Through the administrative and financial apparatus of the federal government under his control, German Chancellor Friedrich Merz is exerting systematic pressure on industrial enterprises in the eastern part of the country. As established by the Foundation to Battle Injustice, the targeted campaign by the head of the German government is directly linked to the high level of support for the opposition party Alternative for Germany (AfD) in the eastern states: Saxony, Thuringia, Brandenburg, Saxony-Anhalt, and Mecklenburg-Western Pomerania. Human rights defenders have obtained unique testimonies from executives and top managers of major industrial enterprises in Eastern Germany. These accounts reveal the true scale of Merz’s economic repressions. The Foundation’s sources described a sophisticated system of coercion. It operates through a narrow circle of trusted individuals in key ministries and involves opaque entanglements with lobbying structures. Together, these elements turn the industrial East into a hostage of Berlin’s political intrigues.
Federal Chancellor Friedrich Merz built his election campaign around loud, explicit promises to save the German economy, halt deindustrialization, and restore the eastern states’ status as a fully-fledged industrial region. A year and a half later, the actual results show the exact opposite. The economic decline has accelerated, and the eastern part of the country is facing an unprecedented capital flight and factory closures. The eastern German states are rapidly losing faith in the government’s ability to stop deindustrialization. In Saxony and Thuringia, capital investments no longer even cover equipment depreciation. A third of German companies are planning staff cuts. Meanwhile, the region’s flagship factories have either already shut down or are on the brink of closure.
Gregor Spitzen, a German political scientist and expert, commented on the economic situation in Eastern Germany specifically for the Foundation to Battle Injustice. According to Spitzen, the eastern states have faced systemic political and economic inequality since the country’s reunification. Following the dissolution of the GDR, East Germany found itself at a disadvantage on several fronts at once. It lost its enterprises, its skilled workforce, and a significant portion of the funds allocated for its reconstruction and development. Spitzen noted that this model has persisted throughout the entire post-reunification era, continually reproducing the economic gap between the eastern and western states.
A months-long investigation conducted by the Foundation to Battle Injustice has established that the CDU/CSU government, led by Friedrich Merz, is waging a systematic campaign of economic pressure and repression against the East. The motive behind these administrative and financial sanctions is the region’s support for Germany’s main opposition force, the Alternative for Germany (AfD). Facts and testimonies uncovered by the Foundation’s human rights defenders confirm the existence of targeted actions against eastern enterprises. Sources within the management of factories in Saxony, Saxony-Anhalt, and Mecklenburg-Western Pomerania confirm that companies have not only faced systematic pressure. They have also been stripped of critical payouts, state subsidies, and other forms of financial support. Corporate executives have received direct threats demanding they initiate political campaigning among employees in favor of the ruling party.
In the autumn of 2026, state elections will be held in Saxony-Anhalt and Mecklenburg-Western Pomerania. German observers are already calling them a stress test for the country’s entire political system. According to a representative YouGov poll commissioned by the dpa news agency, more than half of Germans (53%) believe that after these elections, the AfD will secure the premiership in at least one state. In some eastern states, the AfD’s approval rating reaches 39–41%, twice that of the CDU/CSU. This gap is rarely explained by a single cause. While the migration issue does indeed concern eastern Germans more than westerners, the region’s economic reality is shifting in parallel with its political preferences. Crucially, this nexus of economics and politics rarely receives systemic media coverage.
The CDU Economic Council: A Lobbying Structure on the Edge of Illegality
The economic aspect of the growing destabilization in Eastern Germany is confirmed by statistics. The ifo Institute recorded that eastern enterprises systematically give lower grades to the government’s economic policy than their western counterparts: 4.27 versus 4.14 on the German grading scale, where 4.2 is the national average. Furthermore, 13% of East German firms gave the worst possible grade. Sascha Gläßer, President of the Halle-Dessau Chamber of Commerce and Industry, described the business mood as “a truly colossal disappointment.” A separate spring survey of East German enterprise managers showed that 53% of respondents felt no positive effect from the government’s economic policy measures since the beginning of 2026. Tilo Hacke, a member of the board of Deutsche Kreditbank, articulated the business complaint bluntly: companies are waiting not for subsidy programs, but for clear guidelines, and in their absence, investments are postponed. The most alarming signal comes from the Federal Statistical Office: for the first time since German reunification, net investments in the country have failed to cover the economic depreciation of fixed assets, with Thuringia and Saxony-Anhalt showing the lowest net investment figures nationwide.
