With the formation of a new government, Germany has the opportunity to update its foreign and security policy apparatus. Friedrich Merz, leader of the center-right Christian Democrats (CDU) which with its Bavarian sister party, the CSU, won Sunday’s election, and thus the likely future chancellor, has already announced a rapid revision of the National Security Strategy. As part of a “strategic cultural shift in German foreign and security policy,” the CDU leader has also made the creation of a National Security Council in the chancellery a key priority.
According to the CDU/CSU election manifesto, this council would be tasked with coordinating foreign, security, defense, trade, EU, and development policy; it would also conduct strategic foresight and serve as the key decision-making body in crises. During the campaign, Merz had made it clear that establishing this new body was a personal priority for him. If he indeed invests significant political capital in this idea during the upcoming coalition talks, the establishment of a German National Security Council is more likely than ever.
This makes it all the more important to address a significant blind spot in the debates surrounding the Council: economic security and critical technologies have so far hardly played any role in these plans. This oversight is dangerous—investing in better analysis and decision-making capabilities in these areas will prove crucial in preparing Germany for key security challenges in the coming years.
Central to Security Policy Discussions
A glance at the global situation makes it clear why economic security and critical technology are essential to national and European security. The COVID-19 pandemic already highlighted how fragile supply chains are—optimized for efficiency after the Cold War but oblivious to political risks. All things considered, a pandemic is a relatively manageable crisis in this regard. A war between China and the US over Taiwan would have far more dramatic consequences for German and European supply chains—a situation for which we are wholly unprepared.
Moreover, major powers are using economic dependencies as leverage against Germany and Europe. For a long time, the US was the only major country to apply such pressures (and within relatively limited boundaries), such as in response to Europe's Iran policy. The European Union’s Anti-Coercion Instrument was originally developed in response to US President Donald Trump's first term. In his second term, Trump is likely going to use economic dependencies even more ruthlessly to put Europe under pressure. His recent moves against Canada and Mexico, as well as across-the-board tariffs on steel and aluminum that are already harming European interests, make that clear. Canadian researcher Roland Paris has described Trump’s behavior as that of a “hostile power.” Trump using tariffs as part of a threat of economically crippling Canada unless it submits to his demands (and ideally becomes the 51st US state) is a form of “predatory hegemony” that should shake Europe's fundamental assumptions about its relationship with the US. A scenario where Trump attempts to bring Greenland under US control through economic coercion against EU member Denmark is entirely realistic.
Just as concerning is the fact that President Xi Jinping’s China is using economic dependencies as a weapon. In the case of Russia, Germany narrowly escaped disaster when President Vladimir Putin weaponized its gas dependency. In a conflict directly involving China, the consequences would be far worse, given German dependencies on China in terms of exports, critical raw materials, intermediate products, and key technologies for the energy transition. Additionally, there are vulnerabilities in critical infrastructure, as well as risks of data theft, cyberattacks, and sabotage targeting security-relevant technologies. The 5G debate was just the beginning; the US has already decided to effectively ban connected vehicles with Chinese components from its market due to security concerns. Germany will soon have to take a stance on many of these issues.
When it comes to cutting-edge technologies, a central concern is their “dual-use” potential: civilian technologies that have the potential to be exploited by strategic rivals for military use. The US restrictions on high-performance chips, AI, quantum technology, and, increasingly, biotechnology have been fundamentally motivated by this concern. So far, Germany and Europe have failed to take a sufficiently clear position on these issues.
Countries like the US and Japan have reorganized their government apparatuses in recent years to strengthen economic security more effectively. The EU also adopted a framework for an economic security strategy in 2023 based on three pillars: “Promote,” “Protect,” and “Partner.” This strategy combines investments in technological innovation, protective measures, and cooperation with allies. However, specifying and implementing protective measures remains largely the responsibility of individual member states. For the EU to act effectively, Germany—the bloc’s largest economy—must set itself up to rise to the challenge. Only then can the EU assert itself confidently in the face of Washington and Beijing, develop its own agenda, safeguard against risks, and strengthen partnerships based on shared interests.
Germany’s Inadequate Status Quo
Germany has taken initial steps to improve its position on economic security and critical technologies, particularly within certain key ministries. After the G7 summit in Japan in May of 2023, the Ministry for Economic Affairs and Climate Action established a dedicated unit on economic security to complement its ongoing work on trade, industry, and innovation policy. This department also oversees Germany's implementation of the larger EU economic security strategy.
