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EXPLAINED: How the Ukraine crisis could impact Germany

Following the Russian invasion of neighbouring Ukraine, western leaders are gathering for emergency talks and are set to hit Moscow with a fresh wave of sanctions. The Local looks at Germany's response to the crisis and how the country could be affected.

Brandenburger Tor Ukrainian Flag
Ukrainian citizens in Europe express their fears about the war in Ukraine. Photo: picture alliance/dpa | Christophe Gateau

What’s going on?

After days of mounting concerns about an eruption of war in Europe, the worst fears of world leaders have been realised: Russia has declared war on Ukraine.

According to the latest reports, Russian troops and fighter planes have entered through the eastern borders of the country and are closing in on the capital, Kyiv. Many believe the endgame is to depose Ukraine’s democratically elected government and, in line with Vladimir Putin’s revisionist world-view, attempt to redraw the borders of Europe. 

The move has prompted European nations to gather for crisis talks to decide on far-reaching sanctions on Russia and additional support for Ukraine. Separated from Ukraine by just one nation – Poland – Germany is unlikely to be left unscathed by the crisis. 

Here’s what we know so far. 

How have German officials responded?

After the news of the attack broke overnight, the Brandenburg Gate was lit up in the colours of the Ukrainian flag in a gesture of solidarity as spontaneous protests erupted in support of the Ukrainian government. 

In a brief but powerful statement on Tuesday morning, Chancellor Olaf Scholz (SPD) described the news as a “terrible day” for Ukraine and a “dark day” for Europe. 

“The Russian attack on Ukraine is a blatant breach of international law. There is no justification for it. Germany strongly condemns this ruthless act by President Putin,” he said.

The Chancellor is set to make an emergency statement in the German parliament on Sunday and has warned of further sanctions. 

Writing on Twitter, Foreign Minister Annalena Baerbock also threatened “massive sanctions” as she described the actions of Russia as “unjustifiable”.

“Today we are waking up in a different Europe, in a different world,” she wrote. “With the military attack on Ukraine, the Russian government is breaking the most fundamental rules of the international order, right in front of the eyes of the world.

“Ukrainians have done nothing, nothing that justifies this bloodshed. This war is designed to destroy one thing: the hope of the people of Ukraine. President Putin, you will never be able to destroy their longing for democracy and peace.” 

Baerbock said Germany would be meeting with the leaders of Nato, the G7 and the EU to discuss a coordinated response. 

Will the country send weapons to Ukraine?

Though Germany has provided around $2bn in financial support to Ukraine over the past eight years, it has point-blank refused to send arms into the region – and this position doesn’t look set to change. 

Since the Second World War, the country has generally pursued a strict policy of restraint in military conflicts, with the notable recent exception of Afghanistan. However, the situation in Russia and Ukraine is particularly sensitive for Germany due to its Nazi history: millions of people in both Russia and Ukraine were murdered by the fascist regime. 

“To export arms into the bloodlands that Germany helped to create, to supply one part of the bloodlands with arms… against the other part of the bloodlands… is an anathema in the German political debate,” Thomas Kleine-Brockhoff from the German Marshall Fund told the BBC.

READ ALSO: OPINION: Germany is in a muddle over Russia – and it only has itself to blame

Instead, Germany has sent 550 soldiers to bolster Nato forces in Lithuania and has promised 350 additional troops in the region. 

However, concerns are also growing about the limited military resources the country has, which will make it difficult for it to support Nato further.

Alfons Mais, the chief of the German land army, wrote on a post on the social network LinkedIn that “the options we can offer to politicians to support (NATO) are extremely limited.” The Bundeswehr (army) is “more or less bare,” he wrote.

Annegret Kramp-Karrenbauer, who was defence minister in Angela Merkel’s cabinet, said Germany had forgotten lessons from the past that “negotiation always comes first, but we have to be militarily strong enough to make non-negotiation not an option for the other side”.

“I’m so angry at ourselves for our historical failure. After Georgia, Crimea, and Donbas, we have not prepared anything that would have really deterred Putin,” Kramp-Karrenbauer tweeted, referring to incursions carried out by Russia while Merkel was in power.

What about sanctions?

In some ways, Germany has already announced its most hard-hitting sanction: the indefinite postponement of approval for the €10 billion Nord Steam 2 pipeline, which would have seen Russia delivering a significant proportion of the country’s natural gas supplies. 

When Chancellor Scholz announced the move on Tuesday afternoon, however, he promised that more would follow if Putin escalated the situation further. These could involve targeting wealthy individuals who support Putin’s regime, further sanctions on Russian banks and bans on trading with certain Russian companies.

