This BBC podcast is supported by ads outside the UK.
This is Jenny Garth from I Do Part 2.
Everyone's talking about GLP -1s like Ozempic, Semaglutide.
With Future Health, you can find out if they're right for you too.
Just go to tryfh .com, that's tryfh .com, and find out if weight loss meds are right for you in just three minutes.
Future Health is not a health care services provider.
Meds are prescribed at provider's discretion.
Results may vary. Sponsored by Future Health.
Hello, welcome to World Business Report from the BBC World Service.
My name's Ed Butler.
Today we're looking at Germany's new chancellor and the challenges that he faces at a pivotal moment for Europe's largest economy.
Also in the show, we'll be lifting the lid on the finances of Hezbollah, the shadowy Lebanese political and military group.
After the war with Israel, where does its money come from?
And how Filipinos are sending money home and are keeping their economy afloat.
Although I didn't anticipate the homesickness and boredom, all I'm thinking is to earn money for my family.
More of that later in the show.
Now, it's one day after the vote in Germany and turnout in that election within Europe's largest economy was the highest in close to 40 years.
The Christian Democrats won the day with more than 28 % of ballots cast, although they will now need at least one coalition partner to form a government.
The man set to become the next Chancellor, Friedrich Merz, has already expressed concern about relations between Europe and its traditional mainstay and ally, the United States.
The interferences from Washington were just as drastic, dramatic and shameful as those we've had from Moscow.
I never thought I'd ever have to say this on TV.
But after Trump's statements last week, it is absolutely clear that this US government doesn't care about Europe.
I'm wondering, as we get close to the NATO summit at the end of June if NATO will be in its current form or if we need to make Europe capable of its own defence more quickly.
Outspoken words there from the prospective next chancellor of Germany, Friedrich Merz.
Well, the centre -right Christian Democrats have, like many Germans, always seen the alliance with the US and Europe as central to their security and, of course, to trade.
Christophe Rawald is the Bureau Chief, I beg your pardon, of Bloomberg News.
Hi, Christophe. Thanks for joining us.
So Ukraine, migration, the economy, all top of the agenda during this election campaign.
Add to that simply keeping a cool head, you might think, in these turbulent geopolitical times.
Yes, absolutely. I think it's definitely safe to say that it has been a rather sort of complex and comprehensive package really that has been discussed and in focus during the election campaign, which got quite heated occasionally.
But at the end of the day, the big question that was to be answered yesterday is whether or not the Christian Democrats, as you mentioned, can actually form a coalition with just one other party, or if they would need, in fact, potentially like a second part of the former coalition, which would then
potentially complicate decision making and slow down the whole parliament processes.
And that is something, at least that question that has been answered yesterday with the fact that one of the smaller parties on the political sort of fringes has not made it into parliament.
And this allowed the Christian Democrats to, as of next week, enter coalition talks with the social democrats of the still current chancellor, Olaf Scholz.
But those talks on the backdrop of like the factors that you just outlined from like all the various challenges that are there will be anything but easy.
They won't be easy.
I mean, didn't Olaf Scholz already say he was doubtful about negotiating on this?
Or was that just, I mean, he was in a bad mood because he received the worst election results his party had seen in decades?
Yes, in fact, they suffered the worst election results since World War II yesterday And that's when the Social Democrat leadership, only a few hours after the election results came in, sort of stuck their heads together to come up with a new plan, which includes a leadership change.
So Olaf Scholz will be the German chancellor in a caretaker capacity, but he will make way.
And he will also be directly involved in the coalition talks, which are starting next week.
So that conversation will be held by other people within the Social Democrat Party who are probably to some degree also more aligned to some of the positions that are really important for Friedrich Merz to push through a policy change in Germany, including things like social welfare spending, defence
and generally state finance.
Yes. So, I mean, let's go on to those.
Social welfare spending.
I mean, we're all talking about cuts now, aren't we?
Because Germany needs to find money from somewhere.
It's got a cap on how much it can raise in terms of debt and borrowing.