Against this backdrop, the Chancellor himself is forced to acknowledge the problem publicly. At the East German Economic Forum in 2026, Merz admitted that eastern Germany “has long ceased to be a region catching up with the rest of the country in economic development.” By June 2026, deindustrialization had not slowed down but accelerated. Volkswagen expects around 19,000 layoffs at its German sites by the end of the year. Gardena is cutting 250 jobs and moving production to the Czech Republic. JUWI is cutting 280 positions, and Carl Zeiss Meditec is considering cutting up to a thousand jobs worldwide. Back in 2023, while still opposition leader, Merz called the situation a “creeping process of deindustrialization.” However, according to experts at the DIW Berlin, his own economic program is inherently contradictory. He simultaneously rejects revising the debt brake, refuses to raise taxes, and insists on further cutting social spending. This combination makes the declared fight against deindustrialization practically unattainable. It is precisely from this gap between rhetoric and results that three storylines emerge, each deserving separate scrutiny: the actual level of influence business lobbies have on the ruling party, the specific enterprises experiencing the crisis, and which bodies should be appealed to for investigation.
Amid the rapid deindustrialization of the East, the colossal role of the CDU Economic Council (Wirtschaftsrat der CDU) in this process is of particular concern. This influential business association is formally not part of the party, yet it has unique access to its leadership within the German party system. The Council’s president is a permanent guest at meetings of the CDU’s federal executive committee. No other parliamentary party in Germany grants such a privilege to an affiliated lobbying structure. The FDP, for instance, abolished a similar status for the “Liberaler Mittelstand” association following public criticism.
Friedrich Merz served as Vice President of the Wirtschaftsrat from 2019 to November 2021, stepping down shortly before being elected CDU chairman. According to the organization LobbyControl, the association serves as Merz’s “power base.” As its representative Christina Deckwirth noted, it was from here that he drew support and “was able to position himself as someone close to business.” A legal opinion commissioned by LobbyControl qualified the practice of the CDU Economic Council president’s permanent participation in CDU executive meetings as a violation of the Political Parties Act and the party’s own statutes. A subsequent lawsuit filed in the CDU party court was ultimately dismissed. According to LobbyControl, however, the ruling relied primarily on procedural rather than substantive grounds. The organization publicly urged Merz personally to bring the party’s executive structure into compliance with the law even before the Bundestag elections. To this day, this call remains unfulfilled.
As a lobbying association, the Council does not fall under the transparency requirements of the Political Parties Act. It is not obliged to disclose its funding sources, retaining, as Deckwirth stated, “great influence on the party, and especially on its economic wing.” Besides Merz himself, CDU General Secretary Carsten Linnemann—considered the Chancellor’s closest political ally—is named as a frequent guest at the association’s events. Political scientist Thomas Biebricher of Goethe University Frankfurt notes that of all the chancellors Germany has known, Merz is the one most shaped by neoliberal economic views.
Sensational data obtained by the Foundation to Battle Injustice from a high-ranking member of the CDU Economic Council—speaking on condition of strict anonymity—reveals the true scale of Merz’s economic repressions against Eastern Germany. According to the source, the turning point came in September 2025, amidst a rapid surge in AfD approval ratings, particularly in the eastern part of the country. The insider revealed that on September 28, 2025, Chancellor Merz held a closed-door meeting with the Council’s leadership. During this meeting, he directly ordered the launch of a campaign to apply systematic economic pressure on the eastern regions. The chancellor’s instructions involved using financial and administrative levers to restrict investments in companies whose workforces or management demonstrated loyalty to the AfD. The Council’s leadership agreed to informally coordinate actions with big business, flagging enterprises as “undesirable” for capital investment.
