Four years after Russia’s full-scale invasion of Ukraine, Germany’s economy has transformed, impacted by the effects of war.
A MARTÍNEZ, HOST:
This week, we’re taking stock of four years of all-out war in Ukraine and the damage it’s inflicted. Today, we look at Germany. It’s Europe’s largest economy, an economy that’s still trying to recover from the impact of war on European soil. Here’s NPR’s Rob Schmitz.
ROB SCHMITZ, BYLINE: Russia’s war in Ukraine has hit Germany’s economy much harder than most in Europe. One big reason, says economist Marcel Fratzscher, is where Germany was sourcing its energy at the outset of the war.
MARCEL FRATZSCHER: Germany was receiving about half of all its natural gas imports from Russia, about 20%, 25% of oil imports. And with that coming to a halt, energy cost exploded.
SCHMITZ: Germany cut off all its fossil fuel imports from Russia. And suddenly energy, the fuel for Europe’s biggest economy, wasn’t so cheap anymore.
FRATZSCHER: We had a three- to fourfold increase in energy costs, and also heating costs, by the way. Those energy costs have come down. But we’re still talking about 40%, 50% higher energy costs today than five years ago.
SCHMITZ: That, says Fratzscher, was the key driver of Germany’s high inflation over the past four years. And as Germany’s biggest companies laid off employees – 124,000 Germans lost their jobs last year alone – they often cited higher energy prices. But Fratzscher says it’s more complicated than that.
FRATZSCHER: High energy costs are somewhat of a straw man for much of German industry. It’s used as a scapegoat for the lack of competitiveness, the loss in market share in export markets, the lack of innovation in industry over the past few years.
SCHMITZ: And that, he says, has nothing to do with the war. But the war has had a profound effect on German industry in other ways.
(SOUNDBITE OF ARCHIVED RECORDING)
OLAF SCHOLZ: (Speaking German).
SCHMITZ: Just three days after Russia launched its full-scale invasion of Ukraine, then-Chancellor Olaf Scholz announced a zeitenwende, or turning point, for Germany’s beleaguered military. He promised an injection of more than a hundred billion to upgrade the country’s armed forces.
Three years later, the current chancellor, Friedrich Merz, managed to get the votes in Parliament to enable the government to circumvent the so-called debt brake – a rule that prevented too much government debt. The maneuver freed up half a trillion dollars to be spent on the military and infrastructure. Liana Fix, a senior fellow at the Council on Foreign Relations, says Germany is on an historic military spending spree.
LIANA FIX: Germany is now the fourth-largest spender worldwide after the United States, China and Russia. And its defense budget is projected to reach 162 billion euros in 2029, which is more than the French and the British defense budgets combined right now. So Germany is outspending both its European partners.
SCHMITZ: All this defense spending has turned failed auto parts-makers into drone and weaponry manufacturers. It’s led to armed forces recruitment, and it’s having an impact on how Germans see their military. Outside Germany’s Parliament building, Luisa Rohrig (ph), a librarian in her 30s, says the war in Ukraine has put her on edge.
LUISA ROHRIG: (Speaking German).
SCHMITZ: “It’s as if we are already at war,” says Rohrig. “I see billboards and ads recruiting for the military. And they strike a positive tone, but they show people in uniform holding weapons, which I find threatening. It evokes fear, not security.”
But David Schneider (ph), a 29-year-old law student from southern Germany, says people he knows have changed their minds about the military, given the threat of war on European soil.
DAVID SCHNEIDER: (Speaking German).
SCHMITZ: “I think people have become more realistic about the state of the world,” Schneider says. “Germans realize,” he says, “that we have to grow up and stand on our own two feet when it comes to defending ourselves.”
Rob Schmitz, NPR News, Berlin.
(SOUNDBITE OF HONEY FOR PETZI’S “STRUCTUROTRON”)
Copyright © 2026 NPR. All rights reserved. Visit our website terms of use and permissions pages at www.npr.org for further information.
Accuracy and availability of NPR transcripts may vary. Transcript text may be revised to correct errors or match updates to audio. Audio on npr.org may be edited after its original broadcast or publication. The authoritative record of NPR’s programming is the audio record.
