By Stephan Ossenkopp, Analyst and journalist, Schiller Institute, Berlin, Germany
Vienna Security Round Table „Security Policy Challenges for Europe in 2023“
Germany is currently on a path of isolation and destruction. If this sounds overly dramatic, let me put some of the elements in perspective.
In the energy sector, competitively priced natural gas and oil from Russia, coupled with reliable German technology in nuclear, coal and gas-fired power plants, has allowed Germany to enjoy a systemic advantage that has made possible a broad productive middle class, high-quality export products and a world-class industrial base. But with the energy transition – the phase-out of nuclear power, the planned phase-out of coal and gas, and the boycott of cheap Russian energy imports – this advantage has completely evaporated. No matter how many solar panels and windmills the government mandates.
Meanwhile, the price of gas, oil and electricity has skyrocketed and temporarily plateaued at a high level. The sanctions against the Russian Federation are having a major impact on German wholesale and foreign trade, resulting in more difficult procurement, restricted trade, massive price increases for commodities such as wood and steel, aluminium, palladium, wheat, etc. Key sectors such as the automotive industry and mechanical engineering are under severe pressure from the raw materials side.
Insecure natural gas supplies for the German chemical industry will have massive consequences for all value chains, as 95% of all industrial products require chemical products in their production process. If the supply of energy and raw materials to the chemical industry were to be cut off, the entire industrial production in Germany would be paralysed. The social and economic consequences would be enormous.
Against this background, Germany has foolishly not joined the recent call by Brazil, China and Russia for an independent investigation into the Nord Stream terror attacks. The German government seems indifferent to the destruction of a vital lifeline for German energy consumers.
The German trucking industry would also grind to a halt with much higher diesel prices, with all the consequences that this would entail, such as a collapse in supply in Germany, where 70% of all goods are transported by truck, mostly by small and medium-sized companies.
Moreover, in Germany the neo-liberal model is defended by the political system, which generates uncontrollable inflation and massive losses of purchasing power. The too-big-to-fail banks have been propped up for far too long with zero-interest central bank money. They have long ceased to serve the real economy in the first place. Most of them have far more derivatives and other worthless positions on or off their balance sheets than real capital. A short-term collapse of the transatlantic financial system, of which Germany has become a cornerstone, cannot be ruled out.
In terms of infrastructure, the German rail network is ageing faster than it can be maintained and is therefore much more vulnerable to disruption than ever before. It currently takes four to five legislative periods, i.e. up to twenty years, to build new railway lines, and new lines are hardly in sight. Thousands of railway and motorway bridges would have to be reinforced or replaced quickly. The political system, especially the green anti-industrial neo-Malthusian bureaucracy, is grinding any initiative to modernise infrastructure to a halt in the name of saving ecosystems.
But it’s not just Germany. The Financial Times issued a stark warning late last year that Europe’s industrial base of 35 million people could be hit by the devastating effects of the energy crisis. There is an alarming decline in the competitiveness of Europe’s industrial energy users, warned the European Round Table of Industrialists in a letter to the EU Commission and the European Council. Producers of chemicals, fertilisers, ceramics, etc. could be forced to move production to other parts of the world. Steel, paper, glass, automotive, zinc, aluminium, silicon and ammonia production are all facing massive increases in energy costs. The process of deindustrialisation is well underway.
As if this were not bad enough, Germany insists on intensifying its systemic rivalry with China. Germany has created hurdles for Chinese investment, and not a day goes by without China being chastised and demonised for alleged abuses it has never committed.
What does this mean for German citizens and for democracy?
Germany’s cities and towns are in a free-fall collapse with no end in sight.
A significant number of mayors and district councils are now publicly sounding the alarm that they are extremely worried about ‘maintaining social peace’. The insolvency of a significant part of the population is imminent, which will have a short-term impact on tax revenues and public spending. If electricity and gas bills cannot be paid, the housing industry, municipal utilities and service providers will be hit hard. Company closures and production cutbacks will lead to short-time working and unemployment.
This development comes at a time when cities and municipalities are already under great stress due to the year-long restrictions imposed by the Corona pandemic, the massive influx of refugees, the lack of affordable housing, and a ballooning bureaucracy. It is now openly stated that people’s ‘trust in politics and administration’ is declining and that the democratic system is seen as incapable of solving the most pressing problems. Many citizens, businessmen and local officials have realised that this is not a crisis within the system, but a crisis of the neo-liberal model, which puts the profit of a few above the interests and living standards of the general population.
