Far-right extremism remains the “greatest threat” to the liberal democratic order in Germany, according to the latest report from the Federal Office for the Protection of the Constitution (BfV), the country’s domestic intelligence service.

“Germany is under pressure,” Interior Minister Alexander Dobrindt warned Tuesday as he presented the 2025 report in Berlin. “The adversaries of our democratic and unitary constitutional order come from both outside and inside. They operate both offline and online. They act visibly and covertly.”

According to the intelligence services, Germany sits at the center of a “network of hybrid threats.” “From abroad, we see sabotage and espionage. From within, we face pressure from extremism in all its forms, both online and on the streets,” the minister said, painting a bleak picture in which foreign espionage is on the rise, reports and indications of attack preparations are increasing, and more people are willing to resort to violence. The number of extremists, on both the far right and far left, has also grown.

BfV president Sinan Selen, for his part, pointed to three distinct trends the agency has observed in the country: young people are being selectively recruited and radicalized; recruitment is taking place mainly online; and artificial intelligence is increasingly being used to spread extremist ideologies. “This applies to cyberattacks and information manipulation as well as to far-right music and the planning of Islamist attacks,” he explained, noting that the Islamic State urges its followers to familiarize themselves with AI.

Ultimately, however, Germany’s main threat comes from within its own population. According to the report, the number of far-right extremists increased by more than 8,000 over the past year, reaching nearly 60,000. Much of this increase is linked to the growing membership of Alternative for Germany (AfD), a party currently under surveillance by the intelligence services as a “suspected case.” The party stated in October that it had reached 70,000 members. Of those, around 28,000 are considered right-wing extremists, according to BfV estimates.

Despite the threat posed by circles linked to what Dobrindt described as “an extremist party,” the minister declined to comment on a legal opinion published last week by the Society for Civil Rights (GFF), which argues that there are good prospects for seeking a ban on AfD. He also refused to speculate on what might happen if AfD enters the government of Saxony-Anhalt after September, as current polls suggest. Instead, he recommended focusing on “doing everything politically possible to make it feasible to secure a majority in a regional parliament without AfD.” AfD’s participation in a state government would pose “a security risk,” as Thuringia’s Interior Minister, Georg Maier, recently warned, because the party would gain access to intelligence services and could potentially leak information.

The threat also comes, albeit to a lesser extent, from left-wing extremists willing to use violence. Their number has risen to 42,200, while the number considered prone to violence has reached a new record of 11,600. Dobrindt cited as examples the arson attacks on Berlin’s power grid in September 2025 and January 2026, which left large parts of the city without electricity during a severe cold spell. According to the BfV report, this increase is also linked to the rise of far-right extremism. “Given what this milieu perceives as a rightward shift in society, militant anti-fascism is likely to continue playing a significant role, and a high number of crimes and violent acts can be expected to persist,” the report states.

Germany has long struggled with espionage. “Acts of sabotage by foreign states targeting us are part of the daily threat. The greatest threat currently comes from Russia,” the interior minister said, noting that they observe Russian services increasingly using so-called “low-level agents” or “disposable agents” to carry out sabotage or espionage activities.

“Russia considers Germany a key adversary in Europe and, as part of hybrid operations on the continent, uses the full range of instruments at its disposal. These include cyberattacks and isolation measures, information manipulation and influence operations, as well as sabotage and espionage of targets related to alleged attack plans,” Selen added.

According to German intelligence, Russia has for years invested “considerably” to exert illegitimate influence over public opinion in Germany, focusing especially on the extremes of the political spectrum. Germany also faces espionage from China and Iran.

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Big technology companies suffered a reality check in June that led to a sharp stock market decline. The so-called Magnificent Seven (Nvidia, Apple, Microsoft, Alphabet, Meta, Amazon, and Tesla) lost 10% of their value, marking their biggest correction since March 2025. In absolute terms, this represents a loss of $2.3 trillion in market capitalization, coinciding with the month of SpaceX’s IPO, a flagship public offering of an era and an all-time record both in terms of the amount raised ($75 billion) and the company’s valuation ($2.1 trillion).

