Merz Upbeat on State Backing for €46 Billion Tax-Break Package

Chancellor Friedrich Merz said he's confident Germany 's regional governments will back his €46 billion ($53 billion) package of tax breaks after progress toward settling a dispute over sharing the cost.
The plan needs approval from lawmakers in the Bundesrat, the upper house representing Germany's 16 federal states. Many have voiced concern over the financial burden, warning that states and municipalities would be left covering around two-thirds of the total cost.

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33 minutes ago

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Keir Starmer backs US strike on Iran but warns of wider ‘escalation' risk

Keir Starmer has warned of a 'risk of escalation' in the Middle East and beyond as a result of the US bombing of Iran, but said he backed the strike on Iran's nuclear facilities and called on Tehran to return to negotiations. The prime minister, who was quick to clarify that the UK had not been involved in the strikes, held talks with France's president, Emmanuel Macron, and the German chancellor, Friedrich Merz, on Sunday afternoon after convening a Cobra meeting in the aftermath of the US attack. The US made no request for any UK assistance in the bombing of the three nuclear sites, the Guardian understands, including any use of the leased Diego Garcia base in the Chagos Islands, the recent subject of a controversial deal with Mauritius. Related: Global alarm at US strikes on Iran amid fears conflict could spiral out of control In a joint statement, the three European leaders said it was 'clear that Iran can never have a nuclear weapon and can no longer pose a threat to regional security'. They said their joint aim was to prevent Iran from acquiring a nuclear weapon and called on Tehran to address all concerns associated with the nuclear programme. 'We stand ready to contribute to that goal in coordination with all parties,' the statement said. 'We urge Iran not to take any further action that could destabilise the region. We will continue our joint diplomatic efforts to defuse tensions and ensure the conflict does not intensify and spread further.' Starmer warned earlier that it was possible the fallout from the conflict could reverberate beyond the region. 'It is important that we now de-escalate the situation, stabilise the region and get the parties back around the table to negotiate,' he told broadcasters. Flights from London to Dubai and Doha were cancelled after a British Airways flight from Heathrow to Dubai was forced to divert to Zurich on Saturday night. Israel announced on Sunday that it had closed its airspace to inbound and outbound flights. After Starmer spoke earlier on Sunday with the sultan of Oman and the king of Jordan, No 10 said the leaders agreed that 'escalation of the conflict is in no one's interests'. The US decision to join Israel's offensive against Iran came after western leaders, including Starmer, had urged restraint. They are due to meet again on Tuesday at the Nato summit in the Netherlands. As recently as last Tuesday at the G7 summit, which Trump left early, Starmer said he did not have any indication the US was planning on joining the attack, though later in the week he had warned of a 'real risk of escalation' in the conflict, adding there had been several rounds of discussions with Washington and 'that, to me, is the way to resolve this issue'. The business secretary, Jonathan Reynolds, told Sky News that while the UK had preferred a different path, the outcome was in British interests. 'We support the prevention of Iran obtaining a nuclear weapon. We had proposed a diplomatic course of action, as other European countries had done; the Iranians had rejected that. 'I know people will be waking up this morning and they'll be worried. They'll want to know what this means, and I do want to give them reassurance that whilst the British government has not been involved in these attacks, we have been making extensive preparations for all eventualities.' Reynolds said the British people should be in no doubt that the Iranian regime did pose a threat to the UK, but that regime change in Tehran was 'not the question' when it came to these strikes. 'I wanted a different way to obtain this, but I cannot pretend to you that the prevention of Iran having a nuclear weapon is anything other than [in] the interests of this country,' Reynolds told the BBC. 'This is very different to what we saw with the invasion of Iraq … I think stability for the region would come about through an agreement where Iran would acknowledge that, because of its behaviour, no country in that theatre or the wider world would be able to countenance it having nuclear weapons.' He said the threat from Iran was 'an active one … This is at the forefront of risks to the United Kingdom and our security apparatus has to do a great deal to keep the country safe.' The chair of the foreign affairs select committee, Emily Thornberry, said the strikes were a 'big mistake'. She told the BBC: 'The concern is it will just become a wider conflict, and we are at a very dangerous moment. The war aim is supposed to be to stop the Iranians building a bomb, but this isn't the way to do it. 'At best, it can slow down the Iranians. The way to stop them building a bomb is negotiation.' Labour and opposition MPs are likely to raise concerns in parliament when they return on Monday afternoon. The Green party co-leader, Adrian Ramsay, said: 'We utterly condemn the reckless attacks on Iran by the United States that can only lead to further dangerous conflict in an already volatile region. 'There is no international legal basis for this unilateral action that poses a serious threat to international peace and security.' Related: What a difference a week makes: Trump falls into the Netanyahu trap The foreign secretary, David Lammy, had urged the US to pull back from the brink on a visit to Washington for talks with his counterpart, Marco Rubio, before attending talks with Iran on Friday alongside European allies in Geneva. The Conservative leader, Kemi Badenoch, said the US strike was 'decisive action against a regime that fuels global terror and directly threatens the UK. Iranian operatives have plotted murders and attacks on British soil. We should stand firmly with the US and Israel.' Overnight, Iran launched a ballistic missile barrage against Israel in retaliation against the US action.