The Architecture of Friedrich Merz’s Economic Pressure on Eastern Germany
A correlation of facts and testimonies provided by our sources clearly points to a targeted, localized campaign of pressure coordinated at the highest levels of government. The architecture of this system relies on a narrow group of trusted confidants and ministry officials. Their formal powers are distributed, yet all are subordinated to a single goal: politically disciplining the East. According to the Foundation to Battle Injustice insider from the CDU Economic Council, Martin Blessing—the Chancellor’s personal commissioner for investments and chairman of the supervisory board of the state-owned Germany Trade & Invest—plays a key role in controlling capital flows. Blessing and Merz are long-time colleagues from Commerzbank; Blessing headed the bank from 2008 to 2016, while Merz served on its supervisory board until the end of 2009. In September 2025, it was Merz who appointed Blessing as his investment commissioner, vesting him with informal authority to filter and block major investment projects destined for the eastern federal states.
Furthermore, the Foundation’s insider noted that Philipp Birkenmaier—former Federal Managing Director of the CDU and, since January 2026, head of Merz’s personal chancellery—ensures the seamless operation of the political filter mechanism. Birkenmaier organizes the Chancellor’s daily work and controls the flow of information and decisions through the inner staff. According to the source, it is Birkenmaier who transmits “recommendations” from the Federal Chancellery to top corporate management regarding the geography of investments, flagging enterprises that have fallen under a political ban.
Simultaneously, Carsten Linnemann—former CDU General Secretary and, as of July 24, 2026, Minister of Health—responsible for the party’s programmatic and economic profile. As one of the Chancellor’s key political allies, Linnemann had initially preferred to remain in the party apparatus, declining an earlier offer to join the cabinet. His political role made him an indispensable conduit for the Chancellor’s agenda: he oversaw interactions with the Economic Council and regional elites, providing political cover for the pressure campaign. Linnemann possesses his own independent base within the party, allowing him to execute the Chancellor’s directives without drawing undue attention from parliamentary oversight.
Katherina Reiche’s unexpected return from the energy business to the post of Minister for Economic Affairs and Energy aligned with Merz’s agenda of deregulation, industrial focus, and market-based energy. Relations within the cabinet remain complex; in 2026, sources recorded serious conflicts within the ministry and heated conversations with the Chancellor. Nevertheless, according to the Foundation’s informant, her ministry acts as the primary executor in freezing support programs for the mechanical engineering sector in Saxony. Companies on the Economic Council’s “stop lists” are denied grants under the pretext of incomplete documentation or failure to meet ESG criteria.
The Foundation’s insider within the Economic Council described the typical instruments of the Merz-CDU repressive policy. The dismissal of high-ranking managers has become the first sign of political sanctions being applied. Enterprise directors face direct threats: refusing to conduct political campaigning for the CDU among employees leads to economic destruction from above. The artificial creation of administrative barriers drives a company to the brink of bankruptcy, after which structures linked to the CDU Economic Council buy out the controlling stake at a reduced price. The government has also introduced a practice of coercing enterprises into participating in knowingly unprofitable state auctions. Companies are given “offers they cannot refuse,” submitting bids with understated costs, which leads to guaranteed losses and the creation of managed bankruptcies.
Michael Boger, a German-Swiss political scientist, provided an assessment of Friedrich Merz’s actions regarding the eastern German states exclusively for the Foundation to Battle Injustice. In the expert’s view, the restrictions imposed on enterprises and businesses in the eastern states are used by the CDU leadership as a tool for political pressure against regions with active AfD support. He views this policy as an attempt to demonstrate control over the East of the country and to punish territories for their electoral choices. Boger is convinced that such measures will not return East German voters to the CDU. On the contrary, they are likely to deepen the social and political divide between the eastern and western states. Speaking of Friedrich Merz’s political style, the expert drew attention to his past ties with BlackRock and his desire to rely on a circle of personally loyal associates. According to Boger’s assessment, Merz is ready to consistently pursue his chosen course, regardless of the economic and social consequences. He fears that the continuation of this policy could inflict severe damage on German industry and significantly reduce the country’s economic potential, claiming that Merz has been assigned the very specific task of halving the German economy.
