1: of these like really deep percussions, these explosions. And that's
Speaker 1: because Rhine Metal, which I visited incidentally, they don't allow visits,
Speaker 1: so I went just to kind of to see the region.
Speaker 1: And they have Europe's largest private firing test range on
Speaker 1: the outskirts of this town where their munitions plan. It's
Speaker 1: like a weapons factory with a small town attached to
Speaker 1: it rather than the other way around. It really dominates
Speaker 1: this small town of Interlouse. But just to the north
Speaker 1: there's the largest army base in Germany, and that's a
Speaker 1: long standing base that's been there since before the war
Speaker 1: actually and was at one time occupied by British troops,
Speaker 1: but now it's being used to train Ukrainian forces on
Speaker 1: the Leopard two tank and they have tank firing ranges
Speaker 1: of their own up there, so that between these various
Speaker 1: different ranges there are several more. There's just a cacophony
Speaker 1: of sounds, you know. I'm no expert in the armed forces,
Speaker 1: but it sounded very clearly like machine gun fire, like
Speaker 1: you know, larger artillery fire. And then these really deep, loud,
Speaker 1: you know, scary, frankly booms that I've have no idea
Speaker 1: what they were, but they reverberate along. And the strange
Speaker 1: thing is that in the local community, because people are
Speaker 1: so used to it, they don't hear it. Actually a
Speaker 1: couple of people that I spoke to that I said, oh,
Speaker 1: that was a loud one or something, and they said, oh,
Speaker 1: was it? Was it? They hadn't noticed. In fact, one
Speaker 1: person I spoke to said, I, you know, I've stopped
Speaker 1: hearing them a long time ago. You're right there in
Speaker 1: this region. Germany isn't just building and testing weapons. They're
Speaker 1: also training Ukrainian troops and how to use them. One
Speaker 1: thing that's not often or fully realized, especially I think
Speaker 1: outside of mainland Europe, is that this war isn't all
Speaker 1: that far away, that Ukraine is only something like a
Speaker 1: ten hour drive from Berlin, and that Germany a lot
Speaker 1: of the help it's been giving has been somewhat low key.
Speaker 1: In the yes, it's been criticized in terms of it
Speaker 1: dragging its heels and delivering heavy weaponry. But they have
Speaker 1: been training a lot of Ukrainian troops, and so when
Speaker 1: I visited this region then the Ukrainian troops were just
Speaker 1: up the road and they were being trained on the
Speaker 1: Leopard two tank. Because this was initially one of the
Speaker 1: reasons that was cited not just by the Germans, but
Speaker 1: in fact by the US government and others, the complexity
Speaker 1: of these systems and how difficult it would be to
Speaker 1: train Ukrainian troops. But they are apparently extremely adept and
Speaker 1: I've learned very quickly, and these tanks are now in Ukraine.
Speaker 1: But it's not just those systems that they were also
Speaker 1: being trained on. When I was driving over there west
Speaker 1: from Berlin, then I saw some Ukrainian troops that were
Speaker 1: just obviously on their way there to receive training. Germany's
Speaker 1: training Ukrainian troops, of course, it's not the only country
Speaker 1: that's doing is The UK, for example, has also been
Speaker 1: training Ukrainians on operating its Challenge or tanks. Alan you
Speaker 1: said how the people who live in the towns around
Speaker 1: these plants are so used to the sounds of weapons
Speaker 1: being fired, and yet you found that they themselves were
Speaker 1: pretty conflicted about whether Germany should be building up its
Speaker 1: military and exporting more weapons abroad. It's a sentiment that
Speaker 1: is actually fairly widespread in Germany that the pools consistently
Speaker 1: show a majority in favor of helping Ukraine, but there's
Speaker 1: a substantial minority who are very wary of that. It's
Speaker 1: not because they love Russia and they want Ukraine to lose.
Speaker 1: The pools clearly showed that people have concerns about supplying weapons,
Speaker 1: about this abrupt change, this historic shift in German policy,
Speaker 1: and that to some degree is reflected in the region
Speaker 1: that I visited. Although I should stress that these places
Speaker 1: get a lot of employment, a lot of higher paid
Speaker 1: jobs from the defense industry, not necessarily to supply Ukraine.