And that's perhaps what it needs or what another government, let's say, would do in Germany's position because they're in recession.
So they're going to be cutting things in order to boost this defense spending.
And he's already talking, isn't he, about a big kind of focus on security and defense.
Yes, there are numerous areas where the new government will need to come up with very significant financing and plans to basically get the money into place for investments and everything from crumbling infrastructure to the defense investments that are needed.
which you already alluded to.
Social welfare is like one of the areas which could probably prove as one of the main sticking points in the coalition talks, because Friedrich Merz has clearly pledged cut back very significantly there.
He a couple of weeks ago mentioned a number of as much as 50 billion euros which could be saved in that area to reallocate some funds into other areas where the money is actually urgently needed, for example, defense.
And you had already some comments from Friedrich Merz on the program a couple of minutes ago that highlighted that the new U .S.
administration, of course, looks at Europe in a very much different way than the U .S.
has been looking at Europe before.
So that is something where I think not just Germany, but Europe as a whole faces some pretty significant changes and potentially a lot of spending and investments that will need to go into defense.
And Europe is craving leadership, I guess, right now, which has felt it wasn't coming from Germany because of the political uncertainty in that country.
So I guess we at least have that.
I'd like to bring in now Antonin Finkelberg.
He's the Director General of the Federation for German Wholesale and Foreign Trade.
Hi, Antony. Assuming we get a new coalition government soon by April, according to Friedrich Metz, what do you want to see from the new government?
I believe it will take a little bit longer than April.
I suspect May will be the start of the new government.
And I think they have a twofold task ahead of them.
First of all, there's the national economic task and to revive a shrinking economy and to cut red tape and reduce taxes.
They also have to face the national task of solving the illegal migration trouble.
And then, of course, there's the international perspective dealing with Putin and Trump at the same time will need a stronger voice and a strong part of leadership on his behalf.
Yeah, I mean, sticking with the economy, though, we're in a state now where the usual pillars of German exports, like the automakers, VW, Porsche and others, and the Mittelstand, the small engineering sector, they're all in kind of productive recession, aren't they?
I mean, with China glutting the market and things like new electric vehicles, it's hard to see where the new export markets are going to come from to revive Germany, which depends on these exports so much.
Well, first of all, I think you need to solve the competitiveness crisis.
Most of the troubles that the German companies have right now are homegrown.
We've put ourselves in a straitjacket of red tape, and that needs to be reduced immediately in Brussels and in Berlin.
But also, we have to face the fact this is the most difficult economic situation since the German reunification.
And back then, there was also this large question of how to become competitive again.
So reforms are in order.
Part of becoming competitive is also cheap energy, isn't it?
isn't it? I mean, when you're manufacturing this much, you need cheap energy.
And of course, ever since the war in Ukraine began, that has been hard to come by for Germany, Germany, which depends on, has depended on Russian oil and gas so much more, perhaps, than many other European economies.
It's not only that, it's also the electricity, which is more expensive than in most other European countries.
That, again, is a question of competitiveness.
We have a lot of ways ahead of us to reduce costs of energy.
And that also means the whole question of nuclear energy, in my opinion, will probably eventually come back on the political agenda to at least check if there's a new way of technology to make it safer and cheaper for German companies to produce.
Right. So small mobile nuclear power plants, perhaps, which, of course, have been in other parts of the world.
I just want to quote one thing that Friedrich Merz has said.
We're under such massive pressure from two sides now.
This is, I guess, talking about Russia and the United States, that the priority is to create unity in Europe, he said.
He's going to need, I suppose, money.
He's going to need political support for that across the European Union.
And also, there is the risk of tariffs, which still hangs over Europe and its relationship with the US.
It's also a matter of leadership.
And that has been sorely lacking from the German government for the past three and a half years.
They have been largely non -existent on a European level.
And I think that's going to change with Friedrich Merz.
But of course, the tariffs issue is of massive importance to the German economy.
The United States and China are our biggest trade partners, so we need to have a strong focus on that issue.
And that only works if Europe is working united in this respect.
