Is Germany Once Again The “Sick Man Of Europe”?

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Written by Uriel Araujo, researcher with a focus on international and ethnic conflicts

In 1999, the Economist newspaper described Germany as “the sick man of Europe” – in the following years, however, Germany’s economy prospered as an exporting powerhouse. In the 2010s, after the so-called Jobwunder (employment miracle), Germans went on pretty much unhindered by the global financial crisis of 2007-2009. At the time, there was a boom in emerging markets and manufactured goods were in high demand in China. The German economy grew by 24% in that period – in comparison, the figures for France and Great Britain were 18 and 22% respectively.

According to the Economist, German economic and political models were largely perceived as solid and stable, in contrast with so-called “populism of the Trump-Brexit” persuasion. Today, however, the Economist suggests Germany might once again be “the sick man of Europe”, as the country has experienced its third quarter of contraction and may turn out to be the only big economy to shrink in 2023. Alternative für Deutschland (AfD), often described as a far-right or populist party, is on the rise, and the nation’s economic model is increasingly seen as unable to deliver growth. The IMF forecasts that it will be the only G7 economy to contract in 2023, while the purchasing-managers’ manufacturing index is now at its lowest since the beginning of the pandemics in 2020. Gas prices today are about twice as high as they were before Covid. How have all of this come about?

For one thing, the US-led political West efforts towards “decoupling” or, if you will, “de-risking” ties with Beijing are hurting Berlin in some sensitive areas and this is one of the things which have been driving Germany’s recent interest in “strategic autonomy”. The American subsidy war against Europe does not help much at all.

Interest rates, which have risen a lot in Europe since the pandemic, certainly play a role: they hurt German businesses investments and the construction sector. The rising interest rates were a response to inflation and the latter, of course, has a lot to do with the ongoing Russian-Ukrainian conflict, as has the rise in energy prices. Then there is Nord Stream – or rather its current absence.

German authorities investigating the September 26 attack on Nord Stream pipelines stated, last month, “traces of subsea explosives were found” in a yacht hired by a Ukrainian-owned company. The Washington Post reported in June that US President Joe Biden “knew of the Ukrainian plan to attack Nord Stream” three months before the pipeline explosion. Western media, for a while, had been keen on pointing fingers at Russia – which of course makes close to zero sense: the destruction of Nord Stream pipelines has indeed made it quite impossible for German and other European states to reverse sanctions and reopen the pipeline – plus it ensures most Russian energy exports to the European continent transit Ukraine, as writes in her Foreign Policy piece Emma Ashford, a senior fellow with the Reimagining U.S. Grand Strategy program at the Stimson Center.

Ashford reminds that, while unpopular in part of Eastern Europe, due to disputes between Moscow and the energy transit states, “the original Nord Stream project was backed not only by Germany, but also by the Netherlands and the United Kingdom.” Its first pipeline was completed in 2011 “with only minimal controversy” (in Europe). After 2014, things changed, and the American war on Nord Stream ensued. Her closing thoughts, in the aforementioned piece, are the following: “the destruction of Nord Stream once again places Ukraine and other Eastern European states in a position of greater leverage on the energy question. Destroying Nord Stream is an understandable enough choice from the point of view of a country engaged in a desperate war for survival. But it may prompt Ukraine’s partners to reassess just how closely their interests actually align with Kyiv.”

Far from being merely  “conspiracy theory” speculations, the issue of who blew up Nord Stream is increasingly a pressing issue. It is not just of interest to prosecutors and police authorities or the tabloids: it rather has deep geopolitical and geoeconomic implications. It has everything to do with European sovereignty, for instance (or the lack of it). Back in October 2021, Europe was already haunted by the specter of a major energy crisis, with a 600% rise in gas prices. Now, Europe could face a mass recession worse than 2008. As I wrote, in December 2021, all of that affected European and British industry production and societies as a whole. The end of Nord Stream is a game-changer, and, as I wrote a number of times, the European energy crisis in fact serves American interests quite well.

In Germany, the most vocal players calling for an investigation into the pipeline’s sabotage are AfD lawmakers, and this being so, it is no wonder that the populist camp is growing, while this kind of discussion remains largely marginalized within the so-called mainstream political sphere.

Germany might, once again, be seen as the “sick man of Europe”. The sickness, however, is not just German; it is European. And its roots are deep and they pertain to Europe’s great paradox of being dependent on Washington for security while relying on nearby Russia for energy – the latter, by the way, makes total sense, geopolitically and economically, as Nord Stream 2 itself could provide Europe with energy security and lower costs and avoided the energy crisis which now haunts the continent.

For a while, much has been talked about German economic woes (and British ones as well, for that matter). These conversations however cannot fail to take into account the issue of the energy crisis and the issue of de-industrialization in post-Nord Stream Europe. The problem is that such topics are just too unpleasant and the European political establishment does not seem to be ready for this conversation yet.

MORE ON THE TOPIC:

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