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6 hours ago

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How Germany Changed Its Mind About America, Thanks to Donald Trump

Five days after his election victory in February, Friedrich Merz's world collapses. That's how he will describe it later. That Friday evening, he steps off the stage at a large conference center in Hamburg's port, where cruise ships usually moor. He has just been hailed as 'the future federal chancellor,' and more than a thousand party supporters have cheered on their chairman at a rally of the local chapter of the Christian Democratic Union, Germany's main center-right party. At around 8:15 p.m., he shakes a few hands in farewell, then drops into the backseat of his official car for the three-hour drive home. It is February 28, 2025. Merz checks his phone and notices a message from his spokesperson. He should watch a video, preferably immediately. Merz pulls out his iPad, opens the link, and recognizes a room familiar to anyone who follows politics. Two armchairs upholstered in gold damask sit in front of a fireplace with no fire burning. In front of the fireplace is a table made of fine wood inlaid with an oversized seal. It's the Oval Office in the White House. To Donald Trump's right sits a small, bearded man in a black military sweater embroidered with a stylized trident, the national symbol of Ukraine. It is Volodymyr Zelenskyy, the president of Ukraine, a country invaded by Russia. Merz holds him in high esteem. Merz has visited Zelenskyy twice in Kyiv and, just a few days ago, accepted Zelenskyy's congratulations on his election victory. Ukraine has high hopes for Merz. The new chancellor is expected to finally provide the Taurus, a German cruise missile capable of penetrating bunkers, which Merz's more liberal predecessor as chancellor, Olaf Scholz, refused to provide throughout his time in office. In the video, Zelenskyy looks tired. Tired and helpless. Merz is dismayed as he watches the U.S. president humiliate his Ukrainian counterpart. Trump accuses him of endangering millions of lives and risking a third world war. When Zelenskyy retorts that it was Russian President Vladimir Putin who started the war, Trump interjects harshly. In front of the cameras, Zelenskyy is scolded like a naughty child for several minutes. 'Did you ever say thank you?' Vice President JD Vance asks Zelenskyy, hurling this question at him several times. 'That was good television,' Trump says at the end of the meeting. The subsequent talks, which were supposed to be about security guarantees after a ceasefire, are canceled. A fully negotiated raw materials agreement is not signed. The celebratory lunch is canceled. Zelenskyy waits another 20 minutes in an adjoining room. Then, an official appears and simply sends him away. Merz has just finished watching the nearly 40-minute scene when he posts a solidarity message to Zelenskyy in English on X: 'We must never confuse the aggressor with the victim in this war!' He is on the phone nonstop in the car until he arrives in Sauerland and then for half the night. He also speaks with Scholz, who would still be chancellor for another two months. Scholz and his designated successor agree that something historic happened that day in Washington. The Americans are threatening not only to abandon Ukraine but also all their allies. Is Article 5 of the NATO Treaty, which requires every member to come to the defense of every other member, still to be taken seriously? Would U.S. soldiers defend Germany against a Russian attack? Are American nuclear missiles still a credible deterrent? The two men agree that given these circumstances, Germany must rebuild its national defenses. As quickly as possible and at whatever cost. And it will cost a lot, between 1 and 1.5 trillion euros over the next 12 years — double the previous amount. Spending that much money on defense isn't easy. In Germany, the 'Schuldenbremse' or 'debt brake' is a fiscal rule enshrined in the Constitution. It is designed to limit the amount of new government debt to a maximum of 0.35 percent of gross domestic product. Before the elections, Merz campaigned on keeping the debt brake and insisted as chancellor he could do without extra debt. But in the coming days, Merz will flip his position and agree to this new borrowing. The humiliation of Zelenskyy has changed everything. This account of the election of Merz and his first days as Germany's incoming chancellor is based on more than 50 conversations with sources, some close to Merz, who were granted anonymity to speak freely. Merz's doubts about his prior convictions had been building for weeks. A few days before the general election, Merz met with Vance in Munich. Merz wanted to dissuade the American vice president from publicly urging Germans to vote for the far-right Alternative for Germany (AfD) party. 