And I believe Mrs. von der Weyen is currently putting together a plan to counter the American movements.
In the end, we will have to negotiate with the United States.
There's no way about it.
Anthony Philkenberg, thank you very much.
A quick final word from Christoph Raawold of Bloomberg News.
Christoph, the AFD, I mean, this has been the elephant in the room politically, hasn't it?
They have already been congratulated, we hear, by Elon Musk for what they achieved in the polls.
They've got more than a third of the vote in some areas, like the former East Germany.
There's a lesson there perhaps for all political parties.
I think that definitely is because it also goes to show the critical challenge I think that like what is often described as like the political mainstream parties in Germany face in order to well sort of like fight the perception that the sort of current political system isn't really working and like
that a lot of people aren't really being hurt and that is some that is a narrative that like the far right the AFD has exploited and has benefited from so yeah Yeah, math is also under pressure from that perspective to really basically prove that like Germany can actually sort of get something done
and turn things around.
Christopher Woldt of Bloomberg News, thank you very much indeed.
You're with World Business Report from the BBC World Service.
This is Ashley Akinetti from the Ben and Ashley I Almost Famous podcast.
You probably know somebody who's on Ozempic or semaglutide right now.
These are really popular medications that people are using to lose weight if it seems like all other options aren't working for them.
Go to TryFH .com to find out if weight loss meds are right for you.
TryFH .com Future Health is not a health care services provider.
Meds are prescribed at provider's discretion.
Results may vary. Sponsored by Future Health.
three months ago uh sorry three months after hezbollah agreed to a ceasefire in its war the damage inflicted by israel's armed forces on the iran -backed shiite militant group is becoming clear hezbollah which has long operated as a vast state with an estate within lebanon is apparently no longer able
to fund all its usual costs if the latest reports are to be believe.
Shirin Sharif of the BBC Arabic Service has been investigating this and also looking at where Hezbollah gets his money from amidst the recent political realignments in the region.
There was a hacking group called Spiders.
In 2020, they hacked the system and they leaked most of the documents related to the borrowers and depositors associated with this organisation.
There was one account, for example, called Walay al -Faqih, which is a term used to describe the supreme leader of Iran, Ali Khamenei.
So there were direct connections between this organisation, this company, which is based in Lebanon, right?
It's officially a charitable organisation with links to Hezbollah.
This now showed a direct connection with the Iranian supreme leader.
Despite in their reply to us, they denied any links with Iran or any other country outside Lebanon, but the documents showed otherwise.
And so how much money are we talking about?
We can't verify exactly the amount of money.
So officially, U .S.
State Department stated that Iran funding Hezbollah by $700 million.
dollar. And the leader of Hezbollah, he mentioned clearly in one of his speeches that Iran is funding everything related to Hezbollah, even the weapons and the missiles, but he didn't state any amount of money.
But in the investigation, we also found that Hezbollah is not depending only on Iran for funding.
It's also started to establish a global network from different countries through many illegal activities.
So smuggling operations?
Many of them smuggling, like let's say smuggling the diesel fuel through Syria border.
There was also some investigation done by some governments like in Venezuela and Colombia, that proved links between Hezbollah individuals and mafia groups who are doing drug trades.
So drug dealing potentially out of Latin America, an area, of course, where there is a huge drug trade.
Exactly. There is also loads of links between Hezbollah individuals who are located in Africa in many countries.
Many of them are actually leaders in the field of diamond.
And what some charity organisation called it, Blood Diamond, having links with Hezbollah.
And according to many reports by US Treasury, they are funding Hezbollah.
So this could be Sierra Leone, it could be Liberia, it could be those and Guinea, those countries in West Africa where there are large diamond fields.
Yes, all of them actually.
Yeah. How do you know?
I mean, what's the evidence for the mafia activities, the diamond smuggling, the drug dealing?
What are your sources for this?
Most of them are official investigations by authorities in these countries that name individuals who we can then establish link between them and these individuals related to the funding or finance network of Hezbollah.
So it is a wide scale operation.