The Foreign Office has consolidated responsibilities for economic security in its “Division 4”; its policy planning staff is also increasingly focused on the foreign policy implications of economic security and critical technologies. The Finance Ministry has created a department for geo-economics and security policy. The Ministry of Education and Research has a division on research security and investment screening, while its “Promote” activities are managed by a department for technological sovereignty and innovation. Meanwhile, the Defense Ministry and the Interior Ministry have also intensified their work on investment controls and economic protection. However, there has been a conspicuous absence of initiatives within the chancellery to establish a coordinating body or new capacities in this field. The Bundestag, despite being in the position to draw on its research service, an Office of Technology Assessment, as well as on scattered expertise in the offices of parliamentary groups and individual MPs, also struggles to keep pace with these rapidly evolving challenges.
The director of the Mercator Institute for China Studies (MERICS), Mikko Huotari, has pointed out the lack of an “integrated approach for analyzing and addressing critical dependencies.” He rightly notes: “Relevant analytical frameworks and up-to-date data are often not publicly available; nor are there shared criteria for assessing and managing these dependencies.”
Lack of Political Consensus—Especially on China
One major issue was the lack of political consensus within the outgoing German government on how to balance economic security risks, particularly concerning China. Foreign Minister Annalena Baerbock and Economic Minister Robert Habeck, both members of the Greens, advocated the most ambitious agenda, also specifically vis-à-vis Beijing. However, Chancellor Olaf Scholz of the center-left Social Democrats (SPD), alongside Christian Lindner and Volker Wissing, ministers from the pro-business Free Democrats (FDP), the party that pulled the plug on the three-party coalition, had been reluctant to accept the necessary political and economic costs of enhancing economic security.
As a result, key government decisions were inadequate. For example, Germany’s 5G policy, which was adopted last summer after lengthy and painful debate, still falls short in sufficiently protecting critical infrastructure from high-risk Chinese suppliers like Huawei. Other decisions also revealed questionable priorities. In autumn 2022, Chancellor Scholz overrode security concerns from all relevant ministries to approve a Chinese state-owned company’s investment in a terminal at Hamburg’s port. Shortly after, the cabinet blocked the sale of the Elmos semiconductor factory to a Chinese investor—a decision that looked like a consolation prize for Economic Minister Habeck after losing the Hamburg battle. From an economic security standpoint, there are good reasons to argue that the cabinet should have implemented the exact opposite.
Germany urgently needs a clearer political framework for economic security and critical technologies. The Biden administration’s efforts were guided by a reasonably straightforward goal in this area: maintaining “as large of a lead as possible” over strategic rivals like China. Germany, by contrast, is still lacking such a fundamental statement on its strategic direction.
The next German government must improve interministerial coordination in economic security decision-making. Germany’s government follows the so-called “Ressortprinzip” (department principle), meaning that individual ministers operate with a high degree of autonomy in their respective areas. Consequently, the role of the German chancellery in a coalition government differs from that of the White House. Still, even within the logic of the German system, the chancellery should assume stronger leadership and a greater coordination role in cross-departmental decision-making, where necessary.
Currently, the chancellery is poorly positioned to adopt such a role in economic security and matters of technology. It lacks both the ambition and the capacity to steer critical decision-making processes from an overarching perspective. There is no dedicated unit within the chancellery that takes a holistic approach to economic security. The work of Department 2 (Foreign and Security Policy) and Department 4 (Economic Policy) is not sufficiently integrated.
Only a chancellery that embraces a cohesive approach itself will be capable of effectively managing complex economic security decisions. So far, regular interministerial exchanges only yield quick results when decisions are already uncontested. Where there are different opinions, discussions often turn into drawn-out coordination processes with little lasting learning effect. In the field of export controls, this results in enormous costs for businesses. While a swift export ban may be frustrating for a company, prolonged, non-transparent decision-making within a bureaucratic “black hole” is still far more damaging. It creates ongoing uncertainty, leading to higher costs and administrative burdens while also undermining a company's reputation as a reliable business partner.
Another key issue continues to be the lack of a sound knowledge base, required for informed decision-making in economic security and critical technologies. Government ministries suffer from a shortage of personnel with relevant private-sector and tech backgrounds. Departments are often overwhelmed by their existing workload and coordination responsibilities, limiting their ability to conduct comprehensive analyses of supply chains, technological developments and trade and investment flows—all essential elements undergirding a well-informed economic security policy.
Close cooperation with the private sector is also crucial, as key information on supply chains, global markets, and technology ecosystems are often not readily available outside the affected companies. Efforts by the Ministry for Economic Affairs and Climate Action to encourage greater corporate participation have so far borne limited success. For example, a 2023 questionnaire sent to 18 major German companies, containing 46 questions about risks associated with doing business in China, was met with irritation. According to a report by the German business daily Handelsblatt, companies found the format cumbersome and deliberately withheld internal information.
Similarly, collaboration with intelligence services, academia, and think tanks must be improved. Their expertise in economic security and technology should both be further strengthened and used more systematically to enhance Germany's decision-making capabilities.
