Protesters express support for Ukraine in front of Russia's embassy in Berlin, Germany. AFP
Protesters express support for Ukraine in front of Russia's embassy in Berlin, Germany. AFP
Protesters express support for Ukraine in front of Russia's embassy in Berlin, Germany. AFP
Protesters express support for Ukraine in front of Russia's embassy in Berlin, Germany. AFP

Germany's president admits mistakes amid Russia reckoning


Tim Stickings
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Germany’s President Frank-Walter Steinmeier has become the most senior politician to admit failures in a years-long policy of conciliation with Russia whose flaws were brutally exposed by the invasion of Ukraine.

It comes amid a reckoning at home and frustration abroad at how Germany’s reliance on Russian gas, a reluctance to antagonise Moscow and a military in need of repair have left Berlin somewhat muffled in reacting to the war.

Ukraine’s president and its ambassador in Germany have not held back in lambasting German governments past and present for what they see as commercially-driven policies that make a mockery of its post-war quest for moral leadership and its mantra of “never again”.

As harrowing images emerging from Ukraine spur calls for tougher sanctions, Poland this week criticised Chancellor Olaf Scholz’s government for continuing to oppose an immediate energy embargo, which ministers say would punish German consumers rather than Russia.

Berlin had previously raised eyebrows by objecting to sanctions affecting international payments system Swift before eventually relenting.

“It is not the voices of German businesses, German billionaires… that should be heard loudly in Berlin. It is the voice of these innocent women and children, the voice of those murdered,” said Polish Prime Minister Mateusz Morawiecki.

But much of the criticism is directed not at Mr Scholz but at his two predecessors, Angela Merkel, whose legacy has been clouded by the war in Ukraine, and Gerhard Schroeder, a personal friend of President Vladimir Putin.

Mr Steinmeier’s record has also been called into question after his service under Mr Schroeder and Mrs Merkel, including two terms as foreign minister, made him one of the faces of Germany’s lenient posture towards Russia.

He further angered Ukraine by inviting musicians from Russia and Belarus to a benefit concert at the president’s mansion last week, prompting a boycott from irate Ukrainian ambassador Andrij Melnyk.

Germany's President Frank-Walter Steinmeier, left, said he misjudged Russian leader Vladimir Putin. AFP
Germany's President Frank-Walter Steinmeier, left, said he misjudged Russian leader Vladimir Putin. AFP

Mr Steinmeier on Monday said he had misread Mr Putin. He also admitted his attempts to bring Russia into a common European fold had failed and said he was wrong to support the now-cancelled Nord Stream 2 gas pipeline.

“We were sticking to a bridge in which Russia no longer believed and which other partners had warned us against,” he said.

“I did not believe Vladimir Putin would embrace his country's complete economic, political and moral ruin for the sake of his imperial madness.”

Mrs Merkel and former French leader Nicolas Sarkozy were invited by Ukraine’s President Volodymyr Zelenskyy to see the disturbing scenes of massacre in the town of Bucha which he blamed their policies for enabling.

But Mrs Merkel, who left office in December after 16 years, on Monday defended her actions at a 2008 Nato summit at which Germany was one of the countries blamed for stalling Ukraine’s membership bid for Nato.

The summit ended with an aspirational statement that Ukraine and Georgia “will become members of Nato” but Germany blocked the formal offer of a “membership action plan”, a more practical precursor to joining the alliance.

Mr Zelenskyy has described that as a miscalculation by western powers based on a false hope of appeasing Russia’s ambitions on Ukraine.

However, a short statement from a spokeswoman for Mrs Merkel on Monday said the former chancellor “stands by her decisions in relation to the 2008 Nato summit”.

Angela Merkel and Nicolas Sarkozy were urged by Ukraine to visit the site of apparent massacres near Kyiv. AP
Angela Merkel and Nicolas Sarkozy were urged by Ukraine to visit the site of apparent massacres near Kyiv. AP

Like Mr Steinmeier, Mrs Merkel supported the Nord Stream 2 project and regularly spoke of wanting to improve relations and build economic ties between Germany and Russia.

Her stance partly reflected Germany’s historic feeling of responsibility towards Russia and wariness of antagonising Moscow after the brutal war between Nazi Germany and the Soviet Union.

Mr Scholz’s party, the Social Democrats, regards West Germany’s détente with the eastern bloc in the 1970s as one of its proudest achievements and a precursor to German reunification in 1990.

Mr Schroeder, chancellor from 1998 to 2005, was the first German leader invited to Russia’s Victory Day parade commemorating the defeat of the Nazis, but more recently has caused embarrassment with Kremlin-friendly utterances.

Ministers in Mr Scholz’s government, which took office in December, have distanced itself from Mr Schroeder and openly criticised their predecessors for leaving Germany too reliant on imports of Russian oil and gas.

Now scrambling to replace those imports, they have angered allies such as Poland by arguing the economic pain of an immediate gas embargo would be too great.

