Germany's business with war
Monday morning starts well, at least for investors on the German stock exchange: the Rheinmetall share picks up speed, as one begins to expect tanks in Ukraine.[1] The arms company has tripled its stock market value since the start of the war. Nevertheless, the chairman of the board, Armin Papperger, affirms to the "Frankfurter Allgemeine Sonntagszeitung" that the company by no means considers itself a winner of the crisis.[2]
Gold-rush mood in Ukraine
One can be divided about this. A month ago, Papperger had already told CNN that Ukraine - as far as armaments were concerned - would have to help itself in the long run.[3] Rheinmetall is therefore planning a 200 million euro investment on Ukrainian soil. The company will operate the plant in partnership with Ukroboronprom [4], a state-owned Ukrainian defence company. The cooperation partners intend to jointly produce selected Rheinmetall products in Ukraine on the basis of a comprehensive technology transfer.[5]
There is a gold-rush atmosphere - especially among those companies that can "rebuild" Ukraine. The defence company Rheinmetall, 69% of which is held by institutional investors, counts Goldman Sachs or the Wellington Group among its strongest shareholders, in addition to Black Rock [6]. But Rheinmetall's activities in Ukraine are also actively supported by the German government. Robert Habeck's ministry says: "The interest of German investors in the guarantees is unbroken, also for investments in Ukraine. At present, investment guarantees for 14 enterprises with a total cover volume of 280 million euros exist for Ukraine. Further enterprises have submitted applications for cover, which are being processed quickly." [7]
What are we talking about? Specifically, from now on, the Federal Republic will not only cover property damage up to the complete loss of the investment. Conversion and transfer risks for interest payments on investment-like loans are now also covered. These are long-term loans that German companies often use - in addition to the usual equity participation - to finance Ukrainian subsidiaries. [8]
Rheinmetall is by no means the only company headquartered in Germany to profit from the war in Ukraine. The Left Party constantly asks questions of the federal government, including about individual licences for arms exports. Specifically, in 2022 Ukraine accounted for 232 individual licences worth just under 2.25 billion euros.[9] In addition to Rheinmetall, the largest German arms companies include ThyssenKrupp, Hensoldt, MBDA, Diehl and Kraus-Maffei Wegmann.
There is a gold-rush atmosphere - especially among those companies that can "rebuild" Ukraine. The defence company Rheinmetall, 69% of which is held by institutional investors, counts Goldman Sachs or the Wellington Group among its strongest shareholders, in addition to Black Rock [6]. But Rheinmetall's activities in Ukraine are also actively supported by the German government. Robert Habeck's ministry says: "The interest of German investors in the guarantees is unbroken, also for investments in Ukraine. At present, investment guarantees for 14 enterprises with a total cover volume of 280 million euros exist for Ukraine. Further enterprises have submitted applications for cover, which are being processed quickly." [7]
What are we talking about? Specifically, from now on, the Federal Republic will not only cover property damage up to the complete loss of the investment. Conversion and transfer risks for interest payments on investment-like loans are now also covered. These are long-term loans that German companies often use - in addition to the usual equity participation - to finance Ukrainian subsidiaries. [8]
Rheinmetall is by no means the only company headquartered in Germany to profit from the war in Ukraine. The Left Party constantly asks questions of the federal government, including about individual licences for arms exports. Specifically, in 2022 Ukraine accounted for 232 individual licences worth just under 2.25 billion euros.[9] In addition to Rheinmetall, the largest German arms companies include ThyssenKrupp, Hensoldt, MBDA, Diehl and Kraus-Maffei Wegmann.
The trail of money
The defence industry is also investing in Germany itself: at the beginning of August, the start was made for a new Rheinmetall plant (investment also 200 million euros) in North Rhine-Westphalia. The factory is to produce fuselage centre parts for the F-35 stealth bomber and go into operation at the beginning of 2025. There is talk of 450 jobs. North Rhine-Westphalia's Minister President Hendrik Wüst (CDU) stressed the urgency of investing in military equipment so that the Bundeswehr would be strong and able to defend freedom and democracy with the best equipment.[10]
It is not a new insight that there are economic profiteers in times of war. And it is not new knowledge that they are usually allowed to do so by the state - for whatever reason. But it is unprecedented how brazenly the technostructure is currently using the states in Europe to push through its money and power interests. First the financial sector, then the pharmaceutical companies, now the arms and technology companies. They make entire governments and state administrations their henchmen and have their speculations heavily subsidised. Profits are privatised, the losses are borne by the general public.
The Greens in particular seem to be susceptible to lobbying by the technostructure: since the beginning of the year, Elga Bartsch has been the new head of department for economic policy in the German Federal Ministry of Economics and Climate Protection. She was chief European economist at the investment bank Morgan Stanley and most recently headed the economics and capital markets research at the Blackrock Investment Institute in London until the summer of 2022.[11] Well, a rogue who thinks evil. She will certainly advise Robert Habeck just as well as those gentlemen on the scientific advisory board who want to bypass parliament in the awarding of arms contracts.[12] In any case, Habeck himself is emphatically optimistic: allegedly, two dozen companies are currently planning major investments in Germany with a total investment volume of around 80 billion euros.[13] The Bundesbank is less optimistic about Germany's future. It expects the economy to continue stagnating in the third quarter.
It is not a new insight that there are economic profiteers in times of war. And it is not new knowledge that they are usually allowed to do so by the state - for whatever reason. But it is unprecedented how brazenly the technostructure is currently using the states in Europe to push through its money and power interests. First the financial sector, then the pharmaceutical companies, now the arms and technology companies. They make entire governments and state administrations their henchmen and have their speculations heavily subsidised. Profits are privatised, the losses are borne by the general public.
The Greens in particular seem to be susceptible to lobbying by the technostructure: since the beginning of the year, Elga Bartsch has been the new head of department for economic policy in the German Federal Ministry of Economics and Climate Protection. She was chief European economist at the investment bank Morgan Stanley and most recently headed the economics and capital markets research at the Blackrock Investment Institute in London until the summer of 2022.[11] Well, a rogue who thinks evil. She will certainly advise Robert Habeck just as well as those gentlemen on the scientific advisory board who want to bypass parliament in the awarding of arms contracts.[12] In any case, Habeck himself is emphatically optimistic: allegedly, two dozen companies are currently planning major investments in Germany with a total investment volume of around 80 billion euros.[13] The Bundesbank is less optimistic about Germany's future. It expects the economy to continue stagnating in the third quarter.
This analysis was first published in: Le Courrier des Stratèges on August 22nd, 2023
[3] https://edition.cnn.com/2023/07/10/business/rheinmetall-german-tank-factory-ukraine/index.html
[4] https://ukroboronprom.com.ua/en/
[8] https://www.investitionsgarantien.de/
[9] https://www.linksfraktion.de/parlament/parlamentarische-initiativen/sevim-dagdelen/
[13] https://www.zdf.de/nachrichten/wirtschaft/habeck-investitionen-infineon-wolfspeed-100.html