The question now hangs in the air: will Berlin reconsider its role with Russia, or let the engine seize up?
A Brazil that is now much more central and has a voice on the geopolitical chessboard views the subordination of German national interests to Washington’s consensus with disillusionment. In the Global South, especially in Latin America, which has been historically fated to the Monroe Doctrine, there is an instinctive aversion to the influence of the US in its affairs and the sabotage of development that it has historically inflicted on the subcontinent.
Occupied and divided after the Second World War, without a seat on the UN Security Council, militarily limited and without nuclear weapons, Germany (or rather the western three-quarters of the country) has managed to re-emerge and become a major global economic player, pulling Europe together from the centre, as several thinkers and economists have advocated since the 19th century, but within the US logic and system, initially initiated by the Marshall Plan. Berlin’s tutelage thus left the country with very little room for manoeuvre in the geopolitical sphere beyond Europe. This was not critical in prosperous times, but with the conflicts in Ukraine and the Middle East, and the US trade war with China, Germany’s subordinate role is alerting many to the volatility of maintaining the transatlantic compliance of its government and political class.
The engine of the European project
What has been called the “economic engine of Europe” has also been the country that has benefited most from the trade agreements within the EU, largely anchored in the financial architecture of the euro, which has guaranteed Germany a huge market outlet, often at the expense of competing European industries. On the other hand, German industry, especially intensive industry, has also benefited from decades of fruitful relations with Moscow, which has enabled it to obtain energy at competitive prices, while at the same time lead the anti-Russian rhetoric within the EU.
Some analysts see the 2014 Maidan coup and the resulting rift between Germany and Russia, Europe’s two largest countries, as a sophisticated form of economic warfare by Washington against Europe as a strategic trade competitor. Shortly before the coup in Kiev, former US Secretary of State and now leading energy lobbyist Condoleeza Rice said in an interview: “Over the long run, you want to change the structure of energy dependence. You want to depend more on the North American energy platform, the tremendous bounty of oil and gas that we are finding”.
A decade later, the results are on the table.
Declining competitiveness
The World Competitiveness Center, an index that ranks the competitive position of economies beyond GDP and productivity, including political, social and cultural dimensions, infrastructure, institutions and policies, among others, now ranks Germany 24th, far below the 6th place it held in 2014, the year of the first sanctions against Russia. A significant drop occurred after 2022. Since then, Germany has had only two very modest quarters of growth, both below 1%.
The big German companies are looking for better places to invest: the US and China, the two strategic competitors of the European project that Germany was supposed to lead. The big industrialists are wondering what will happen to the stability of energy prices, if not to the security of energy supply in the medium and long run. This is a major uncertainty that they cannot afford to hold back on.
Infrastructure, technology, pensions and immigration
This coincides with a paradigm shift in technology, labour relations and the pension system. Over the next decade, Germany will send one million workers into retirement every year. This work will have to be replaced. Either by Germans who are not keen on wage conditions, or by immigrants, or by robots. Confusion has broken out, and the nationalistic discourse is gaining supporters every day.
The neoliberal period, first initiated by Schröder’s Agenda 2010 and four Merkel governments later, amounts to two decades of sweet Lassai-fair, but now everyone is realising that they have forgotten to do their homework: the digital transition is late, the infrastructure is outdated, and the foundations for the education of a high-tech generation have been left behind. This is currently being passed on, as its biggest economic competitors, the US and above all China, are prepared for this war.
Stagnating economy
The German economy is expected to contract for the second year in a row, shrinking by 0.2% in 2024. With the economy stagnating from 2022 onwards, all economic indicators point to a prolonged recession and a foreseeable period of political and governmental instability.
The warning was already given during the pandemic: Germany’s instrumental role in the Western economic system would change, namely through a planned “ecological” deindustrialisation, in its relations with neighbouring Russia and in the US’s long-term economic war against Chinese power. The arrival of the “traffic light” coalition in Berlin has confirmed all the most pessimistic forecasts.
Denuclearised, disarmed and now without Russia’s cheap energy, Germany’s industrial base and the export model on which it had based its strategy have been undermined. The country is now entering literally uncharted waters. No one has ever seen a de-industrialised Germany, and this raises many questions both inside and outside the country.
Light at the end of the tunnel?
This week, Chancellor Olaf Scholz came out in favour of diplomatic talks with Russia to end the conflict in Ukraine. In his government statement to the Bundestag, Scholz expressed his openness to direct talks with Putin. “If you ask us whether we will also talk to the Russian president, we’ll say: yes, that’s the case”.
However, opposition leader Friedrich Merz, who would win the October 2025 elections if they were held today, has blackmailed the chancellor into issuing “an ultimatum to Putin” with the delivery of long-range Taurus missiles capable of reaching deep into Russian territory. Scholz seems to be holding firm on this point, as it would represent insanity. However, there are plenty of signs of lack of rationality in Berlin.
In my interview on Europe and Germany on the Brazilian channel, one of my guests ended the programme by justifying the evening’s theme: “Germany is still the engine of Europe”. I had to correct him and add: “Germany was the engine of Europe because it had Russian fuel”. The question now hangs in the air: will Berlin reconsider its role with Russia, or let the engine seize up?
Ricardo Nuno Costa ‒ geopolitical expert, writer, columnist, and editor-in-chief of geopol.pt, especially for «New Eastern Outlook»
