Germany

Germany’s Friedrich Merz is gambling big. The leader of the centre-right Christian Democratic Union (CDU) is gambling with the upcoming elections, his political career, his country’s future and Europe’s future.

He is gambling that by opening—ever so slightly—the door to the German far-right that he will be able to slam it shut again after winning elections on February 23.

Ever since the end of the Second World War the mainstream political parties have maintained a firewall (or “Brandmauer”) between themselves and any far-right, neo-Nazi party that might undermine the political consensus that Germany maintain a sense of contrition for its Nazi past.

In recent years that has meant no coalitions, no deals, no talk of parliamentary support with the far-right Alternative for Deutschland (AfD).

Merz blew a hole in the Brandmauer at the end of January when he used AfD votes in the Bundestag to push through the first reading of an anti-immigration bill.  The “Influx Limitation Law” would have tightened existing immigration laws and grant police powers to detain people due for deportation and to deport immigrants at the border.”

The move provoked a stern protest from Merz’s predecessor, elder statesperson Angela Merkel. “I consider it wrong,” she said in a statement, “to abandon this commitment (the firewall) and, as a result to knowingly allow a majority vote with AfD votes in the Bundestag for the first time.”

The vote also sparked off a series of anti-AfD and pro-immigration demonstrations over the weekend.

The result was defeat for the bill at its second reading this week as 12 members of Merz’s own party voted against him.

Merz was unrepentant and has vowed even tougher anti-immigration laws if he wins the election. At the moment his party is predicted to win 30 percent of the vote. The AfD is projected to secure the number two slot with 20 percent of the vote while the opposition coalition of the Social Democrats, Greens and Liberals is likely to come in third with 29 percent.

Merz is gambling that his politics will steal some of the AfD’s far-right clothes and push up his share of the vote. But he also risks losing the centrist votes that were secured by Angela Merkel’s moderate positions. And his defeat at the second reading undermines Merz’s leadership of the CDU and runs the risk of pushing Germans concerned about immigrants into the arms of the AfD.

Europe

“Europe,” Trump recently warned, “you are next.”

The newly-elected American president was referring to those “lovely, lovely tariffs” that he is imposing left, right and centre, especially on those who dare to disagree with him.

Trump has never liked the EU. With half a billion reasonably well-off people, it is the world’s largest trading bloc, and trading bloc’s exist to protect the economic interests of their members, and they use the leverage that their size gives them to negotiate the best possible trading terms.

Trump would love to break-up the EU so that he can use the size of the American market to negotiate bilateral deals that are more favourable to the US. This is why he is a big fan of Brexit.

The EU imposes a tariff of ten percent on American cars and whisky. It has also introduced a number of regulations on America’s tech giants to which Trump’s new buddies in Silicon Valley object vociferously.

Trump also wants the European members of NATO to increase their defense spending. Two percent was the figure he used in his first term. Pressure from Trump, Biden and the Russian invasion of Ukraine means that 23 of the 32 European members of NATO now spend two percent or more. But now Trump is talking about 3.5 percent. Only Poland reaches that target with a spend of four percent.

Trump is also concerned with protecting aluminium and steel production which he regards as vital to America’s national security. He put tariffs of 25 percent on those European products in his first term.

Finally, he uses tariffs as a political weapon. If he doesn’t like the political complexion or position of a country then he will bully them with the threat of  tariffs. He has already threatened Denmark with “massive tariffs” unless it sells him Greenland. Conversely, if he likes a country’s policies, Trump may well exempt it from US tariffs.

So, expect retaliatory tariffs on cars, Scotch whiskey and luxury European goods. There are likely to be tariffs on aluminium and steel. Countries that do not pay what Trump regards as a fair share of NATO’s defense costs could also suffer tariffs, along with countries who oppose his policies in other areas.

Populist-led countries such as Viktor Orban’s Hungary and Giorgia Meloni’s Italy may well be exempt from certain US tariffs, partly to support them with the voters and partly to encourage the break-up of the EU.

Ukraine

Volodomyr Zelensky has something Donald Trump wants. What’s more he appears willing to provide it in return for continued US military support.

The something is Ukraine’s substantial deposits of rare earth minerals.

The minerals are essential for computers, electric cars and high-tech defense equipment. At the moment China is the dominant source of rare earth minerals. Eighty percent of the minerals that Silicon Valley uses are imported from China.

America’s military planners are understandably concerned about being so heavily dependent on their number one enemy for such vital deposits. Also worried are Trump’s new Silicon Valley friends—Musk, Zuckerberg, Thiele, Bezos and Co. who are pushing Trump to back off China until alternative sources of rare earth minerals are established.

The US recently re-opened a minerals mine in California and are retrieving other deposits in Alaska, Wyoming and Texas. They have also introduced an extensive recycling programme.

But this is not nearly enough, which explains Trump’s interest in acquiring Greenland and making Canada the 51st state—both of whom are overflowing with untapped rare earth resources.

Zelensky may be accused of short-termism by selling the seed corn to keep the Russians at bay with no guarantee of success. He would not be the first to do so and this would not be the first time that the US benefitted from war in Europe.

After World War I Britain owed America $4.3 billion ($87 billion in 2024 prices). It struggled to pay it off and the debt was finally forgiven at the height of the Great Depression in 1934. But Britain had no time to recover before World War Two. In 1940 it gave America 99-year leases on eight bases in the Western Hemisphere (three of which are still active) in return for 50 old destroyers.

At the end of war the UK owed the “Arsenal for Democracy” $11.5 billion ($176 billion in 2024 prices). A large part of that debt was written off or renegotiated in the 1945 UK Loan Adjustment Agreement, but the US still came out way head. Today it has the world’s largest gold reserves – 8,133.5 metric tons, largely as a result of payments made after European wars.

* Tom Arms is foreign editor of Liberal Democrat Voice and author of “The Encyclopaedia of the Cold War” and “America Made in Britain".