Former European officials have compared Germany’s stance unfavourably to its hardline attitude towards Greece during the early 2010s debt crisis, when Berlin demanded painful economic measures in exchange for bailout funds.

  • After a long goodbye, Angela Merkel finally reached the end on Wednesday of her 16-year term as Germany’s first female chancellor, Europe’s most powerful leader and one of the world’s most durable crisis managers. Getty Images
    After a long goodbye, Angela Merkel finally reached the end on Wednesday of her 16-year term as Germany’s first female chancellor, Europe’s most powerful leader and one of the world’s most durable crisis managers. Getty Images
  • Mrs Merkel poses with ministers and other members of her government after a cabinet meeting in Berlin on November 24, 2021. AFP
    Mrs Merkel poses with ministers and other members of her government after a cabinet meeting in Berlin on November 24, 2021. AFP
  • Mrs Merkel receives a bouquet of flowers from Olaf Scholz as she arrives for probably her last weekly cabinet meeting on November 24. Getty Images
    Mrs Merkel receives a bouquet of flowers from Olaf Scholz as she arrives for probably her last weekly cabinet meeting on November 24. Getty Images
  • From right to left, US President Joe Biden, Ms Merkel, French President Emmanuel Macron and British Prime Minister Boris Johnson pose before a meeting on the sidelines of the G20 summit in Rome, in October 2021. AP
    From right to left, US President Joe Biden, Ms Merkel, French President Emmanuel Macron and British Prime Minister Boris Johnson pose before a meeting on the sidelines of the G20 summit in Rome, in October 2021. AP
  • Mrs Merkel visiting flood-ravaged areas to survey the damage and meet survivors in July 2021, in Schuld, near Bad Neuenahr-Ahrweiler. Getty Images
    Mrs Merkel visiting flood-ravaged areas to survey the damage and meet survivors in July 2021, in Schuld, near Bad Neuenahr-Ahrweiler. Getty Images
  • Mrs Merkel addressing the nation via a video statement about the continuing Covid-19 pandemic, on March 18, 2020. It was the first time in her 15-year tenure as chancellor that Mrs Merkel addressed citizens directly via a televised statement other than her New Year's Eve message. Getty Images
    Mrs Merkel addressing the nation via a video statement about the continuing Covid-19 pandemic, on March 18, 2020. It was the first time in her 15-year tenure as chancellor that Mrs Merkel addressed citizens directly via a televised statement other than her New Year's Eve message. Getty Images
  • Mrs Merkel speaks to China's President Xi Jinping and Russia's President Vladimir Putin during a group photo session in front of Japan's Osaka Castle, at the G20 summit in June 2019. Getty Images
    Mrs Merkel speaks to China's President Xi Jinping and Russia's President Vladimir Putin during a group photo session in front of Japan's Osaka Castle, at the G20 summit in June 2019. Getty Images
  • Mrs Merkel deliberates with former US president Donald Trump on the sidelines of the June 2018 G7 summit in Canada. Getty Images
    Mrs Merkel deliberates with former US president Donald Trump on the sidelines of the June 2018 G7 summit in Canada. Getty Images
  • Mrs Merkel and Mr Putin meet at Schloss Meseberg palace, the German government retreat, in August 2018. Getty Images
    Mrs Merkel and Mr Putin meet at Schloss Meseberg palace, the German government retreat, in August 2018. Getty Images
  • Mrs Merkel wears safety goggles during a visit to the European Astronauts Centre in Cologne, in 2016. Getty Images
    Mrs Merkel wears safety goggles during a visit to the European Astronauts Centre in Cologne, in 2016. Getty Images
  • Mrs Merkel poses for a selfie with Anas Modamani, a refugee from Syria, as she visited the AWO Refugium Askanierring shelter for migrants and refugees in September 2015, in Berlin. Getty Images
    Mrs Merkel poses for a selfie with Anas Modamani, a refugee from Syria, as she visited the AWO Refugium Askanierring shelter for migrants and refugees in September 2015, in Berlin. Getty Images
  • Mrs Merkel speaks with former US president Barack Obama during a G7 summit in 2015. AP Photo
    Mrs Merkel speaks with former US president Barack Obama during a G7 summit in 2015. AP Photo
  • Mrs Merkel and German President Joachim Gauck celebrate with the German national football team after its 1-0 victory in the 2014 FIFA World Cup Brazil Final match against Argentina in 2014. Getty Images
    Mrs Merkel and German President Joachim Gauck celebrate with the German national football team after its 1-0 victory in the 2014 FIFA World Cup Brazil Final match against Argentina in 2014. Getty Images
  • Mrs Merkel waves at an election campaign rally for federal elections in Dusseldorf, in 2013. Getty Images
    Mrs Merkel waves at an election campaign rally for federal elections in Dusseldorf, in 2013. Getty Images
  • Mrs Merkel smiles as she sits in the chancellor's chair for the first time at the German lower house of parliament in November 2005. Getty Images
    Mrs Merkel smiles as she sits in the chancellor's chair for the first time at the German lower house of parliament in November 2005. Getty Images
  • Mrs Merkel raises her fists at the Lower Saxony Christian Democratic Party's annual general meeting in 2005. Getty Images
    Mrs Merkel raises her fists at the Lower Saxony Christian Democratic Party's annual general meeting in 2005. Getty Images
  • Mrs Merkel speaks at the CDU party congress in December 2003, in Leipzig. Getty Images
    Mrs Merkel speaks at the CDU party congress in December 2003, in Leipzig. Getty Images

“As German officials liked to remind their Greek counterparts, bad luck is no excuse for bad policy,” said Thomas Philippon, a former adviser in the French finance ministry.