I was reading in the Wall Street Journal that the group has in past years maintained an annual budget of around $1 billion just for benefits, salaries and other costs, excluding its military expenses.
So Hezbollah is a very high amount of financial turnover.
Are there signs that it has been struggling in recent months?
That's right. After the Israeli strikes and also the fall of the Syrian president Bashar al -Assad in Syria, who was allied with Iran and, of course, Hezbollah.
But after the fall of Bashar al -Assad, now we can sense some struggle.
For example, Hezbollah announced they will help all the families who have been impacted by the strikes and war.
But then there were some complaints that they couldn't commit to their words because there is not enough money to actually give all these families the amount they promised them.
Is there any clear evidence that this financial infrastructure has been fundamentally undermined?
Let's not forget that Hezbollah is a very strong movement.
If we can say it is the strongest movement, that it's not official.
So we can see struggle indications, but I wouldn't say it will not survive it.
So they are still trying to find other ways to reinstate the links with help of Iran.
It takes time, maybe, but I wouldn't say it will be the start of ending of Hezbollah.
The BBC's Shireen Sharif.
Time now for a quick look at the markets.
Danny Hewson of AJ Bell is with us.
Hi, Danny. Now, Apple has published plans to invest half a trillion dollars in the US over the next four years.
What's this about? Yeah, this is all about getting Donald Trump on side.
You've got to remember that Apple, of course, still puts together a lot of its products in China.
And last time Donald Trump was in office, it did something similar, pledging $350 billion to create thousands of jobs in the United States.
And this is kind of a carbon copy of that plan.
Donald Trump, you won't be surprised, has already put out on Truth Social that the Apple amount of cash has come because they are feeling confident in the direction of travel.
And it wouldn't have happened if he hadn't been in office.
But of course, we've got a really bumpy ride ahead of us this week with tariffs which have been suspended on Mexico and Canada.
Well, the deadline for that is fast approaching us.
So, Mark, it's still looking pretty jittery.
Right. That's interesting, of course.
one deadline. We've seen tariffs go up against China already.
I want to just switch focus.
There is talk, I think, today that Ukraine and the United States could yet be in the final stages of negotiating this minerals deal, which is considered central to ending Russia's three -year -old war in Ukraine.
That's according to the Deputy Prime Minister of Ukraine.
Yeah, I mean, minerals are going to be absolutely crucial in terms of Donald Trump being able to say that he has got a win.
You know, we've seen an awful lot of rhetoric coming out of the White House about Russia's part in the war, about Ukraine, about the President Vladimir Zelensky and his position there.
So if some kind of deal can be done, which would allow the United States to continue to have a military presence in Ukraine, because Donald Trump can say, transactionally, he is benefiting that the United States is benefiting, then that would be a win for Donald Trump and potentially good news for the Ukraine
and for Europe. Danny Hewson, thank you very much indeed.
The European Union has hit Russia with more sanctions today.
It is the 16th round of sanctions imposed by the bloc since Russia launched its full -scale invasion of Ukraine three years ago.
The latest package extends prohibitions on aluminium imports from Russia.
It also doubles the number of sanctioned ships in what's called Russia's shadow fleet.
These are vessels which aim to evade previous sanctions.
I asked Ami Daniel about this.
He's co -founder and CEO of Winwood, a maritime analytics firm, whether he thought the latest measures would have any effect.
First of all, yes, there is a bigger game at play here.
You have the US saying they're going to do peace with Russia and perhaps they pull back on all these sanctions.
And you have the EU and clearly also the UK actually doubling down on Russian sanctions.
So I think it's a further bifurcation of the world where you have multiple different entities' blocks sanctioning other blocks to achieve a goal.
So I don't think you should look at these packages sanctions just in a tactical way.
Yes, you have 75 shadow fleet sanctions, 53 entities, and abandoned provision of temporary storage for Russian crude and oil petroleum products in the EU, but the bigger statement here is UK and EU are doubling down on sanctions, while the US perhaps is pulling back.
So that could have an effect, because I was seeing that actually, the EU consumption, European consumption of Russian oil and gas had actually gone up in the last 12 months, despite the various other sanctions that have already been put in place.