'These are not friends of America,' Merz said, 'but partisans of Putin.' Vance nodded in apparent agreement. Just a few hours later, during his speech at the Munich Security Conference, Vance stunned the audience. He declared that restrictions on freedom of speech in the EU are a greater threat than Russia or China. He called for firewalls to be torn down across Europe and for right-wing populists to be included in politics. The vice president did not mention the AfD by name. However, a few hours later, reports circulated that Vance had met with not only Merz, but also with AfD leader Alice Weidel at his hotel before the speech. He had not told Merz about this meeting. Even then, two weeks before Zelenskyy's humiliation in the Oval Office and one week before the Bundestag elections, Merz had begun privately considering the need for Germany to take on additional billions in debt. 'What the new American president, Donald Trump, has said in Washington these last few days…' he told the audience from the campaign stage in Hamburg, 'Ladies and gentlemen, we are witnessing a fundamental shift in the global political landscape.' Following the Munich Security Conference, Merz discreetly asked former Constitutional Court judge Udo Di Fabio to explore whether it would be possible to amend Germany's Basic Law with the votes of the outgoing Bundestag. The 'Basic Law' is Germany's equivalent of a constitution. It can only be changed by a two-thirds majority in parliament. That also applies to the debt brake. Getting a two-thirds vote would be possible with the old Bundestag, but not the new Bundestag that was expected to have a higher representation of AfD and other fringe parties. Shortly afterwards, Di Fabio sent him his expert opinion. Amendments to the Basic Law with the votes of MPs who had already been voted out of office were possible up to 30 days after the election. That would be March 25, the same day the new Bundestag would be seated. Merz would have less than a month to execute an about-face. On the day of the election, Merz gave the first public signal that his thinking was changing when he appeared with other candidates on the Berliner Runde, a television program in which party leaders comment on the election as soon as the polls close. 'For me, it will therefore be an absolute priority to strengthen Europe as quickly as possible so that, step by step, we can really achieve independence from the USA,' he said. Independence from the USA? Scholz, sitting right next to Merz on TV, could hardly believe it. Until now, European politicians had carefully avoided suggesting that Europe could manage its defense without the Americans. Germany, which has neither its own nuclear weapons nor a robust army, needs American troops and their nuclear umbrella more than anyone. Merz, considered a staunch transatlanticist, was giving up on the USA? 'Since U.S. President Donald Trump's statements last week, it has been clear to me that this administration is largely indifferent to the fate of Europe,' Merz continued. A summit of the transatlantic military alliance is scheduled for the end of June. 'Will we even be talking about NATO in its current form then?' he asked. 'Or will we then have to establish an independent European defense capability much more quickly?' The next day, when the election results had been tallied, Merz praised the outcome in a press conference: 29 percent was much less than the Christian Democrats had hoped for, but Merz argued it was a success if you look at the number of votes rather than percentage points. The Christian Democrats gained 2.5 million votes compared to the previous Bundestag election, and the Christian Socialists gained 500,000, he noted. What he failed to mention is that the AfD gained over 6 million votes. After an election campaign more polarizing than any in decades, more people turned out to vote than in previous years, and the AfD was the beneficiary. Merz was genuinely outraged by the scene in the Oval Office. But he also knew he could use this indignation to his advantage. After all, he would need a credible narrative to justify the political turnaround, the astronomical increase in defense spending, that will take place under his leadership. The election results meant that, for the first time since World War II, centrist parties no longer have a two-thirds majority in Parliament. Without a two-thirds majority, centrist parties cannot elect judges to the Federal Constitutional Court, declare war on an invader or amend the Basic Law. For example, to reform the debt brake. The situation is reminiscent of the late phase of the Weimar Republic. At that time, the National Socialists and Communists together held over 50 percent of the seats in the Reichstag, preventing the Social Democrats, Liberals and Christian Democrats from governing effectively — thus fueling growing frustration with democracy. This created a vicious circle that led to the collapse of the first republic at the beginning of the 1930s. Is this a bold comparison? The AfD and other fringe parties already control a blocking minority in the state parliaments of three German states: Saxony, Thuringia and Brandenburg. The same will be true in the Bundestag when the new MPs are seated March 25. Scholz also played a role in urging Merz's turnaround. In meetings unnoticed by the public, Scholz and Merz met several times in the chancellor's office after the Bundestag elections, sometimes with other center-right politicians present. At one of these meetings, Scholz presented intelligence service findings on the immense