On Thursday, Economy Minister Robert Habeck, signalled that there’d be a “strong sanctions package” that would “cut off the Russian economy from industrial progress, attack and freeze assets and financial holdings, and dramatically limit access to the European and American markets.”


How does this affect the German economy?

According to the German-Russian Chamber of Commerce (AHK), around 3,651 German companies are currently still active in Russia and are likely to be directly impacted by the crisis. “German companies are thus among the most active foreign investors in Russia,” a spokesperson for the Association of German Chambers of Industry and Commerce (DIHK) told Tagesschau. “In addition to the high need for modernisation and the good image of the brand ‘Made in Germany’, it is above all the comparatively high-profit margins that attract them.”

An escalating conflict will hit these companies hard and have ramifications for financial markets and the wider economy. When the German stock exchange (DAX) opened this morning, it had slumped by five percent amid news of the invasion. 

According to DZ-Bank, Russia recently ranked 14th among the most important destination countries for German exports, with 1.9 percent of German exports going to Russia. On the import side, it’s the 12th most important trading partner, with 2.8 percent of all imports to Germany coming from Russia. According to the Federal Statistical Office, the main goods traded between Russia and Germany were raw materials, vehicles and machinery.

In 2021, German exports to Russia jumped to €26.6 billion annually, so far-reaching sanctions will definitely place a dent in the treasury’s revenues.

What does it mean for the cost of living?

Experts generally concur that the war in Ukraine will exacerbate the spiralling cost of living crisis. Though the Nord Stream 2 announcement was deeply symbolic, Germany had not yet received any deliveries of natural gas through the pipeline, so it won’t be hit by immediate losses to its reserves.

However, fears that Russia will stifle the supply of gas into Europe in retaliation for sanctions has already caused energy prices to soar to unpredecented highs. This is likely to hit households directly, driving up the price of energy bills further and increasing the cost of living as businesses pass on their higher costs to consumers. 

Ukraine protests at Brandenburg Gate

Protesters wrap themselves in the Ukrainian flag at Brandenburg Gate in Berlin. Photo: picture alliance/dpa | Kay Nietfeld

Announcing the decision to pause the controversial pipeline project, Economy Minister Robert Habeck (Greens) warned that energy prices would undoubtedly rise in the short-term, though he vowed to take steps to mitigate the impact on consumers.

There is also a consensus that current gas reserves would be enough to carry Germany through the rest of the winter – even if deliveries were to cease entirely. As the government sets its sights on renewable energy projects, it hopes that it will soon be able to end its dependence on Russian gas entirely, though in reality, this will take a number of years. 

Disruptions to wheat and corn shipments could also have a knock-on effect on food prices. According to Bloomberg, Ukraine is an agricultural powerhouse that’s responsible for around 25 percent of global wheat trade and around 20 percent of corn sales. Issues with producing and delivering these shipments would send shockwaves through the global economy and could hit German consumers hard. 


How about refugees?

Ukraine is home to around 44 million people, almost three million of whom live in Kyiv. As Russian forces approached, images were shared on the internet of endless traffic jams as people attempted to flee west out of the capital. 

In a speech made this morning in response to the invasion, Berlin’s mayor Franziska Giffey spoke of the impact the conflict would have on the capital and said Ukrainian refugees would be likely to come to Berlin if the situation deteriorated further. 

According to a spokesperson, however, the Federal Ministry of the Interior is “prepared for conceivable scenarios” but doesn’t believe the likelihood of refugees coming to Germany can be seriously assessed at the present moment.

Federal Interior Minister Nancy Faeser said she was in close contact with the Polish government and the EU Commission with regard to refugees fleeing to neighbouring countries such as Poland. According to the ministry, the German government will “massively support” other EU countries, especially Poland, in the event that a huge influx of Ukrainian refugees arrives there.

This would primarily involve “humanitarian support”.

Meanwhile, the Association of Towns and Municipalities has called on state and federal governments to start preparing for an influx of Ukranian refugees. 

“We expect close coordination between the federal government, the states and the municipalities in order to have enough time for comprehensive preparation,” Gerd Landsberg, the association’s managing director, told Handelsblatt. This would involve releasing funds and preparing accommodation. 

According to the Federal Office of Statistics, there were around 145,515 Ukrainians living in Germany as of 2020, with numbers of Ukrainian immigrants rising sharply in the wake of the 2014 Russia attacks. 

Member comments

  1. Ukraine wants Russia barred from SWIFT. The only obstacle to this is Scholz. I suppose we can’t expect any meaningful reaction from Germany until Russia comes knocking on East Germany’s door.

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Rapping, breakdancing Ukrainians win Eurovision in musical morale boost

Ukraine won the Eurovision Song Contest Sunday with an infectious hip-hop folk melody, boosting spirits in the embattled nation fighting off a Russian invasion that has killed thousands and displaced millions of people.