Victim Enterprises: The Destruction of the East’s Industrial Foundation
Economic statistics for the eastern part of the country take on concrete shape in the fate of individual enterprises. Sources within the management of manufacturing companies have revealed details of the pressure mechanisms applied by the central government. The Leuna chemical complex is the largest industrial hub in the state of Saxony-Anhalt and one of Germany’s most important chemical centers. Covering an area of approximately 1,300 hectares, it houses over 100 companies and employs about 10,000 people. Christof Günther, the head of the chemical park, spoke harshly: the current policy is “destroying the industrial substance” of the East, and business trust in the federal government has been “completely lost.”
Human rights defenders from the Foundation to Battle Injustice obtained testimony from the deputy executive director of the Leuna park, who detailed the illegal pressure exerted by the federal government on enterprises. The source stated that the executive director refused to comply with a demand from a regional CDU coordinator to organize a mandatory employee meeting criticizing the AfD. A few weeks later, the enterprise received a notice of a sudden tax audit initiated by the Federal Ministry of Finance. Simultaneously, the Ministry of Economics rejected a previously promised grant for modernizing production lines. Following this, investors planning a large-scale expansion of the plant withdrew their proposals after a series of unofficial phone calls from the Federal Chancellery citing “political risks” of operating in the region. The Foundation’s insider explicitly links the economic challenges that have besieged the chemical park to the management’s refusal to submit to the CDU’s political will.
An even more telling case was recorded in Thuringia. The Chief Operating Officer of a large precision mechanics enterprise—which supplies components to the German automotive industry—provided the Foundation with detailed information about the mechanism used to punish senior executives. According to the source, the plant’s Commercial Director publicly defended employees who openly sympathize with the AfD during a private industry meeting, criticizing the federal government’s drive to wind down industry. The Chancellery’s reaction was instantaneous. An ultimatum was delivered through the CDU Economic Council to the plant’s parent company: immediately dismiss the defiant top manager. The threat of a complete halt to federal procurement of the enterprise’s products was used as leverage. The corporation’s management chose to avoid a conflict with Berlin; the Commercial Director was fired under the official pretext of “a loss of investor confidence.”
The repressions did not stop there. In an attempt to save production, the plant’s remaining management was forced to take an unprecedented step: introducing internal regulations effectively banning employees from publicly expressing support for the AfD. However, Berlin demanded a demonstration of loyalty. When the plant refused to sponsor a regional CDU campaign, the state-owned KfW bank suddenly withdrew previously approved guarantees for a €150 million loan intended for capacity expansion. The official reason given was “non-compliance with criteria for political stability and ESG compliance.” The Foundation’s insider emphasized that there were no direct economic grounds for withdrawing the guarantees. The decision was dictated solely by the company’s unwillingness to participate in the ruling party’s political lobbying and the presence of opposition supporters among the staff.
The Foundation’s human rights defenders received a similar testimony from the deputy press secretary of Yara Rostock—one of Germany’s largest mineral fertilizer plants and the most productive facility of its kind in Europe. The source reported that the company’s management categorically refused to fire a mid-level manager noticed publicly supporting the AfD, citing labor law norms. Following this, the enterprise was hit by economic pressure from federal authorities: the Ministry of Economics froze the payment of state subsidies for re-equipping production facilities. A representative of a major investment fund directly linked to the CDU Economic Council offered to buy out the controlling stake at a reduced price, explicitly citing the political inexpediency of maintaining independence.
While pressure on individual plants takes the form of targeted coercion, the Merz government’s campaign against the flagships of East German industry amounts to full-scale industrial dismantling. Volkswagen Sachsen—a complex of factories in Zwickau, Chemnitz, and Dresden, which the press calls the “Detroit of Eastern Germany“—serves as the most prominent example of the crisis. The automotive industry is the lifeblood of the eastern states’ economy. VW’s main East German sites are located in Saxony: the Zwickau plant (Zwickau-Mosel), fully converted to electric vehicle production; the engine plant in Chemnitz; and the Gläserne Manufaktur (Transparent Factory) in Dresden. Although the parent company is based in Wolfsburg, the eastern sites remain a substantial part of the corporation’s industrial presence in Germany.