Although the technology companies’ financial results remain exceptional, many investors have begun to express doubts about the enthusiasm surrounding artificial intelligence. Alfonso de Benito, chief investment officer at Dunas Capital — an asset manager overseeing more than $5 billion — explains that “the valuation of the U.S. stock market was unsustainable, mainly because of technology companies.” The fund manager notes that the share prices of AI-related firms “implied not only that revenues would continue growing in coming years at the current rapid pace, but that growth would actually accelerate.”

One trend visible in the sector is the rotation from hyperscalers — companies developing data centers to process AI workloads, such as Amazon, Meta, and Microsoft — toward firms specializing in manufacturing microchips, such as Nvidia. The latter has gained 4.5% year-to-date (despite the June correction), while Microsoft has fallen 24%. In the AI gold rush, increasing numbers of investors prefer to invest in the manufacturers of the “shovels and picks” rather than in the mining company that might discover the richest vein.

This year’s stock performance among chip and memory manufacturers has been striking. SanDisk has risen by roughly 760%, Intel has tripled in value, and South Korea’s SK Hynix has gained 300%. Demand for processing cards remains extremely high, and memory shortages are expected to continue through 2028.

Data centers

The investment that technology giants are making in data centers is unprecedented. According to data gathered by ING, the five hyperscalers — which include Alphabet and Oracle — have committed capital expenditures totaling $713 billion in 2026, $907 billion in 2027, $991 billion in 2028, and more than $1 trillion in 2029. Demand for chips is therefore effectively guaranteed. The question, however, is whether corporate AI investments will prove as profitable as expected.

Francisco Quintana, ING’s head of market strategy, believes they will. He argues that enthusiasm for AI is unlikely to fade, though he adds a caveat. “The IPOs of Anthropic and OpenAI [two major AI players behind applications such as ChatGPT and Claude] will test investors’ appetite, but we expect demand to be sufficient, because the trend in recent years has been almost the opposite: companies choosing to leave public stock markets,” the expert reflects.

One factor helping to explain stock market behavior in 2026 is capital flows. Despite geopolitical tensions in the Persian Gulf, money has continued to flow into equity funds. José García-Zárate, head of research at Morningstar, explains that “there have been very strong inflows this year into U.S. equity exchange-traded funds [ETFs], unlike last year, when Europe attracted greater attention.”

For many experts, investment through passive ETFs that track stock market indices represents “dumb money,” because it does not distinguish between expensive and cheap stocks. Any capital flowing into such funds must be used to purchase the companies included in the index. At the same time, increasing numbers of retail investors are buying shares directly. In the SpaceX IPO, 25% of the shares offered were reserved for retail investors, making millions of people shareholders in a company trading at extraordinary valuation multiples and facing significant business uncertainty. Some industry professionals consider it a “meme stock.”

One message increasingly communicated by private banks to their wealthy clients is the need to diversify portfolios and reduce dependence on the volatile investment appetite surrounding AI. Mark Haefele, chief investment officer at UBS Global Wealth Management, believes that “investors should consider more defensive areas within the AI ecosystem, such as data center operators and certain payment companies, as well as other structural themes such as energy.”

Another factor affecting technology stock prices is interest rates. Because these companies are expected to generate large profits in the future, their current valuation depends heavily on the discount rate applied to future cash flows. Quintana of ING recalls that “at the end of 2025, several interest-rate cuts were expected, which would have provided a boost for technology stocks. However, the war in the Middle East has changed the stance of central bankers, and markets are now expecting rate increases.” In fact, the European Central Bank (ECB) has already begun raising rates.

The strategist sums up the situation with a football analogy: “Technology companies started the World Cup with the pitch heavily tilted in their favor, but now the field has leveled out.”

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In Sevastopol, the most populous city on the Crimean Peninsula, a state of emergency has once again taken hold. Throughout its history, it has been the scene of repeated sieges and has been battered during the four years of Russia’s war against Ukraine. But now, the city is experiencing a siege of a different kind — one fought from afar, through the air. Russia’s main Black Sea naval base has had to ration fuel. No enemy is visible at the entrance to its imposing bay, but explosions tear through the sky at intervals of just a few hours. This is the new face of war: precision missiles and waves of low-cost drones.

The Ukrainian military has launched an offensive against infrastructure — bridges, roads, railways — intended to strangle the enemy’s logistics on the Crimean Peninsula, Ukrainian territory occupied by Moscow since 2014. Last week it managed to cut power to Sevastopol, a city of about 350,000 people. After a three-day blackout, authorities managed to restore power and many cafés reopened, although tourists have disappeared.