Rapping, breakdancing Ukrainians win Eurovision in musical morale boost

Riding a huge wave of public support, Kalush Orchestra beat 24 competitors in the finale of the world’s biggest live music event with “Stefania”, a rap lullaby combining Ukrainian folk and modern hip-hop rhythms.

“Please help Ukraine and Mariupol! Help Azovstal right now,” implored frontman Oleh Psiuk in English from the stage after their performance was met by a cheering audience.

In the Ukrainian capital Kyiv, the triumph was met with smiles and visible relief.

“It’s a small ray of happiness. It’s very important now for us,” said Iryna Vorobey, a 35-year-old businesswoman, adding that the support from Europe was “incredible”.

Following the win, Psiuk — whose bubblegum-pink bucket hat has made him instantly recognisable — thanked everyone who voted for his country in the contest, which is watched by millions of viewers.

“The victory is very important for Ukraine, especially this year. Thank you from the bottom of our hearts. Glory to Ukraine,” Psiuk told journalists.

Music conquers Europe

The win provided a much-needed morale boost for the embattled nation in its third month of battling much-larger Russian forces.

Mahmood & BLANCO  performing for Italy at Eurovision 2022

Mahmood & BLANCO perform on behalf of Italy during the final of the Eurovision Song contest 2022 in Turin, Italy. (Photo by Marco BERTORELLO / AFP)

“Our courage impresses the world, our music conquers Europe!” he wrote on Facebook.

“This win is so very good for our mood,” Andriy Nemkovych, a 28 year-old project manager, told AFP in Kyiv.

The victory drew praise in unlikely corners, as the deputy chief of the NATO military alliance said it showed just how much public support ex-Soviet Ukraine has in fighting off Moscow.

“I would like to congratulate Ukraine for winning the Eurovision contest,” Mircea Geoana said as he arrived in Berlin for talks that will tackle the alliance’s expansion in the wake of the Kremlin’s war.

“And this is not something I’m making in a light way because we have seen yesterday the immense public support all over Europe and Australia for the bravery of” Ukraine, Geoana said.

British Prime Minister Boris Johnson called the win “a clear reflection of not just your talent, but of the unwavering support for your fight for freedom”.

And European Council President Charles Michel said he hoped next year’s contest “can be hosted in Kyiv in a free and united Ukraine”.

‘Ready to fight’
Despite the joyous theatrics that are a hallmark of the song contest, the war in Ukraine hung heavily over the festivities this year.
The European Broadcasting Union, which organises the event, banned Russia on February 25, the day after Moscow invaded its neighbour.
“Stefania”, written by Psiuk as a tribute to his mother before the war, mixes traditional Ukrainian folk music played on flute-like instruments with an invigorating hip-hop beat. The band donned richly embroidered ethnic garb
to perform their act.
Nostalgic lyrics such as “I’ll always find my way home even if all the roads are destroyed” resonated all the more as millions of Ukrainians have been displaced by war.

Kalush Orchestra received special authorisation from Ukraine’s government to attend Eurovision, since men of fighting age are prohibited from leaving the country, but that permit expires in two days.

Psiuk said he was not sure what awaited the band as war rages back home.

“Like every Ukrainian, we are ready to fight as much as we can and go until the end.

Britain’s ‘Space Man’

Ukraine beat a host of over-the-top acts at the kitschy, quirky annual musical event, including Norway’s Subwoolfer, who sang about bananas while dressed in yellow wolf masks, and Serbia’s Konstrakta, who questioned national healthcare while meticulously scrubbing her hands onstage.

Coming in second place was Britain with Sam Ryder’s “Space Man” and its stratospheric notes, followed by Spain with the reggaeton “SloMo” from Chanel.

After a quarter-century of being shut out from the top spot, Britain had hoped to have a winner in “Space Man” and its high notes belted by the affable, long-haired Ryder.

Britain had been ahead after votes were counted from the national juries, but a jaw-dropping 439 points awarded to Ukraine from the public pushed it to the top spot.

Eurovision’s winner is chosen by a cast of music industry professionals — and members of the public — from each country, with votes for one’s home nation not allowed.

Eurovision is a hit among fans not only for the music, but for the looks on display and this year was no exception. Lithuania’s Monika Liu generated as much social media buzz for her bowl cut hairdo as her sensual and elegant

Other offerings included Greece’s “Die Together” by Amanda Georgiadi Tenfjord and “Brividi” (Shivers), a duet from Italy’s Mahmood and Blanco.

Italy had hoped the gay-themed love song would bring it a second consecutive Eurovision win after last year’s “Zitti e Buoni” (Shut up and Behave) from high-octane glam rockers Maneskin.