“Greek politicians did not want to pay the price of responsibility. They later imposed a cost on their fellow Europeans when the funds dried up. Germany did the same with its energy policy.”

Mr Scholz has sought to meet the moment by speaking of a watershed in German history, promising 100 billion euros ($110bn) to upgrade the military and presiding over a push to free the country from Russian energy by 2024.

In a break with Mrs Merkel’s policies, he has scrapped Nord Stream 2, approved the export of weapons to Ukraine and pledged to meet Nato spending targets by 2024, describing better defence as the route to success in Germany’s quest for peace.

One of Mrs Merkel's former defence ministers, Annegret Kramp-Karrenbauer, acknowledged after Russia's invasion that Germany had failed to deter Mr Putin despite previous instances of Russian aggression.

Mr Scholz’s moves have rallied public support that had flagged before the invasion and ensured public backing from allies including US President Joe Biden.

But his long-term plans have failed to win over critics such as Mr Melnyk who say Germany needs to act faster now to stop horrors such as those in Bucha from intensifying in Ukraine.

“Dear German government,” Mr Melnyk said on Tuesday, “how long will you keep watching?”.

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Navdeep Suri, India's Ambassador to the UAE

There has been a longstanding need from the Indian community to have a religious premises where they can practise their beliefs. Currently there is a very, very small temple in Bur Dubai and the community has outgrown this. So this will be a major temple and open to all denominations and a place should reflect India’s diversity.

It fits so well into the UAE’s own commitment to tolerance and pluralism and coming in the year of tolerance gives it that extra dimension.

What we will see on April 20 is the foundation ceremony and we expect a pretty broad cross section of the Indian community to be present, both from the UAE and abroad. The Hindu group that is building the temple will have their holiest leader attending – and we expect very senior representation from the leadership of the UAE.

When the designs were taken to the leadership, there were two clear options. There was a New Jersey model with a rectangular structure with the temple recessed inside so it was not too visible from the outside and another was the Neasden temple in London with the spires in its classical shape. And they said: look we said we wanted a temple so it should look like a temple. So this should be a classical style temple in all its glory.

It is beautifully located - 30 minutes outside of Abu Dhabi and barely 45 minutes to Dubai so it serves the needs of both communities.

This is going to be the big temple where I expect people to come from across the country at major festivals and occasions.

It is hugely important – it will take a couple of years to complete given the scale. It is going to be remarkable and will contribute something not just to the landscape in terms of visual architecture but also to the ethos. Here will be a real representation of UAE’s pluralism.

Why it pays to compare

A comparison of sending Dh20,000 from the UAE using two different routes at the same time - the first direct from a UAE bank to a bank in Germany, and the second from the same UAE bank via an online platform to Germany - found key differences in cost and speed. The transfers were both initiated on January 30.

Route 1: bank transfer

The UAE bank charged Dh152.25 for the Dh20,000 transfer. On top of that, their exchange rate margin added a difference of around Dh415, compared with the mid-market rate.

Total cost: Dh567.25 - around 2.9 per cent of the total amount

Total received: €4,670.30 

Route 2: online platform

The UAE bank’s charge for sending Dh20,000 to a UK dirham-denominated account was Dh2.10. The exchange rate margin cost was Dh60, plus a Dh12 fee.

Total cost: Dh74.10, around 0.4 per cent of the transaction

Total received: €4,756

The UAE bank transfer was far quicker – around two to three working days, while the online platform took around four to five days, but was considerably cheaper. In the online platform transfer, the funds were also exposed to currency risk during the period it took for them to arrive.

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Ten tax points to be aware of in 2026

1. Domestic VAT refund amendments: request your refund within five years

If a business does not apply for the refund on time, they lose their credit.

2. E-invoicing in the UAE

Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption. 

3. More tax audits

Tax authorities are increasingly using data already available across multiple filings to identify audit risks. 

4. More beneficial VAT and excise tax penalty regime

Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.

5. Greater emphasis on statutory audit

There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.

6. Further transfer pricing enforcement

Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes. 

7. Limited time periods for audits

Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion. 

8. Pillar 2 implementation 

Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.

9. Reduced compliance obligations for imported goods and services

Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations. 

10. Substance and CbC reporting focus

Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity. 

Contributed by Thomas Vanhee and Hend Rashwan, Aurifer

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Updated: April 05, 2022, 10:38 AM