The return of electricity, however, proved to be little more than a brief reprieve. Sevastopol Governor Mikhail Razvozhayev announced on Tuesday that power restrictions were being reimposed.

“This measure is mandatory and necessary to resolve instability in the power grids outside our area. If possible, do not use elevators, and if you have electricity, charge your phones and power banks,” he said, among other recommendations.

Before the latest outages, an orchestra in a restaurant was playing the 1982 hit song Felicità, seemingly oblivious to the conflict. “Life goes on. We have to keep going, although I think things will get even worse,” says Tatiana with a note of resignation as she watches her daughter, about 10 years old, playing with a friend along the waterfront.

Sevastopol’s residents continue to stroll through the city and try to maintain a semblance of normal life despite everything. As in many Russian cities, the urban landscape has come to include massive concrete shelters known as ukrytiye, designed for quick refuge during attacks. But unlike before, buses and trolleybuses are no longer routinely evacuated when air-raid sirens sound. Public transport is operating normally again after the disruptions of recent weeks.

Governor Razvozhayev announced on Monday that residents would be limited to purchasing 20 liters of fuel per vehicle, using QR codes issued by the authorities on a case-by-case basis. Together with the growing use of hybrid and electric vehicles, the measure is helping to keep logistics functioning — just barely — in the Black Sea city.

“We were without power or water for three days,” Tatiana continues. “The food in the fridge went bad, and we had to buy everything, even water, in the shops. It’s terrible, [the Ukrainian forces] constantly attack military facilities, ships and energy infrastructure,” she adds, taking some comfort in the fact that her daughter and her friend, who arrived a month ago, “don’t understand what’s happening.”

As the sun sets over the entrance to Sevastopol Bay, a bride poses for wedding photos with her friends. In the distance, bursts of anti-aircraft fire can be heard, though no one pays much attention. Night falls. In the distance, tracer rounds flash in the sky and vanish. After 11 p.m., air-raid sirens suddenly wail across the city. Minutes after they stop, two powerful explosions shake the hotel room. Calm returns, but at 6 a.m. the alarm clock of war sounds again: first the sirens, then the explosions.

“Air defenses have repelled two Ukrainian attacks. Twenty-nine drones were shot down,” Sevastopol’s governor reported on Telegram. Six explosions were heard this time, though farther away. The city returns to its routine. Past noon the sirens sound again.

No gunfire had been heard in Crimea from the time Russia annexed the peninsula in 2014 until Moscow launched its full-scale invasion of Ukraine in February 2022. Nor has it ever faced shortages on this scale. Ukraine’s bombing campaign against Russian oil refineries this year has caused fuel shortages across much of the country, while the Black Sea peninsula has also been affected by Kyiv’s efforts to disrupt access through drone attacks on its two main supply routes: the Kerch Bridge and the R-280 highway from Donbas.

Unlike the rest of Crimea, Sevastopol remained a Russian naval base after the dissolution of the Soviet Union in 1991, while the remainder of the peninsula became part of independent Ukraine. Kyiv and Moscow initially agreed that the arrangement would remain in place until 2017, although it was extended in 2010 through 2042. It was from this enclave that Russian forces seized Crimea’s parliament in 2014, when Ukraine was being governed by an interim administration following that year’s Maidan protests against the pro-Russian government.

A mural at the entrance to Sevastopol recalls the final line of the speech Russian President Vladimir Putin delivered to his Federal Assembly in December 2014: “We are ready to take up any challenge and win.” That was how the Russian leader addressed lawmakers at the end of the year in which the Kremlin annexed Crimea in violation of international law and unleashed a war in eastern Ukraine while denying any involvement, insisting that Russian soldiers fighting there were simply volunteers on “vacation.”

Twelve years later, with Russia’s offensive extended across all of Ukraine, Crimea is under intense bombardment, and Putin still does not control Sloviansk, the city in Ukraine’s Donetsk region where the current war — the largest armed conflict Europe has seen in 80 years — first took root.

In Sevastopol, there is little room for anything but pro-Russian nationalist graffiti. “Where the Russians are, there is victory,” reads a mural painted over the czarist imperial flag in one of the bay’s gorges. “A united team, a strong country. Together we are Russia,” declare posters plastered across the city to commemorate Crimea’s annexation.