Yeah, because again, remember, the oil cap on Russia is designed to keep the Russian oil flowing in the world while limiting the revenues for the Russian war machine.
So it's not to be imagined that this would be the outcome so far.
But again, the news here is EU and UK doubling down and the US saying, well, Russia is probably a European problem and a UK problem, not our problem.
So make America great again.
Amir Daniel there of Wynwood AI.
The Philippines in East Asia has been growing rapidly of late, nearly 6 % growth last year, driven by strong consumer demand, a large and young population, and of course, robust remittances.
This is the money that overseas workers send back home.
These contribute close to a tenth of the country's total economy.
Our own Sam Fennec has been looking into the role of the remittance payments made in supporting the country.
So this is the kitchen.
So you're preparing three meals a for 77 people.
Yes. Meet Angel Ko.
She's head chef at Cherry Blossom Care Home for the Elderly in Basingstoke, a town in the southeast of England.
Angel arrived in the UK in 2012.
She was 16 years old.
She joined her mum, who moved here in 2007, to work as a senior care assistant at a residential home for the elderly in London.
Do you remember how you felt at that point with your mum leaving?
I was crying because I was in school that time and I could not accept the fact that suddenly my mum's going to go abroad to work.
But I understand in a way that she has to work to provide our needs, to give us a good life.
Angel and her mum are part of a vast Filipino workforce that sends money known as remittances back home.
The latest figures from 2023 reveal that there are 2 .3 million registered overseas Filipino workers.
Gonzalo Varela, the World Bank's lead economist for the Philippines, says that the benefits are also felt in the wider economy.
At the beginning, they alleviate their liquidity constraints they may have so they will get more food.
But as they get more remittances, what we see is that they spend more and more in accumulation of physical capital.
So about 12 to 14 percent of remittances contribute to the growth of the production capacity of the economy, leading to substantial investments in education and nutrition that also helps to contribute to human capital.
But it's not just the money being sent home.
We're also witnessing a trend of Filipinos returning home and investing the money they've earned while working abroad.
In 2020, at the beginning of the coronavirus pandemic, Andrew Gutierrez returned to the Philippines and started a takeaway business just south of Manila in Laguna province with his wife.
As a Filipino overseas worker, I crave Indian foods and Arabic foods.
It all started there until now.
The business is the bread and butter of the family.
For more than 20 years, Andrew worked as a clerical worker in Saudi Arabia.
He says he missed out on a lot being away from his family for such a long period of time.
It's part of the life of overseas Filipino workers.
Although I didn't anticipate the homesickness and boredom, all I'm thinking is to earn money for my family.
How much more were you able to earn?
Well, I can say working abroad doubled or tripled my salary.
Remittances to the Philippines grew by 3 % in 2024 and are projected to increase by roughly the same rate this year.
But significant risk could slow this growth.
For example, potential escalations in conflicts in Ukraine and the Middle East could destabilise regions and impact global economies.
Further volatility in oil prices and exchange rates poses a threat, creating uncertainty and potentially reducing the amount of money migrants can send home.
Deeper than expected economic slowdowns in high -income countries could lead to fewer job opportunities and lower wages for migrants, affecting remittance flows.
So how big a problem could this be for the Philippines economy?
Its population of about 120 million is young, and this will be crucial for future growth, as Gonzalo Varela, the World Bank's lead economist for the country, explains.
What you see is fast investment growth.
So an investment acceleration that is the main driver in economic activity in the Philippines.
And that has been quite outstanding and therefore has sort of changed the pattern that we have seen historically of growth in Philippines.
Particularly in the last 15 years, we see this investment acceleration that has boosted economic growth quite substantially.
The UN's Gonzalo Varela, ending that report by Sam Fennec, part of today's edition of Business Daily here on the BBC.
And tomorrow, Sam will be looking at the Philippines' massive outsourcing industry.
That's it for this edition of World Business Report, though.
I hope you enjoyed it from me and the rest of the team.
Do take care.
