Merz Defends First Year as Russia, IS Threats Multiply

The economic verdict on Merz's first year now reads as a public reckoning. The ifo Institute's regular survey of business sentiment has fallen to its lowest level since the height of the COVID-19 pandemic in May 2020, with bankruptcies at their highest level since the post-2008 crisis. The Federation of German Industries, in a statement that timed itself to the anniversary, said "hardly any of the urgently needed structural reforms that were announced have been implemented" and warned that Germany as a centre of industry is "under existential threat," adding that what investment German companies are making is "mainly abroad." The Association of German Chambers of Industry and Commerce, speaking for the Mittelstand, called Germany "a country with a complex and costly bureaucracy." Merz, at this year's CDU Economic Day — the same forum that had celebrated him a year earlier — told a frosty audience: "I know the mood in the country is dire, it is, in fact, exceedingly dire," and went on to blame coalition arithmetic with the SPD: "You don't change a country in a week or a month."

The Iran war is the macro variable nobody can offset. Oil prices remain high, jet fuel is scarce, and the Strait of Hormuz blockade is producing supply bottlenecks. Economy Minister Katherina Reiche warned that rising kerosene prices — driven by the Iran war and disrupted oil transport through both the Strait of Hormuz and the Druzhba pipeline — will push flight prices up, while rejecting public "alarmism" about a near-term jet-fuel collapse.

Security threats from the east and within came in the same news cycle. In a response to a parliamentary inquiry by the Greens, first reported by the Frankfurter Allgemeine Zeitung, the federal government told the Bundestag that Russian intelligence services are increasingly outsourcing assassination and sabotage operations to organised-crime networks because the arrangement gives the Kremlin "plausible deniability." MP Marcel Emmerich (Greens) was the named recipient of the response. Separately, Hamburg police announced the arrest on Thursday of a 17-year-old Syrian accused of preparing an Islamic State–inspired bomb attack; prosecutors said on Monday that he had already obtained fertilizer for the device, had scouted a shopping centre and a police station, and had considered Molotov cocktails as an alternative.

The transatlantic question stayed open without producing fresh panic. Defence Minister Boris Pistorius described Donald Trump's 5,000-troop withdrawal from Germany as "foreseeable," and Spanish Defence Minister Margarita Robles, in remarks that travelled in Berlin, argued that Europe "must strengthen" its own posture rather than recalibrate around US signals. The day's tone in Europe was less alarm than working assumption.

- A new Cybersicherheitsmonitor report, produced by Germany's BSI and police crime-prevention bodies, found that 11 percent of German internet users — one in nine — fell victim to cybercrime in 2025, up from 7 percent in 2024; the most common offence was online shopping fraud at 22 percent of cases.