This is definitely not the Germany of Adenauer. Or even that of Brandt.
From Tablet Magazine, October 12:
The worst nightmares of Europe’s sleeping giant are coming true all at once
Being a Germany watcher in the early 21st century can often feel like being an expert on ancient Greece: You kind of missed all the exciting bits. Alas, that seems to be changing. At the same time an economic cyclone is threatening to wreck one of the world’s more deceptively combustible societies, Germany is also emerging as the fulcrum of Vladimir Putin’s strategy to salvage his war in Ukraine by breaking Western solidarity—a gambit that now involves a credible nuclear weapons threat. For a country with an almost uniquely pathological fear of inflationary shocks, populist politics, and nuclear technology, the winter of 2022 is shaping up to be a horror show.
What is currently grist for German nightmares may also turn out to be a genuine tragedy for the entirety of Europe, as well as the United States. For several decades, Germany was able to build strong domestic cohesion, a solid social welfare system, and limited income inequality on the back of a strong manufacturing sector and competitive exports. This kept unemployment low, wages stable, and politics bland. Their high quality of life often came at the expense of poorer members of the eurozone, but few Germans could argue with the result: the world’s fourth-largest economy and one of its most steady and apparently sane political societies.
But the last two years, and the last seven months in particular, have revealed this model to be something of a Ponzi scheme. The entire German system, it turns out, depended on a never-ending supply of cheap Russian gas, immaculate just-in-time Chinese supply chains, and ever-expanding foreign markets. No other country bet more on the end of history, and we all know how that turned out.
Until the end of September, there had been widespread speculation that Chancellor Olaf Scholz was willing to trade sanctions relief in exchange for a revival of the halted Nord Stream gas pipelines. Now that the pipelines have exploded, the loss of the cheap energy that underpinned modern Germany is all but irreversible. Meanwhile, the Chinese market is becoming tighter and more hostile, even as Chinese firms have started to outcompete German firms in everything from cars to machine tools. Because Germany depends so disproportionately on foreign markets, remains ideologically committed to large savings surpluses, and suppresses wages to keep exports competitive, Germans themselves cannot consume enough of what they make—while German workers make things that are especially vulnerable to inflationary pressures. Baseline inflation forecasts for Germany are now in double-digit territory. Steel, fertilizer, chemical, and toilet paper plants are shutting down or on the brink of closure, and German automakers are threatening to shift more production to places like South Carolina and Alabama. The anger and frustration of a large number of increasingly nationalist voters—the worst fear of the German establishment, for obvious reasons—has benefited the far-right Alternative für Deutschland (AfD), which now polls as the most popular political party in all five states of the former East Germany.
In response to all this, Berlin resolved last week not to reverse course on nuclear power or invest in economic modernization—both of which remain poisonous in German domestic politics—but to embrace a 200-billion-euro national energy subsidy that whipped a majority of the European Union into a frenzy. By opposing an EU price cap while unveiling a surprise domestic relief package to keep its own voters warm and its factories from shutting down, Germany was seen as sabotaging EU state aid programs, efforts to build a unified response to the energy crisis, and attempts to ensure that poorer member states can bid for gas on a level playing field—the union’s core reasons for existing. The German national subsidy, which has since been slightly downscaled, could still make energy more expensive for its neighbors—none of whom have forgotten that Germany’s two big contributions to Europe over the last 15 years have been the cult of fiscal austerity and dependence on Vladimir Putin.
Berlin has taken a Wilhelmine attitude to its allies’ fury. At a meeting of EU leaders last Friday, Scholz dismissed Polish, Italian, and other provincial frothing about his subsidy—which he refers to, approvingly, as a “double ka-boom”—as simple “misunderstandings.” Economy Minister Robert Habeck meanwhile recently appeared to accuse the United States of war profiteering by putting Germany in the position of having to buy expensive U.S. liquefied natural gas exports, now that its rightful cheap Russian gas is spilling into the ocean....
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