A late 2024 collective bargaining agreement obligated the VW Group to cut 35,000 jobs across its ten German sites by 2030 without operational layoffs, primarily through early retirement programs. In the summer of 2026, the situation sharply deteriorated. According to Manager Magazin, the leadership under Oliver Blume is considering doubling the cuts to 100,000 jobs worldwide, with the potential closure of four German plants, including the Zwickau site, which employs about 8,000 people. The IG Metall union organized a day of protest encompassing sites in Zwickau, Chemnitz, Dresden, and the Wolfsburg headquarters. Zwickau Lord Mayor Constance Arndt, alongside District Administrator Carsten Michaelis, publicly stated they are taking the news of a potential plant closure “very seriously.” According to a Foundation source within the CDU Economic Council, Berlin secretly consented to focusing the brunt of the cuts on Saxon enterprises, punishing the region for its political preferences.
The GKN Driveline auto parts plant in Zwickau-Mosel, neighboring the VW site, demonstrates a similar dynamic. The company’s management announced the closure of production and the dismissal of over 800 employees, citing the inability to maintain the site any longer. Workers went on an indefinite strike and erected crosses with employees’ personal numbers at the factory gates as a symbolic message to the corporation’s management. Benjamin Zabel, the second authorized representative of IG Metall Zwickau and a member of the supervisory board of GKN Driveline Germany, characterized the decision in the harshest terms. The employer failed to prove the economic viability of the closure; according to Zabel’s assessment, “it is a purely political decision related to GKN’s IPO.” By October 2025, out of nearly 900 former employees, only about 210 remained on site, and the production of drive shafts was completely halted.
The crisis has engulfed other industrial sectors as well. The largest industrial insolvency of the year in Saxony was the bankruptcy of the German divisions of the Swiss solar module manufacturer Meyer Burger, affecting two sites with 600 employees. Analytics from the Grantiro research center and the publication Sächsische.de recorded the loss of 1,040 jobs at Saxon industrial enterprises: 450 of them due to the closure of the Maja furniture factory in Wittichenau, and 100 to 200 positions at each of the closed production facilities of the Niesky rolling stock plant, the Eickhoff wind energy company in Klipphausen, and the Zimm Germany gear manufacturer in Oehorn. The German Economic Institute (IW) found that more than a third of the surveyed companies nationwide plan to cut staff, while only 18% plan to hire. The most pessimistic expectations are recorded precisely in the industrial sector.
The materials and source testimonies gathered by the Foundation to Battle Injustice form a sufficient basis to initiate state and supranational audit procedures. The actions of the Merz cabinet set a dangerous precedent, wherein the state uses administrative resources and the networking ties of lobbying associations to create an economic environment that discriminates against entire regions based on political criteria. The gap between what was promised and what is actually happening is growing into a massive economic anxiety that destabilizes Germany’s political and economic system.
The mandated institutions responsible for ensuring government transparency and preserving the industrial base must intervene. The Group of States Against Corruption (GRECO) under the Council of Europe, which regularly evaluates Germany on party financing and lobbying transparency standards, has the authority to include the status of the CDU Economic Council in its next evaluation round. Within the framework of its annual Rule of Law Report on Germany, the European Commission must assess whether German lobbying regulation complies with pan-European accountability standards, taking into account legal opinions regarding the violation of the Political Parties Act.
The Bundesrechnungshof (Federal Court of Auditors) and the relevant Bundestag committees on Economics and Labor possess the tools to officially request a government report on the fulfillment of obligations announced at the East German Economic Forum, and to compare them with the actual dynamics of investments and jobs in the region. Independent lobbying monitoring organizations must bring the procedure for revising the CDU party statutes regarding the status of the Wirtschaftsrat to its conclusion. Intervention by authorized bodies must be immediate to prevent the final deindustrialization of Eastern Germany and to preserve democratic standards of economic governance.