Glenn Diesen: Germany’s developing economic crisis is a fascinating study of self-harm
By sanctioning Russia, Germany destroyed its economic model. Now he faces a possible economic disaster
Germany has just posted its first monthly trade deficit in three decades, and the head of the German Federation of Trade Unions has warned that the country’s key industries could collapse permanently due to high energy prices and shortages . The golden age of the economic locomotive of the European Union is already over.
For three decades, the competitiveness of German industries has been boosted by the import of cheap Russian energy, while Europe’s largest country has also become a key export market for German technology and manufactures. In previous centuries, a key theme of European politics was that the productive power of Germany and the immense resources of Russia could create the main pillar of power on the European continent.
The relationship between Germany and Russia has always presented a dilemma thereafter: a partnership between the two giants would create a challenge for rival powers such as Britain and the United States, while German-Russian conflicts previously transformed Central and Eastern Europe into what British geographer James Fairgrieve dubbed it the « crushing zone ».
The current NATO-Russia proxy war in Ukraine demonstrates that this dilemma of the 19th and 20th centuries remains relevant. Although the 21st century presents a key difference in that the world is no longer centered on Europe.
Moscow’s goal for a Russian-German partnership was to build an inclusive Greater Europe, although that initiative has now been superseded by a Russian-Chinese partnership to build a Greater Eurasia. The export of Russian energy and other natural resources is being redirected to the East, while Russia is increasingly importing vital technologies and industrial products from this source as well.
A case study of self-harm
The economic crisis in Germany is a fascinating case of self-harm. After Moscow backed German reunification in the early 1990s, there was a lack of reciprocity as Bonn, then Berlin, abandoned agreements with Moscow for a pan-European security architecture based on « sovereign equality » and “indivisible security”. Instead, Germany supported NATO expansionism to create a pan-European system, without the largest state on the continent.
As a result, the centuries-old historic rivalry for influence in Central and Eastern Europe was rekindled between Germany/NATO and Russia over where the new European dividing lines would be drawn. After Berlin backed the Orange Revolution in 2004 and the Kyiv Maidan in 2014 to install pro-Western/anti-Russian governments, Ukraine became a less reliable transit corridor for Russian energy. Yet Germany has undermined its own energy security by opposing several Russian initiatives to diversify transit routes. Berlin has repeatedly threatened to reduce its dependence on Russian energy and thus has encouraged Russia to seek export markets in the East.
The Minsk-2 agreement in February 2015 represented a compromise to resolve the conflict that had followed the Western-backed coup in Ukraine the previous year. Berlin brokered the peace accord, though it then played into U.S. efforts to sabotage or « renegotiate » the deal for the next seven years. As NATO Secretary General Jens Stoltenberg recently admitted publicly, the military bloc was using this time to prepare for conflict with Russia.
When Moscow responded by recognizing the independence of Donbass and attacking Ukraine in February 2022, Germany canceled the Nord Stream 2 gas pipeline, took control of Gazprom subsidiaries on its territory and announced energy sanctions. Russian. For years there has been speculation that Russia would use the dreaded ‘energy weapon’ by cutting off Germany’s energy supply, although in the end there was no need to do so. because Germany was inflicting this economic pain on itself.
Escalation Control in the Multipolar Era
Escalation control involves the ability to raise tensions to impose costs on adversaries and defuse them when desired concessions have been achieved. In the unipolar era, when there was only one center of power, the collective West largely enjoyed escalating dominance because it could increase the pressure until its opponents were forced to capitulate. NATO expansionism, strategic missile defense and asymmetric economic interdependence have strengthened this power against Russia.
However, in a multipolar world, it is not possible to base European security on the principle of expanding a hostile military bloc towards Russian borders and then expecting Moscow to simply adapt to these new realities. .
In the emerging world order, sanctioning Russia simply means ceding huge market share to states such as China and India instead of forcing Moscow into submission. As Germany scrambles to find expensive energy to replace cheap Russian fuels, Moscow is now selling its production at a discount to China and India as it transitions from Greater Europe to Greater Eurasia.
Consequently, German industries will lose competitiveness vis-à-vis their Asian counterparts.
While Russia may diversify its energy exports, the West’s ability to diversify its energy imports has been undermined by other policies during the unipolar era. Western sanctions against Venezuela and Iran have reduced their ability and willingness to support the West in these difficult times. Likewise, the invasion of Libya and the subsequent destabilization of countries like Nigeria have reduced the ability of African states to fill the void.
Meanwhile, the United States confiscated Syrian oil, although Syrian energy exports would be much higher if the United States ended its illegal occupation of the country’s territory.
Double on failure
The collective West faces an economic calamity, driven by unsustainable debt, runaway inflation, declining competitiveness, and now also an energy crisis on top of that. As escalation hurts Germany more than Russia, logic would suggest that Germany could pursue de-escalation by reviewing and reconsidering the decision to abandon the pan-European security agreements that were reached at the start of the unipolar era. .
Instead, sanity has disappeared as leaders in Berlin, consumed by ideological fervor, redouble their efforts for failed policies.