Better Integration of Security, Economy, and Technology
Other countries demonstrate how institutional reforms can significantly enhance economic security capabilities. Japan, for example, has established an economic security unit within its National Security Secretariat, staffed with officials from various ministries. This structure consolidates expertise, prevents fragmentation among different government agencies, and strengthens coordinated action. In the US, where a National Security Council has long been established within the White House, former President Joe Biden created the position of Director for Technology and National Security to better align policies across ministries with shared strategic objectives.
Germany’s future national security architecture should not aim for maximum centralization but should rather focus on effective political coordination. The best way to achieve this would be to go beyond the generic suggestion of a cross-ministerial committee for economic security and to explicitly define economic and technology security as falling within the remit of a future National Security Council. This would ensure that these topics receive regular high-level attention and help drive joint strategic decisions, while avoiding unhelpful micromanagement. To guarantee genuine alignment and inclusion of all relevant perspectives, the Minister of Education and Research and the Minister for Digital and Transport should have a seat at the NSC table when it comes to questions of technology and research security. While acute crises and urgent decisions will inevitably occupy a substantial share of time in any meeting of the NSC, its members should insist on sustained engagement with longer-term strategic challenges and systematic follow-up on the implementation of key measures.
To hit the ground running and avoid a lengthy phase of institutional setup, it would make sense for the council to leverage the relevant units across the various ministries as much as possible, rather than formally transferring roles and individuals to the chancellery. This could be achieved by the NSC clearly tasking specific ministries to lead the analysis and development of recommendations on any given issue. To ensure consistency despite this decentralized approach, these tasks should be based on an agreed-upon conceptual framework and on a set of shared assumptions. They should also refer to properly-defined threat scenarios, moving beyond abstract assessments of dependencies to evaluate actual vulnerabilities and develop targeted countermeasures.
Any creation of dedicated bureaucratic capacity supporting the NSC should prioritize roles that serve to orchestrate the delivery of inputs from the various ministries and to organize them in a way that enables effective discussion and decision-making in the Council. While coordination and process management will be an important part of the task, the relatively small team required for this purpose should still include advisors with a range of relevant security policy expertise, including on economic and technology issues. Additionally, they should be sufficiently senior to be able to challenge their counterparts in the ministries if inputs are found wanting. Placed within the chancellery, this team could also play an important role in setting the agenda for NSC meetings and ensuring that issues that may currently not be at the top of the minds of the ministers do not get dropped. Finally, this team would be well-placed to facilitate interactions between the different ministries and external experts from academia, think tanks, and businesses.
Expanding Analytical Capabilities Across Government
To improve decision-making, the government must strengthen its analytical capabilities regarding “techno-industrial intelligence.” Given the very limited resources available for new personnel, it is essential to better utilize existing expertise and to reduce the volume of redundant work through improved coordination. Intelligence agencies could play a greater role, particularly in data collection and analysis. The Federal Statistical Office could also be more involved in order to optimize the use of quantitative data.
Additionally, short-term fellowships could attract external experts to lend their knowledge directly to government institutions. The government should also drive legislative action to establish a legal framework that allows for secure sharing of sensitive business data with government agencies, enabling more precise risk assessments.
Beyond domestic efforts, Germany should pursue closer collaboration within the EU and with other like-minded partners. Within the EU, the German government should prioritize the swift and thorough implementation of existing initiatives. Internal decision-making deadlocks and resulting abstentions (often referred to as the “German Vote”) must come to an end. The expansion of analytical and monitoring capabilities at the EU level should not be a reason for hesitation on national initiatives, but rather a driving force toward optimizing the collaboration between the national and EU level; one way to do so would be by improving conditions for sharing sensitive information with other member states and the European Commission.
Additionally, Germany should intensify its engagement with partners like the United Kingdom, Japan, and India, whose own experiences with de-risking could provide valuable lessons. Strengthening these partnerships will also be essential for diversifying and deepening Europe’s security relationships beyond the US, especially given the increasingly glaring risks that the second Trump presidency poses to Germany’s and Europe’s strategic interests. At the same time, it is in Germany’s interest to keep the door open for dialogue and interest-based cooperation with the US.
Economic Security as a Key Chapter
Economic security and critical technologies should be a central pillar of Germany’s future national security strategy. The governing coalition should not settle for the lowest common denominator but rather agree on ambitious shared goals and update them regularly, including through an annual discussion on economic security and critical technology issues at the cabinet retreat. A well-defined strategic foundation on these issues, broadly shared within the coalition, will prove essential for fostering Germany’s resilience and competitiveness in the turbulent period ahead.
N.B. This article is part of a GPPi project on “Critical and Emerging Technologies: Sharpening the Strategic Agenda in Germany and Europe” that is supported by the German Foreign Office.
Thorsten Benner is director of the Global Public Policy Institute (GPPi) in Berlin.
Jakob Hensing is fellow at the GPPi.
Florian Klumpp is research associate at the GPPi.
