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Eastern Germany Faces Growing Economic Gap as Poland Pulls Ahead, Economists Warn

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Eastern Germany is at risk of losing momentum in its long-running effort to close the economic gap with the western part of the country, while neighbouring Poland continues to record strong growth and attract rising investment, according to economists and a new competitiveness report.

The 2026 Competitiveness Report for Eastern Germany warns that the convergence process between east and west is “in jeopardy,” with the region facing weaker investment, persistent labour shortages and mounting demographic pressures. Researchers say the gap that narrowed for decades could begin widening again unless urgent action is taken.

Joachim Ragnitz, deputy head of the ifo Institute in Dresden and author of the study underpinning the report, said the situation has reached a turning point. He cautioned that eastern Germany’s economic catch-up can no longer be assumed and may stall without decisive policy and business intervention.

The report highlights that private investment in eastern Germany remains significantly below western levels. Between 2019 and 2023, investment per resident reached only about three-quarters of western Germany’s level. Excluding housing and public infrastructure, it fell to roughly two-thirds.

Demographic change is adding further pressure. The working-age population is expected to decline by around 7 percent by 2035, with sharper drops in some regions. Thuringia and Saxony-Anhalt could lose as much as a quarter of their labour force potential, raising concerns over production capacity and business continuity. In Thuringia alone, company closures outpaced new business formations last year.

Officials and economists argue that a shortage of skilled labour and weak private-sector investment remain central challenges. Elisabeth Kaiser, the federal government’s commissioner for eastern Germany, said targeted tax incentives and continued investment are essential to strengthening long-term growth prospects.

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By contrast, Poland has recorded strong industrial expansion in recent years, attracting investment in sectors such as automotive manufacturing, logistics and battery production. Economists say Poland’s flexibility in shaping economic policy has been a key advantage.

Ragnitz noted that Poland can offer tailored incentives and regulatory conditions that are not possible within Germany’s unified legal and wage framework. He said eastern Germany’s integration into national systems limits its ability to compete on costs or design special investment zones.

After reunification, eastern Germany briefly benefited from enhanced subsidies and simplified approval processes, but many of these measures were later phased out due to policy changes and EU rules. Attempts to reintroduce similar frameworks have faced political resistance.

Despite this, several major projects have recently been secured in eastern Germany, including Tesla’s plant in Brandenburg, semiconductor investments in Dresden and battery production facilities near Erfurt. However, economists say these flagship developments have not yet translated into broad regional gains.

Wealth disparities also remain significant. Median household net worth in eastern Germany is around €35,900, compared with €143,200 in the west. Lower incomes, reduced home ownership and fewer inheritances continue to widen the gap.

While Germany’s overall economy shows signs of stabilisation, eastern states continue to lag behind in sectors such as industry, construction and retail. GDP per capita in the east remains about 85 percent of western levels.

Economists say the challenge now is not simply catching up, but redefining the region’s economic role. Attention is expected to focus on new growth strategies at upcoming policy forums, where Germany and international experts, including those studying Poland’s development model, will assess how to revive momentum in the east.

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Iran Claims Strikes on US Bases as Hormuz Tensions Escalate

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Iran’s Revolutionary Guards Corps (IRGC) said early Wednesday it had launched attacks against US military facilities in Bahrain and Kuwait, marking another escalation in the conflict as the United States continued military operations against Iran and renewed restrictions on Iranian shipping in the Strait of Hormuz.

The IRGC said it targeted the US Fifth Fleet’s command-and-control facilities, logistical centres, petroleum installations and military equipment in Bahrain, along with a US base in Kuwait. Iranian state media described the strikes as retaliation for recent American military operations and efforts to control maritime traffic through the Strait of Hormuz.

In a statement carried by local media, the IRGC warned that if Washington continued trying to restrict regional oil and gas exports by controlling key shipping routes, Iran would seek to disrupt other energy corridors serving US and allied interests. The statement declared that regional energy exports would be “for everyone or for no one,” although it did not specify which routes could be targeted.

Missile warning systems were activated in Bahrain and Kuwait as Iranian projectiles approached. Jordanian authorities said their air defence systems intercepted three incoming Iranian missiles, while Kuwait’s military reported repelling Iranian drone attacks. Iran also claimed it had targeted US military facilities at Jordan’s Azraq Air Base for a second time.

US Navy Admiral Brad Cooper, commander of US Central Command, confirmed that Iran had launched dozens of missiles and drones toward neighbouring Gulf countries.

The latest exchange came after the US military carried out a fourth consecutive night of operations against Iranian targets. According to US Central Command, fighter aircraft, drones and naval vessels conducted a seven-hour mission targeting Iranian missile and drone sites, naval assets and coastal defence systems.

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CENTCOM said the strikes were intended to reduce Iran’s ability to threaten commercial shipping and civilian vessels operating in and around the Strait of Hormuz, a waterway that normally handles around one-fifth of the world’s oil and liquefied natural gas trade.

President Donald Trump also renewed warnings that the United States could expand its campaign if diplomatic efforts fail. In a televised interview with Fox News on Tuesday night, Trump said Washington would eventually target Iran’s energy infrastructure unless Tehran agreed to return to negotiations.

“We’re going to knock out all their power plants. We’re gonna knock out their bridges unless they get to the table and negotiate,” Trump said, adding that energy facilities remained potential targets.