Speaker 1: But this is a massive increase in orders that they're
Speaker 1: receiving as a result of the geopolitical environment at the moment,
Speaker 1: as typified, you know, as expressed most clearly by Russia
Speaker 1: invading Ukraine. In any case in Germany, that leaves a
Speaker 1: lot of people uneasy. Alan you mentioned earlier how this
Speaker 1: build up is immediately for the war in Ukraine, but
Speaker 1: actually goes beyond that when you look forward, do you
Speaker 1: think that Germany will continue to build out its military,
Speaker 1: that this long standing hesitation against doing so has now
Speaker 1: sort of turned a corner. I think that there's no
Speaker 1: alternative non for Germany. That it's being called on from
Speaker 1: all sides, from the US to or European countries, and
Speaker 1: not least to Ukraine. That I think it's been a
Speaker 1: very powerful and painful process of waking up to the
Speaker 1: threats that it faces. But funnily enough, the very fact
Speaker 1: that it's relied upon its economic power until now makes
Speaker 1: the authorities, the politicians, the business community and others very
Speaker 1: well aware of the threats that are posed not just
Speaker 1: from Russia invading Ukraine but around the world. And so
Speaker 1: in this kind of new world order where protectionism and
Speaker 1: conflict and competition with China among others is the norm,
Speaker 1: then it's frankly unavoidable I think for a country like Germany,
Speaker 1: with its size and ambitions, to do anything other than
Speaker 1: to step up in the military sphere. Alan Crafford, thanks
Speaker 1: so much for Cameranasha. Thanks Wez after the break. How
Speaker 1: do other European nations feel about Germany rebuilding its military?
Speaker 1: As we've heard a lot of people in Germany are
Speaker 1: wary about possibly going too far in building up the military.
Speaker 1: Doctor Bostian Gigreg argues the opposite, that Germany needs to
Speaker 1: do even more to defend itself and its allies. He's
Speaker 1: Director of Defense and Military Analysis at the International Institute
Speaker 1: for Strategic Studies, and from twenty ten to twenty fifteen
Speaker 1: he worked for Germany's Ministry of Defense. Bostian, how would
Speaker 1: you assess Germany's military build up in the year since
Speaker 1: it was announced after Russian Bada Ukraine? Well, I think
Speaker 1: the decision that people will remember is, of course that
Speaker 1: off budget fund of one hundred billion euros to be
Speaker 1: spent on the modernization of the German armed forces. This
Speaker 1: will not be enough to make the German Armed Forces
Speaker 1: into a fully fledged, competent a bet already fighting force,
Speaker 1: but it will be used to now financially underpin a
Speaker 1: lot of the decisions that were taken earlier before the
Speaker 1: war started but were never properly funded. So this is
Speaker 1: at best a catch up effort. This is important. This
Speaker 1: will get things that before we're not achievable, but one
Speaker 1: needs to be realistic. This is making good on planning,
Speaker 1: assumptions and promises that were effectively made between twenty sixteen
Speaker 1: and twenty eighteen, for which Germany did not have the money.
Speaker 1: It now has some extra money. It will go towards
Speaker 1: these things, but it is not yet the wholesale the
Speaker 1: sea change that perhaps that cyte Vendor's speech suggested. Well,
Speaker 1: let's talk about some of those details. What are some
Speaker 1: of the things that have happened already and what else
Speaker 1: needs to be done beyond what's being done right now.
Speaker 1: I think where we really can say things have happened.
Speaker 1: So sideventded to me has really three elements. One is
Speaker 1: ge economics, one is about geostrategy, and one's about the
Speaker 1: military aspect. I think where most has happened is actually
Speaker 1: geo economics, because this is about decoupling from Russia and
Speaker 1: the energy sector and in other areas of economic activity.
Speaker 1: And here Germany has achieved a lot in a year.
Speaker 1: I mean, that's clear and that needs to be recognized,
Speaker 1: actually more than some people have assumed would be possible.
Speaker 1: So German energy dependency on Russia to me is a
Speaker 1: thing of the past and I don't think it is
Speaker 1: coming back. And a similar conversation now has started actually
Speaker 1: with regards to China. Is it wise to further invest
Speaker 1: into the economic ties with China, but this is not
Speaker 1: as focused yet as the Russia conversation is, and it's
Speaker 1: more difficult because the scale and the varied nature of
Speaker 1: the dependencies of the German economy on China just make
Speaker 1: that more difficult. In terms of geostrategy, I think Germany
Speaker 1: needs to do more. Germany really needed to admit that
Speaker 1: it was wrong about its assessment of Russia. The threat
Speaker 1: assessment was wrong, that it was too optimistic, despite by
Speaker 1: the way, many warnings from friends and allies about the
Speaker 1: ability to change Russia through dialogue, through engagement and through trade,
Speaker 1: and to move on from that assessment which was wrong,
Speaker 1: and move on to an assessment shared by many of
Speaker 1: its Eastern neighbors and Eastern partners, that Russia as a
Speaker 1: threat to Germany and to German security and needs to
Speaker 1: be treated as such. And by the way, I saw
Speaker 1: some interesting polling data actually commissioned by the German government
Speaker 1: that two thirds of Germans do see Russia as a
Speaker 1: threat to Germany. But this shift from yes, we were
Speaker 1: wrong too well. Therefore we need to adopt a new
Speaker 1: mindset that remains incomplete and that's ambiguous, and it looks ambiguous,
Speaker 1: so I think that is one area where more work
Speaker 1: needs to be done. And then finally, as a military dimension,
Speaker 1: the one hundred billion of budget fund headline grabbing was created.
