The courtyard nestled in a renovated building constructed in 1897 is buzzing with excitement. Art enthusiasts have gathered for an exhibition featuring the rather fabulous work of Anna Retulainen, a leading figure in Finnish contemporary painting. The Berlin Art Week last month was in full swing this year.

My friend, a German economist, and I were joined by his elder brother. It turned out that all three of us had a Fulbright Program connection. Introducing me around, the brother cruised effortlessly in the labyrinth of guests. Greetings, words and thoughts flowed freely since everyone spoke fluent English.

As the evening wore on, the conversation turned more somber. Germany has been facing economic stagnation for the last five years. Germany’s infrastructure, like its rail system and digital networks, is creaking and needs urgent upgrades. Thankfully, the country plans to borrow a large sum of money (an additional €1tn) to pay for these improvements and for increased defense spending. Some have referred to this plan as employing a “fiscal bazooka.” Economists believe Germany has room to borrow responsibly because its current debt level is still manageable.

Of course, such unprecedented fiscal plans are making many people uneasy in Germany, a country known for its fiscal prudence and the Protestant work ethic. Still, Friedrich Merz, the current German chancellor, once a staunch economic liberal, realizes that the world is entering a new era of war-driven economy, where supply chains are being used as weapons and economic resilience has become a strategic necessity. 

This new era caps 80-years of Pax Americana, a period of peace that enabled market liberalism. Now, state power is being used to fortify and, in some instances, weaponize critical sectors like semiconductors for geopolitical competition. 

It appears that Western nations will now have to leverage state power to build resilient supply chain alliances, spur innovation through industrial policy, and facilitate technology sharing. In other words, at least in the context of Western Europe, the market must now serve strategy, not the other way around.

Still, employing fiscal policy to achieve economic growth remains fraught with risks. Pakistan’s persistently large fiscal and external deficits have led to an alarming increase in public debt as well as in the servicing cost on that debt. It is thus no wonder that the International Monetary Fund (IMF) has repeatedly pushed for structural reforms in order to enhance fiscal discipline and governance. However, these efforts have often encountered entrenched resistance from vested interests as well as institutional inertia.

An IMF mission is presently in Islamabad to carry out the second review of its $7 billion External Fund Facility (EFF). According to reports, Pakistan and the IMF are revising key budgetary and economic targets on account of recent floods that killed more than 1,000 people. While the government will surely promise upholding fiscal discipline, post-floods reconstruction against revised targets will continue to test Pakistan’s financial management.

The IMF is likely to lower its growth forecast for Pakistan’s economy after wrapping up the ongoing performance review. 

Back in Berlin, another exhibition was getting noticed. “Topography of Terror” is the present-day name assigned to the site of the most notorious Nazi institutions like Gestapo between 1933-45. Berliners of all ages flocked to the exhibit, respectfully engaging and learning from this painful past.

In 2015, Chancellor Angela Merkel decided to take in 1 million refugees into Germany. However, the lack of economic growth has pushed Merkel’s decision into stark relief and hardened Germany’s views on immigration. Germany’s politics is shifting to the right with the AfD— party of the far-right— recently making gains in Duisburg, a city that used to be a stronghold of Social Democrats. There now appears to be an emerging consensus that though fast-aging-Germany still requires immigrants, doors should only open to those with skills and the ability to assimilate into the larger body politic of the country.

As the city settles into the quiet hum of the night, the conversations from the courtyard and the lessons from the exhibits still linger in the air. Berlin, in its enduring complexity, embodies this moment of transition— a city forever marked by history, now navigating the precarious balance between fiscal caution and strategic necessity, between open doors and guarded borders. The art, the politics, and the memories of terror all serve as powerful reminders that the choices made today are never just economic; they are profoundly social, shaped by the ghosts of the past and by the uncertain promise of the future.