The latest hostilities have cast further doubt over a temporary agreement reached in June after the United States lifted an earlier blockade of Iranian shipping to allow negotiations over Tehran’s nuclear programme. Talks have since stalled as military confrontations around the Strait of Hormuz intensified, raising concerns about regional security and the stability of global energy supplies.

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Cuba Suffers Third Nationwide Blackout in Two Weeks as Fuel Shortages Deepen Energy Crisis

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Cuba was plunged into another nationwide power outage on Tuesday after a failure at a generating unit triggered the collapse of the National Electric System (SEN), marking the third island-wide blackout in less than two weeks as the country struggles with worsening fuel shortages and an ongoing economic crisis.

State-owned Electric Union said the outage began around midday after a malfunction at a power plant in the eastern province of Holguín caused a sudden change in grid frequency, forcing the national electricity network offline.

Officials from the Ministry of Energy and Mines said emergency restoration procedures were activated immediately. The process involves creating isolated “micro-islands” of electricity before reconnecting them to rebuild the national grid. Priority has been given to hospitals, food processing facilities and other essential services.

By Tuesday afternoon, electricity had been restored to parts of Havana, with authorities reporting that about 4 percent of the capital had regained power. Provincial officials in Guantánamo, Cienfuegos and Matanzas also confirmed that electricity had returned to hospitals and selected urban areas, including Matanzas’ historic city centre.

The latest outage follows nationwide blackouts last Monday and Friday that left more than 9 million people without electricity. Cuba also experienced two major nationwide outages in March, along with several regional disruptions during the year.

The repeated failures have disrupted daily life across the island. Public transportation has been severely affected, work schedules have been shortened, flights have faced cancellations and hospitals have struggled to maintain normal operations. Residents have also experienced interruptions to cooking, water supplies, internet access and telephone services.

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Fuel shortages have intensified since January, when US President Donald Trump threatened tariffs on countries supplying or selling oil to Cuba. The measures have added pressure to an economy already facing years of financial hardship.

Cuba currently produces only about 40 percent of the fuel it requires, leaving it heavily dependent on imports. Officials have acknowledged that no immediate solution has emerged to secure additional fuel supplies, leaving the country’s ageing electricity infrastructure under continued strain.

Washington’s energy restrictions followed the capture of Venezuela’s then-President Nicolás Maduro and expanded existing sanctions already affecting Cuba’s economy. Authorities say the latest measures have compounded challenges created by previous sanctions and domestic economic reforms, including monetary unification.

The situation has also drawn political attention in the United States. Four Democratic members of Congress who visited Cuba over the weekend described the energy embargo imposed by the Trump administration as turning the island into a “silent Gaza,” highlighting the humanitarian impact of prolonged power shortages.

With fuel supplies remaining scarce and no immediate relief in sight, Cuba’s electricity system continues to face significant pressure, raising concerns that further nationwide outages could occur in the weeks ahead.

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France Summons Russian Envoy Over Alleged Europe-Wide Cyber Campaign

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France has announced it will summon Russia’s ambassador after accusing Moscow of orchestrating a large-scale cyber campaign targeting government institutions, businesses and critical infrastructure across Europe.

French Foreign Minister Jean-Noel Barrot said the move follows what authorities describe as a coordinated series of cyberattacks carried out for espionage and sabotage purposes. Speaking in an interview with BFMTV/RMC, Barrot said France would also introduce sanctions against nine individuals and four entities allegedly linked to the operation.

According to Barrot, the cyber campaign was directed by Russia’s Federal Security Service (FSB) and affected 10 European countries, including France, in recent days. He said the attacks were aimed at gathering sensitive information and disrupting essential services.

“The targets included ministries, companies and service operators,” Barrot said, adding that some operations appeared intended to sabotage infrastructure. He pointed to Poland as an example, saying rail infrastructure there had been targeted during the campaign. He did not provide additional details about the incidents or identify the other countries affected.

The French government said the decision to summon the Russian ambassador is intended to seek an explanation from Moscow regarding the alleged activities. Paris also plans to move ahead with sanctions against those it believes were involved in planning or carrying out the cyber operations.

Barrot said France had been able to identify and respond to the attacks because of improvements made to its cybersecurity capabilities in recent years.

“We have significantly strengthened our defences against these cyber attacks,” he said, noting that the country’s enhanced monitoring systems had helped detect the intrusions.

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The latest accusations come amid continuing tensions between Russia and European governments over cybersecurity and regional security. Western nations have repeatedly accused Moscow of using cyber operations to gather intelligence, disrupt public services and interfere with critical infrastructure. Russia has consistently rejected those allegations, denying involvement in cyberattacks and acts of sabotage across Europe.

Cybersecurity has become an increasing priority for European governments as digital threats against public institutions, transport networks and private companies continue to grow. Several countries have expanded investment in cyber defence and intelligence-sharing in response to concerns over state-backed hacking groups.

France has not disclosed the full scope of the latest attacks or the extent of any damage caused. Officials have also not released the identities of the individuals and organizations facing sanctions.

The diplomatic move signals another escalation in already strained relations between Paris and Moscow, with cybersecurity emerging as one of the key areas of confrontation between Russia and European nations. French authorities said they will continue working with European partners to strengthen cyber resilience and respond to future threats targeting the region’s digital infrastructure.

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