If this were a one-way street, things wouldn’t look so good, and many people and business leaders in Germany see things exactly that way, but they don’t have much hope that any mainstream political force will be able to turn things around and return to normal or a path of growth.
Thankfully, this is not the whole picture. A huge shift towards a new paradigm is emerging and consolidating in the rest of the world, mostly outside Europe, the US and the few countries that cling relentlessly to the failed neo-liberal model.
It is therefore not an inevitable fate that German or European or transatlantic society remains on the path of accelerated disintegration.
But it requires a lot of organisation and bridge-building. For example: China, Germany’s largest trading partner, has just come out of pandemic restrictions to boost consumption, production and innovation. Even the IMF, by no means an institution that helps make the world a better place, has said that China will again contribute more than 30% to global growth, and India 15%.
According to recent calculations, the BRICS group of nations produces more GDP than the G7, and the gap is widening in favour of the emerging economies.
More than 140 nations continue to align with China on the multi-trillion dollar Belt & Road Initiative, which is increasingly transforming poor nations into emerging economic partners, especially in the Global South.
And since their summit in Xiamen, China, where the BRICS Plus concept was born, they have been attracting more and more countries to apply for membership. There are now around two dozen, many of them in Latin America, Africa, Western Asia, etc.
The BRICS charter rejects a Cold War-era system of alliances and bloc thinking, in favour of a system of non-interference and respect for each other’s development path.
The Shanghai Cooperation Organisation, or SCO, currently one of the largest security and development organisations, is moving in the same direction, as formulated in the founding ideas of the Shanghai Spirit, which continues to help reduce tensions and discuss the security concerns of all participating states.
Russia, China and, in the case of the SCO, even India and Pakistan are fully integrated into these platforms. The calculation of the Western power elites, including the German government, to bring the Russian economy to its knees, to collapse the ruble, to isolate Russia by forcing everyone to support sanctions and bans on Russian trade, has backfired terribly, especially on Germany. India continues its independent and non-aligned foreign policy, as do most of the countries of the former Non-Aligned Movement, whose principles are making a strong comeback.
When Russian Foreign Minister Sergei Lawrow recently spoke at the Raisina Dialogue in New Delhi, a very high-level political dialogue, and pointed out the double standards of the West’s narrative on the Ukraine conflict, he received resounding applause from the audience, which consisted mainly of representatives of countries of the Global South.
Shortly before Chinese President Xi Jinping’s visit to Moscow, Russian President Vladimir Putin hosted a two-day conference on Africa attended by 40 heads of state and their delegations. The consensus was that Russia has an important role to play in the world and that its security concerns cannot be treated as arrogantly as has been done by the US and NATO.
The aim of all these developments is to create a new global development and security order, based on principles such as sovereignty, peaceful dialogue and the elimination of all remnants of neo-colonialism.
The most promising flank in this situation is the amplification of the voices of independent personalities and organisations within Germany and other European states, with the explicit demand to put this reality on the agenda for public discussion. If such a powerful alternative to being just a vassal state of NATO and the financial oligarchy becomes an issue, then I believe most people would choose this way out and demand Germany’s cooperation with this new paradigm to create a just economic order in the world.
The real „turning of the tide“ is that unipolarity, bullying, divide and conquer, covert terrorism and other tactics will no longer be tolerated by a humanity that sees itself at a crossroads between sliding into chaotic decay or even World War III, and rebuilding humanity’s interests on the basis of a new era of mutual respect and win-win cooperation.
There is no reason why Germany and others could not cooperate, for example, with China and its development model in third markets, including Central and Eastern Europe, North Africa and West Asia. Germany could immediately bypass the current collapsing system of too-big-to-fail megabanks with undisclosed balance sheets of worthless paper and derivatives and return to the industrial banking and publicly controlled credit it had in the era of full employment and industrial boom. Large amounts of credit can be mobilised to rebuild infrastructure and lent to companies for new production capacity. Jobs can be created, and the confidence of the citizens can be quickly regained.
The West, including eventually the United States, must join such a Global Security and Development Initiative and sit down with its self-proclaimed enemies and rivals and sort things out, in the manner of a Westphalian treaty. It’s a question of will and commitment. It demands a recognition that humanity is worth the effort of reconciliation, security and development.