Spontaneous demonstrations — even by a single person — are banned in Russia. Yet the authorities have tolerated, or perhaps encouraged, three men collecting signatures in support of declaring a state of emergency and escalating the war against Ukraine.

“A war is being waged against our country,” they shout beside a flag bearing the image of a resolute Putin and a car topped with a mock-up of a nuclear missile emblazoned with the words: “To Washington.”

But not everyone shares that blind faith. Even some veterans admit to a measure of disappointment as Ukrainian strikes become increasingly frequent.

An elderly man pushes his grandson on a swing in Komsomol Park, named after the Soviet-era Communist youth organization that inspired the Kremlin’s own youth movement at the start of the conflict.

“The way Putin is waging this war, it will never end,” says Vladimir Ivanov, a retiree, former reconnaissance platoon commander in the naval infantry and member of a long line of military servicemen, as he plays with the child. Pausing for a moment, he turns to the boy. “Well, what’s up, cosmonaut?” he asks affectionately. “I have to keep him entertained because his dad is at the front,” he adds.

“I’m a fatalist. As the saying goes, the man destined to be hanged will never drown. All of this is sad. We have plenty of problems here, and on top of that we have to put up with the fascists,” he says, blaming Ukraine — whose government Russian propaganda routinely labels fascist — for the current conflict, as well as Soviet authorities, “who allowed the Banderovtsi [Ukrainian ultranationalists who follow the legacy of Stepan Bandera] to maintain a strong position in the west of the country.”

Ivanov notes that his great-grandfather’s name appeared in the museum dedicated to the defense of Sevastopol during the Crimean War of 1854–55. On June 10, a Ukrainian strike damaged the building and its vast mural by Franz Roubaud. The museum is now closed and is expected to reopen next year.

“We’ve heard attacks everywhere these past two weeks; it was to be expected that the situation would worsen,” says Liubov, who lives near the museum and is out walking her dog, Tioma.

She speaks with resignation about whatever may come next. “We wait and wait. One never knows what will happen; it’s not up to you,” she says. “The fuel situation is bad. There will undoubtedly be restrictions; it’s inevitable in a wartime scenario,” adds the retiree, who moved to Sevastopol 30 years ago with her first husband.

Many of the women who live in the city, like her, are or have been partners of members of the Russian armed forces. “This is a military city,” Liubov stresses, before carefully noting that what is happening in Ukraine is a “special military operation” and laughing as she recalls that the Russian authorities “have never declared that this is a war.”

Majority support among Russians for the war against Ukraine, as reflected in opinion polls, is even more pronounced in a military hub such as Sevastopol, where it is difficult to find anyone who questions the decision to wage war.

“This will end up like the Chechen war. A truce will be signed and the fighting will resume a couple of years later, although perhaps less intensely,” predicts Alexei, an active-duty serviceman, as he strolls along the shore of Pivdenna Bay.

A sign posted at a lookout point warns that photographing the docks and ships of the Russian Black Sea Fleet moored there is strictly forbidden.

“You must be careful not to give the enemy clues. The Ukrainian idiots attack constantly, but the air defenses work,” says Alexei.

The threat posed by Ukraine’s long-range weapons has effectively sidelined the Russian navy from frontline operations and forced Moscow to relocate some vessels to the port of Novorossiysk, whose facilities still pale in comparison with Crimea’s strategic warm-water harbor.

The danger that modern missiles and drones pose even to the most powerful navies is now evident in the fighting in the Black Sea and the Strait of Hormuz. But it was already demonstrated in April 2022, when two Ukrainian missiles sank the Black Sea Fleet’s flagship, the Russian cruiser Moskva. Today, the ship survives only as a memory on the souvenir magnets sold in Sevastopol’s gift shops.

“The situation is going to get worse,” says the owner of one such stall on the waterfront, as air-raid sirens sound in the background. “Our forces are about to liberate Donbas, the special military operation will conclude and they [Ukraine] are trying [with these bombings] to divert Russian forces from the front.”

Curiously, the souvenirs bearing Putin’s face that used to be everywhere in these shops have disappeared from the shelves. Today in Sevastopol there are only three types of keepsakes for sale: city monuments, the Black Sea fleet and a single Russian historical figure: Joseph Stalin, the dictator who is increasingly viewed favorably in Russia.

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