Germany In Talks For $18 Billion National Missile Defense Shield After Escalations With Russia

Mersad Air Defense System

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Germany has recently come to the forefront of European countries causing escalations with Russia when it began pressuring Washington and NATO allies to send tanks to Ukraine last month. Being well aware of its precarious position with Russian President Vladimir Putin, Germany is now in a race to drastically increase its defense spending and arm itself against possible Russian attacks, including spending $18 billion on a nationwide missile defense shied.

It should be noted that less than a year ago, Germany's military was struggling to meet its commitment to NATO and had an entire battalion of Puma tanks fail drills and be deemed unfit for action in the NATO Rapid Reaction Force (NRF). The German military is also known to be underfunded and lacking resources. Now, it's giving away the handful of operational tanks it does have to Ukraine. The German military should be helping itself before it helps Kyiv.

As part of Germany's recent about-face regarding its defense spending, the country is now in talks with multiple defense manufacturers to have a multi-layered, anti-missile shield built that could cost as much as €17 billion ($18.5 billion).

Specifically, the government is negotiating a contract with Bavarian-based manufacturer Diehl Defence to purchase up to 8 IRS-T anti-missile systems for a cost of €2 billion to €3 billion. The 8 IRS-T anti-missile systems are expected to be just the first layer of a more complex multi-layered system. One IRS-T battery is capable of intercepting fighter jets, inbound cruise missiles, and drones and can fire missiles that travel over 40 km.

Germany also supplied Kyiv with the first 4 IRS-T air defense systems it received in October, keeping a promise it had made with Ukraine to provide the systems to protect its cities from drone attacks. It should also be noted that Germany does not currently own any IRS-T systems.

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Berlin is finally waking up to the realization that it has a woefully inadequate military. While Chancellor Olaf Scholz is doing everything possible to increase defense spending and build up Germany's military, it comes as concern is mounting that Russia's war in Ukraine could spread both West and deeper into Europe. Germany's last-minute effort to build its military up before it gets dragged into a conflict with Russia is a classic example of too little, too late.

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France Faces Blackouts Amid Nuclear Power Plant Issues

A Nuclear Power Plant

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While much of Europe has been facing an energy crisis leading into winter, France appeared to be one of the most reliable energy suppliers in western Europe, but that has changed in recent months as the country has been forced to take several of its nuclear power plants offline. Now, the once energy-stable country is facing the bleak possibility of blackouts if temperatures dip in the coming weeks.

The looming energy crisis does not bode well for other European countries that rely on France for some of their energy production. Germany and the UK would be directly affected if France experiences an energy shortage.

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While France's widespread use of nuclear power has proven beneficial in recent months as the rest of Europe struggles to meet oil and gas needs, problems with multiple nuclear plants across the country have left France's power grid strained and seen its production fall to concerning levels over the past few weeks.

Half of the country's nuclear power plants have been taken offline in recent weeks as dangerous cracks have been discovered at several of the facilities. The reduction in operational plants has severely limited the amount of electricity France can produce, not only for its own consumption but also for that of Germany and the UK.

While teams of engineers have been deployed to correct the issues, the temporary loss of production levels has forced France to cut off its energy supply to its neighbors. Last month France requested the UK be removed from its energy exports in an attempt to save energy.

While energy rationing is still a possibility, recent warmer temperatures have reduced the likelihood that blackouts will occur. Although the President of France's Energy Regulation Commission, Emmanuelle Wargon, warned, "Until January 15, we know that we will have no difficulty. Afterwards, if there is a cold snap, the situation will inevitably be more tense."

While France's energy seems moderately secure for now, Germany is now facing a worsening energy crisis as it faces continued pressure to reduce its gas consumption by 20 percent in an effort to save its economy. If France stops providing energy, Germany will have to scramble to find enough gas and oil to meet its demand.

There is currently no timeframe for when France will be able to bring its damaged nuclear power plants back online and begin providing energy to other countries again.

Germany Turns To Coal As Temperatures Plummet - Climate Change Initiatives Can Wait

A Coal Powered Energy Plant

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Despite a push across many EU countries to eliminate coal and embrace green energy alternatives, an energy crisis, and plummeting temperatures have driven Germany to consume coal at its highest rate in 6 years.

Coal which has long been a reliable and affordable source of energy had all but been driven out of Germany, with many coal plants being shut down in favor of more environmentally friendly energy sources. However, with energy costs soaring as relations with Moscow crumble, the European country was left with a dire need for cost-effective energy. In an effort to meet the demand, a few coal plants in Europe were temporarily reactivated. Despite global coal consumption reaching a record high of more than 8 billion tonnes in 2022, German carbon emissions figures for November were the lowest they have been in 30 years.

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While Germany was set to phase out coal by 2038, that initiative has been bumped up to 2030. However, the war in Ukraine, which caused most of Europe's natural gas supply to be cut off, has led to an increased use of the fossil fuel.