scale of the Russian arms buildup. Despite the enormous losses in Ukraine, Putin would have considerably more tanks and missiles in just a few years than before the invasion. The intelligence suggested he is preparing to wage another war, this time against Europe. Scholz, who campaigned as a peace chancellor, advised his successor to do the opposite: to massively rearm. Germany's new government coalition joined Merz's Christian Democrats with Scholz's Social Democrats. In the days after the election, the coalition partners convened private negotiations to reach a spending plan they could implement before March 25. In those talks, the sums involved increased by the hour. On March 4, when the partners reappeared in public to announce their deal, there was great astonishment. There were no longer any limits to rearmament. Merz secured special funds for a defense build-up over the next 10 years that were five times larger than an increase Scholz negotiated just three years ago. An additional special fund of 500 billion euros had been agreed upon for rebuilding the country's infrastructure. Why was Merz, the avowed debt hawk, now so willing to push Germany so deep into debt? 'In view of the threats to our freedom and peace on our continent, the same must now apply to our defense: Whatever it takes!' Merz said at a press conference. The saying was a quote from Mario Draghi, the former head of the European Central Bank, who used this slogan in 2012 to scare off speculators who wanted to bet on a breakup of the eurozone. Now Merz used the same quote to explain his rearmament plan. At a parliamentary group meeting later that day, Merz reported that he would be traveling to Brussels to take part in the meeting of the heads of state and government of the EU Council. And then he said something curious: 'If Trump announces his withdrawal from NATO tonight, then we, the Federal Republic of Germany, will be the first to have reacted correctly in advance.' There was horror among the MPs. Merz was deadly serious. The total turnaround in financial policy began after the shock appearance by Vance at the Munich Security Conference. Merz justified it by pointing to the humiliation of Zelenskyy at the White House. But now he was talking about an imminent U.S. withdrawal from NATO. How did Merz get this idea? Trump was set to give his first speech to a joint session of Congress that same night. Merz explained to close allies later that he had received information from an American source indicating that Trump would use the speech to announce a U.S. withdrawal from the Western defense alliance. He had reason to trust his source. Two weeks earlier, the source had provided him with advance information on Vance's speech at the Munich Security Conference. Merz held a conference call the night before the speech and warned Christian Democratic leaders that Vance would shake the transatlantic friendship and launch a rhetorical attack on Europe. That is exactly what happened. Merz and his allies were prepared. Warned once again, Merz expected the worst from Trump's speech to Congress. During conversations and phone calls with confidants, he made it even clearer than he had in the parliamentary group meeting that if Trump announced a NATO withdrawal that night, Putin might react immediately with an attack on the Baltic states. During those hours when he agreed Germany should take on a trillion-euro debt, Merz was acting on the belief that a new war in Europe was possible and NATO was on the brink of collapse. His vote in favor of the record debt came against this dramatic backdrop. As we know, things turned out differently. Trump delivered his congressional speech but did not mention a withdrawal from NATO. To this day, Merz does not believe that his Washington source misinformed him. The NATO withdrawal announcement had been prepared, he believes. Trump changed his mind at the last minute. (POLITICO Magazine asked the White House to respond to the assertion that Trump had considered using his March 4 speech to a joint session of Congress to announce a U.S. withdrawal from NATO. In an emailed statement, White House spokeswoman Anna Kelly said, 'Such an announcement was never included in any draft of any speech.')

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a day ago

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Germany to hire 11,000 more military personnel this year, Bild reports

FRANKFURT (Reuters) -The German government will provide funds for an extra 11,000 military personnel by the end of the year, an increase of around 4%, tabloid Bild reported on Saturday, citing government sources. The money will be provided for 10,000 soldiers and 1,000 civilian employees for the military by end-2025, the newspaper said, adding the move was part of this year's budget planning to be approved by the cabinet next week. The new jobs will cover armed, air, naval and cyber forces, the report said. Germany's Defence Ministry declined to comment. Germany needs up to 60,000 additional troops under new NATO targets for weapons and personnel, Defence Minister Boris Pistorius said earlier this month, as the alliance beefs up its forces to respond to what it sees as an increased threat from Russia.