and economic sanctions are hitting russia hard. they're also affecting companies that exported to russia. we find out how one small german firm is adapt. welcome to the show i'm seeing busy in berlin. could have you with us. germany has decided in principle to buy f 35 fighter jets from the us. that's according to new reports, citing government sources. berlin plans to drastically beef up military spending. as a result of the russian invasion of ukraine. it's not alone. denmark and sweden say they're also raising their military spending over the coming years. now, traditionally, larger nations have spent more on defense in 2020 the u. s. with a whopping $77080000000000.00 budgeted for defense. china only $200.00. $52000000000.00 on its military, but that still georgia, germany with $53000000000.00 euros are dollars. i should say. that year russia had a military budget of $62000000000.00. and that's 10 times what ukraine spent. and

while it seems much smaller than china or the u. s, it represents a greater share of the russian economy. switch companies are the biggest players in defense. well, u. s. company lockheed martin makes the f $35.00 is one of that's where the largest net is industry with sales of 66000000000 dollars last year. it's followed by europe's air bus and 2 more u. s. companies, raytheon technologies, and boeing. now the stock home international piece research institute tracks military expenditures around the world. i asked their senior researcher lucy bl, road suits role to put recent events into perspective. we are seeing at the moment and strong in that sense all across europe in particular for increasing the tree expenditure, but also in canada, which is also in the nato member. and of course, countries are reacting to the outbreak of the war and ukraine and countries have, are actually not making decision soon for their entry expenditure and reaching the

2 percent target said by nato. something they have been asked to do. this is 2014 but are now ready and if you move towards one of those countries, of course germany announcing that it wants to stay with the 2 percent of g d p level for defense expenditures. so are we saying that we're seeing more countries that are spending that haven't traditionally spent as much in the past? is that fair to say, or is it more the usual suspects? china, the us, russia, what we're seeing is that the next generation of the trend in pets here in europe. so you can countries have been already increasing their meter expenditure for the past few years. but, you know, since 2014 in russia's annexation of crimea. but district is actually accelerating, so there were increases that had been announced, but now there are an increase on top of increases, so to speak. so companies that say france like sweden or put on, we're already saying that we're going to increase the rich expenditure. but honestly, they're gonna increase even more. so we're going to see europe as one of the read

the key regions driving that you're spending for the coming years. not just the usual suspects, as mentioned. can we say what kinds of spending we're seeing is this for modernizing programs for modernization? is it for new weapon systems? can you, can you break it down a little bit more surely to say, cuz really we are really interested in the state of announcements. so countries promising they're going to increase spending to 2 percent or more. a t one is even saying they're going to go to 3 percent. germany says more than 2 percent. so, but we, at this stage we don't know yet or just been a few announcements. i think were mentioning the 35 for germany. that is really too early to tell. i think one key question when it comes to europe or nato as a whole, is how to coordinate all those increases. they're going to be billions of euros or dollars are going to the realization of, of our forces the how to make sure this is done in the coordinated fashion that we

don't duplicate when we don't waste money in the process. i think there will be a really strong role for nato n d u, and making sure that this is done in the coordinated fashion. and that was lucy ro, sutro of supreme speaking with me earlier. russian authorities have threatened foreign companies that are withdrawing from the country with arrests and asset seizures. that's according to a new report in wall street journal. coca cola mcdonalds and apple have all closed stores in russia. proctor and gamble, ibm, and others have halted exports of the country. over the weekend, russia plus president vladimir putin said he would favor putting firms under one called external management. the government has largely threatened to also see their assets, including intellectual property. right, enjoy. now by theresa found the center for russia, europe, asian studies, theresa, good to see if true, these reports and this effort, i think we're seeing in the duma to nationalize in these aspect assets that would

amount to expropriation. i would imagine this, this suggests really a real rupture with western economies and not just sort of a pause during sanctions. yes, that would really represent a very strong di, linking with the west and the one country that we b, situated to gain the most from our. this is china. we've seen ambassador a chinese master state that china should position itself to buy up these western companies that might be nationalized by, by raso. but in addition, this is also a taste it promised to russia that they will support them. so in many respects, china is trying to walk a very careful line while the west is trying to sanction russia in order to change their calculus in regard to ukraine. china is kind of back to our kind of telling them that we're there to support you and this is all coming to a head today. we'll see their talks going to take place in rome. but i think that

china is trying to be ambiguous, trying to keep rossa on site and try to keep the western side because they need the western markets, both in europe and in the u. s. i want to come back to china just a moment, but want to ask 1st the businesses, these major businesses, mcdonalds, coca cola, either do they have any recourse where their assets to be sees? well that's, there are 2 aspects going on here. some are just voluntarily the company's leaving, they're not part of the sanctions package. they realize that the optics are really bad. and of course, this would hurt russia over the longer term. i think the big canary in the coal mine, at least for me, was when v p announced without even being asked by the government that they were playing out of russia. this was at the very, very beginning of the day of the russian invasion of ukraine. they left $25000000000.00 on the table. and so i think that sent a very dangerous message to the rest of the international community that russia people were looking at it. businesses were looking at it over the longer term as