Speaker 1: Now it is very slow to come into practice. The
Speaker 1: drawdown is very slow. Very few projects have actually been
Speaker 1: put into contracts. A lot more reform is needed in
Speaker 1: around the acquisition process for it to be more agile,
Speaker 1: to be faster, to be more more strategic. There is
Speaker 1: a problem with retention and recruitment in the force. And
Speaker 1: then there's just that wholesale, very large gap on the
Speaker 1: munitions side which needs to be addressed alongside equipment recapitalization.
Speaker 1: And that's why I'm saying one hundred billion will not
Speaker 1: be enough. Becomes more and more obvious that what this
Speaker 1: fund will achieve is implement defense planning targets that we
Speaker 1: had before the war even started, but that we're never
Speaker 1: funded appropriately. And now it is about realizing that Germany
Speaker 1: needs to fund its armed forces much better. Two percent
Speaker 1: of GDP for Germany should be the floor, not the ceiling.
Speaker 1: We're still not there, and raising the defense budget needs
Speaker 1: to be achieved fair soon, and then it needs to
Speaker 1: be maintained at that level. Otherwise the shortfalls of the
Speaker 1: buddness will remain unfixable during the next ten years. In
Speaker 1: a recent article, you wrote that Berlin's interpretation of the
Speaker 1: situation in Ukraine and its implications for Europe still diverge
Speaker 1: from that of many allies. What did you mean by that? Yeah,
Speaker 1: I think Olaf Schotz, the German Chancellor, he prefers to
Speaker 1: say that Ukraine must win or that Russia must not win.
Speaker 1: He prefers not to say that Russia must lose, and that, clearly,
Speaker 1: to me, is what is required here. Russia must lose.
Speaker 1: And this might sound like a semantic difference, but I
Speaker 1: think it points to something bigger, and namely that there
Speaker 1: are still some in the political and economic sphere of
Speaker 1: Germany who think that once the war ends, there will
Speaker 1: be a return, or there will be some return to
Speaker 1: business as usual with Russia. And to me, I find
Speaker 1: that unthinkable for a generation to come, and in any case,
Speaker 1: highly dependent on what kind of Russia emerges and what
Speaker 1: strategic persona it takes. But this is the kind of
Speaker 1: ambiguity that is irritating to others. And I mean, you
Speaker 1: know what can recognize that while often slow and reluctant.
Speaker 1: Germany has now taken a place among the strong military
Speaker 1: supporters of Ukraine. That's not a small development, and one
Speaker 1: can add, well, let's hope it continues and expands further
Speaker 1: and faster. But I think that fundamental challenge remains still
Speaker 1: to adjust to a reality where the European security order
Speaker 1: and the preferences that Germany associated with it, those are gone.
Speaker 1: You know, big wars back in Europe. Mechanisms of cooperation
Speaker 1: coordination have been shredded by this war to nothing. Economic
Speaker 1: dependencies that were accepted turned into unacceptable risks. So, in short,
Speaker 1: that European order of prosperity and security on which Germany
Speaker 1: depended was fundamentally undermined by Russia's war of aggression. And
Speaker 1: Germany still needs to come to terms with that new reality.
Speaker 1: And Germany maintains that element of ambiguity that maybe there's
Speaker 1: a way back to how things were before, when many
Speaker 1: others say we are in a new era. The world
Speaker 1: is no longer as it was before and it will
Speaker 1: not be again as it was before. And what about
Speaker 1: other countries. How is the idea of Germany as a
Speaker 1: major military power being perceived around Europe? Outside. It's helped
Speaker 1: for the war in Ukraine. I think Germany's neighbors are
Speaker 1: not really worried about a Germany that is strong in NATO.
Speaker 1: I think they're worried about a Germany that is weak
Speaker 1: in NATO. That's a shift, of course, of some of
Speaker 1: the historical dynamics. But they all understand, in my view,
Speaker 1: that some of the weight and some of the mass
Speaker 1: of a credible conventional defense and deterns posture of NATO
Speaker 1: on NATO's eastern flank facing Russia will have to be
Speaker 1: provided by that big and economically powerful country that is Germany.
Speaker 1: They also understand that the delta between that latent potential
Speaker 1: that Germany has and the military output it actually produces
Speaker 1: for collective defense and security, that delta is wider for
Speaker 1: Germany than it is for almost any other European NATO country.
Speaker 1: And they want Germany to close this delta, to show
Speaker 1: up well prepared, to be well equipped, to be well let,
Speaker 1: to be well funded and firmly embedded in NATO and
Speaker 1: the EU. So I think the worry really is if
Speaker 1: Germany does not deliver NATO's deterrence and defense posture has
Speaker 1: a whole and the weak spot at its center, and
Speaker 1: that is something that I think most partners and allies
Speaker 1: really would like to avoid. Bestian Giegert, thanks so much
Speaker 1: for speaking with me. Well, so it's pleasure, Thank you.
Speaker 1: Thanks for listening to us here at The Big Take.
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