According to Destatis, the German statistics office, German electricity produced by coal plants increased from 31.9 percent to 36.3 percent from the third quarter of 2021 to September of this year. Over the last year, Germany saw the largest increase in coal consumption, rising 19 percent. Natural gas usage also increased slightly in Germany, but the highly touted wind and hydro output remained low.

Coal is not the only reliable energy source being phased out in Germany. Nuclear power is also on the chopping block, with 3 of the country's 6 reactors closing over the past year after the Fukushima disaster caused Berlin to reconsider the use of nuclear power. Despite the government trying to bring an end to nuclear energy, Chancellor Olaf Scholz overruled his coalition in October, deciding to keep the 3 operational nuclear power plants online until mid-April 2023 at the latest.

Meanwhile, due to maintenance issues at French nuclear plants, Germany became a net exporter of electricity to France this year. However, as French nuclear reactor capacity increases from 50 percent in November to 68 percent this month, Germany is expected to return to a net energy importer within a few years.

Due to the energy crisis and rising energy costs, Berlin has issued a waiver to keep 2.6 GW of coal and 1.2 GW of lignite power plants online through March 2024. Initially, those plants were to be shut down by the end of this year.

Despite the record increase in coal usage this year, a spokeswoman for the German Economy Ministry said in a statement to Bloomberg, "The coal phase-out ideally by 2030 is not in question. Against the backdrop of the crisis situation, the most important thing is that we have apparently succeeded in consuming significantly less energy in 2022, especially natural gas."

While coal is still set to be phased out and replaced with more expensive, less efficient energy alternatives, the energy crisis has proved that coal is still an affordable and reliable source of energy. Perhaps the EU and Germany should reconsider their climate change initiatives amid a serious energy crisis and soaring inflation.

Poland To Supply Crude Oil To Germany

A German Refinery

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Poland has reached an agreement with Germany to provide enough crude to Germany's Schwedt refinery to run the plant at 70% capacity from January, which means that Germany would no longer be dependent on Russian oil.

The Schwedt refinery, seized from Russia in September, provides 90% of Berlin's fuel. Germany has a goal of ending Russian oil imports by the end of the year and has been working with Poland for months to secure enough crude to meet the country's demands.

Under the agreement, 2-3 ships each bringing 100,000 tonnes of crude a month, will travel from Gdansk, Poland, to Schwedt beginning next year. The agreement with Poland would provide approximately 3.5 million tonnes per year, with Rostock on the Baltic filling the remaining gap.

In September, Germany seized the Schwedt refinery, which belonged to Russian oil company Rosneft PJSC as Germany struggles to overhaul its economy and secure enough oil and LNG to prevent blackouts and shortages during the coming winter.

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A top lawmaker for Scholz's Social Democrats told Bloomberg, "Over the next few months, we'll have to continue to preserve critical infrastructure in order to achieve energy independence."

At the time of the Schwedt seizure, Rosneft called the move illegal and equated it to the expropriation of equity assets. Rosneft had invested €4.6 billion into the facility's refining capacity. The company issued a statement at the time saying that it would "consider all possible measures to protect its shareholders, including legal action."

Rosneft Germany runs 3 refineries in the country and provides 12% of Germany's refining capacity. The Schwedt refinery is the most important of the three as it provides fuel for the Berlin-Brandenburg area, and concerns had been mounting that the refinery would have to close and workers would be laid off.

The move to seize control of the Schwedt refinery was political and was done to keep the refinery online and workers employed. There had been a serious concern, though, about where the facility would get its crude from as it had been running on Russian oil. Poland finally came through to keep the refinery operational, and Germany no longer dependent on Russian crude.

Germany Arrests Group Plotting To Overthrow Government

German Police Make an Arrest

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In an operation that involved roughly 3,000 German police and Special Forces officers, more than two-dozen people were arrested in Germany Wednesday for allegedly plotting to overthrow the government as part of the Reichsbürger (Citizens of the Reich) movement, which is a domestic terrorist organization that was formed in late 2021. The organization intended to overthrow the German government and form its own state. Prosecutors have said that the organization believes that "Germany is currently ruled by members of a so-called deep state" which needed to be overthrown.

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In addition to those arrested in Germany, two others were arrested, one in Austria and another in Italy. Overall, 52 people are being investigated. Some of those involved in the plot include a member of the Alternative for Germany party who was a former member of the German Parliament, a member of the German nobility, and a Russian citizen who supported the organization's plans. A member named Heinrich XIII, who is from an old aristocratic family, was allegedly a central figure in the group.

Included in the organization's plans was an armed attack on the German parliament building. Members had also created an alternative government that was to be installed if their attack was successful. The group had also organized arms training for members and had attempted to recruit personnel from the German security services. German officials do not know how close the organization was to putting their plans into motion.

The group wanted "to overcome the existing state order in Germany and to establish its own form of state, the outlines of which have already been worked out," a report issued by authorities stated. It went on to say, "The members of the organization were aware that this goal can only be achieved through the use of military means and violence against state representatives. This also included commissioning killings."

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