a lost cause. shells quickly followed. so now you see other companies like, as you noted, coca cola, disney, all these companies are kind of pulling out a bit from ross as a way of voluntarily to kind of send a message to their other customers in the rest of the world. that they don't support what they're doing in ukraine. so this really we're seeing russian economy being crippled very rapidly. i mean, we haven't seen these types of sanctions all these, you know, kind of joint sanctions, even partially swift. so i think that this is also kind of a stress test for other countries that might think of invading other countries. you talked about the market opportunities there for china, potentially as the western businesses we've. but what about customer preference in russia? surely there are many who don't want to give up mcdonalds or coca cola. yes, i've seen many interviews of people who are in shock. you know that they might not have any more access to these types of industries or companies or products. but i

think that even though that much of the media is controlled, say, controlled in russia, people are going to start noticing that kia is gone. each of them is gone. all of these companies that they were doing business with are gone. so even though the media in russia is telling me everything's fine, the public is getting concerned because also these companies provide a lot of jobs. and so people are already being asked to take hudson pay. and some of these companies are continuing to pay their employees, even though they've shut down their premises in order to keep good relations with their, their employees. so it's, it's a very mixed bag. some are leaving. some are trying to maintain good relations with their russian employees, and others companies are being threatened to be nationalized. so i think the moscow politics or russian politics are really going to be stress test it not only with what's happening in ukraine, but about how the public responding to all of these pressures that they're under.

right. theresa found the center for russia, europe, asia, studies. thank you very much. thank you. all right, let's look at some of the other business headlines now. has lucio, you must says, both the electric car maker and his rocket company space ex are facing significant inflation pressure that as rushes war and ukraine, of course commodity prices to the highest levels of 5 years. tesla has reacted by raising prices for several car models by $1000.00. bermuda says it is the spinning certification of russian planes licensed in the british overseas territory . that's due to sanctions on moscow. the prohibit necessary maintenance work on the plains with measures likely to impact hundreds of russian commercial aircraft. more than $700.00, which of which are licensed in bermuda. global sanctions are biting down on the russian economy. economy or they're also hitting some companies across europe, including here in germany. here's

a look at one firm. we're revenues stand up all by a 3rd. ah, the workers here still have their hands full with orders from the us and middle east. but the loss of their contracts from russia is a painful blow for the matter burg based firm am i am once at least an indian alongside the economic problems. i of course worry not just as a business manager, but also as a father about what the future will look like. it works for me in photos own versus the visitors who controls the relationships with his russian customers were longstanding and friendly. but that's not much used to him. now. his firm is no longer allowed to deliver its products to russia, as they are used in the petrochemical industry. i wouldn't when they're going on with refers jesus or duke the van soon. essentially, this product is affected by the sanctions because as needed for oil refinery in the

so i can't ex, caught them to rush any more. that will cost me about 30 percent of my revenue was that was one of the other isaac watson minus what was that? and what was i was more than the e u has imposed a ban on this kind of technology in an effort to hamper rushes, military capacity. what this means that the employees here is not yet clear. it might be necessary to cut working hours as recover doesn't, will agree, as well as employees were not that pleased about it because a lot of our products are delivered to russia. it's our jobs were talking about. and of course, we want to keep them going about this if the difficult time more difficult than corona definitely mathias e lo may have to close his russian office. but it's not the only problem. raw materials are getting harder to come by. gasoline vice bo winslow his yesterday. i was at our plant. and for me, prices for carbon steel versus 30 percent overnight for him to meet for guess wants

a word or glass equal to including the firm has $27.00 employees including 3 from ukraine. but only the gemma ones are prepared to appear on camera and speak about the war and ukraine. have you not used? does he? we hope that the situation comes down and pieces secured. that's the most important thing. the boss doesn't think the sanctions will hit russia where it hurts. he expects his chinese competitors to fill the supply gaps. thanks for watching. ah, ah, ah. with

a taking a look at what device and what to connect. in the fight for peace and freedom. the war in ukraine changed everything. life and making art. we ask who effective can always be in these times up our to 21? 30 minutes on d w. i may be getting on in the, in the trying to me or some be a railway. some read a mention, but i rain on the test

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with . this is the w news live from berlin, more sci fi talks, as russia intensifies its assaults against you crate. moscow denies targeting civilians. but once it reports walking $2500.00 death because of russian attacks, also on the program, that he does have germany and to if you hold the crisis talks on ukraine and renewed coals for a cease fire. german chancellor, olaf shoulds warns that negotiate us must make a breakthrough peace talk soon. and the black sea quarter of

a data $45.00 states defense is.