Will Trump continue the openly warmongering path of his predecessor, or will abandon the ‘Ukraine enterprise’ and leave the bill to the Germans?
“I have once again presented our coalition partner, the FDP, with a comprehensive proposal to close the federal budget deficit without plunging our country into chaos, based on four key points: Ensuring affordable energy costs, securing jobs in the automotive industry and its many suppliers, improving tax deductions to encourage companies to invest in Germany, and increasing our support for Ukraine. After the US election, this is a very important signal: we can trust ourselves,” the Chancellor said.
Scholz painted a gloomy picture: “Our economy is drifting. Companies are struggling with weak world trade. Energy prices as a result of the Russian war of aggression, the cost of modernising our economy […] Our companies need support, and they need it now”. In addition, the head of government wanted all this to be done within the framework of ‘climate-friendly modernisation’, a demand of the Greens’ partners. Lindner reportedly replied that it was impossible to meet all these demands, and Scholz ended a relationship that had proved difficult from the start.
Economic crisis and car industry under threat
Meanwhile, the economy continues to stagnate: 2024 will be the second year of negative growth, with a very unfavourable outlook for 2025. This is particularly the case for the car industry, which has very tight margins and will have to face fierce competition from China and the US against a backdrop of unbearable energy costs. During his election campaign, Trump threatened to impose additional tariffs on the European car industry, which could force Berlin to intervene in the sector.
In October, for the first time in its 87-year history, Volkswagen announced the closure of at least three factories in Germany, a 10 per cent pay cut and job reductions, without specifying how many (in September, the press spoke of 30,000 layoffs, but VW denied this at the time).
In Russia, the Minister of Industry and Trade, Anton Alikhanov, invited the thousands of dismissed Volkswagen workers to work in Russia at the Jetta SUV plant, a joint venture between VW and China’s FAW, in the Kaliningrad enclave, a Baltic region with strong historical and cultural ties to Germany. There they will be able to obtain Russian citizenship after five years.
The impact of the Russian power cut on Germany’s intensive and manufacturing industries is becoming clear, as is the impact of restrictive policies during the pandemic, especially on the ‘Mittelstand’, SMEs and others that play a crucial role in the German economy for the stability of the middle class. The crisis is deep because it is still exposing the economic reality that the Merkel CDU/CSU (the Union) governments have been hiding for years.
Elections in March
Following Scholz’s statement, the leader of the CDU/CSU, Friedrich Merz, immediately called for a vote of no confidence in the government, but new elections won’t be held until March (six months before the normal end of the parliamentary term). The Christian Democratic coalition will be the party with the most votes, but with whom it can form a government is still unknown. With an almost non-existent FDP, it won’t have enough of a majority, with the far right it will be very difficult, and with the BSW or the Greens even less so. A new grand coalition with the SPD is also unlikely, but possible. Institutional instability and uncertainty will be the new normal in a country accustomed to political calm.
The Union carries on its shoulders the pro-immigration policies of four successive governments (2004-2020) and some of the most serious corruption cases in the country’s history, of which it naturally retains some important protagonists in its parliamentary fraction.
“Things can only get worse with the Union”
On the left of the Bundestag, Sahra Wagenknecht, leader of the new BSW parliamentary group, predicted that the country’s precarious situation could only get worse with a Union government, given that the current crisis is rooted in Berlin’s support for the Kiev regime to the tune of at least €37 billion and the €100 billion special fund to finance the armed forces, which has even greater support in the Union than in the current government.
Merz recently called on Scholz to give Putin a “24-hour ultimatum”. According to the CDU/CSU leader, this is a question of self-confidence: “If we in the West are afraid to defend ourselves, then Putin has already won half the battle. It’s a question of self-confidence,” he said. Merz believes that he can intimidate Putin with the supply of German Taurus long-range missiles, which Kiev could use to attack Russian cities. In January, foreign policy chief Roderich Kiesewetter said live on public television from Kiev that war must be brought to Russia. Russian military installations and headquarters must be destroyed. This is the current level of the Union.
It’s also important to know what the US position on NATO and Ukraine will actually be once Trump takes office. An unknown that will determine the fate of the European Atlanticists, who risk being left alone in their defence of US hegemony on the Old Continent.
The traffic light crash is no accident
Germany’s critical situation represents the return of the ‘sick man of Europe’ of the 1990s, masked for a quarter of a century by neoliberal and laissez-faire recipes and public debt.
Germany’s education system currently has an investment deficit of 68 billion euros, according to the GEW trade union, the country’s infrastructure is not as well maintained as it needs to be, trains are often late, thousands of doctors’ surgeries are closing and there are hundreds of thousands of kindergarten places missing. The carefree and harmonious atmosphere of 20, 10 or even five years ago is history.
The energy problem
As has been mentioned in other contexts, one of the fundamental problems of the current state of the country has to do with access to energy sources at affordable prices. Long-term contracts to buy oil (since 1963) and gas (since 1972) from Russia have guaranteed Germany (and therefore the European project) decades of industrial competitiveness, on which its entire export model is based. An energy partnership that Washington has always looked down on, but which it avoided directly interfering with until the Maidan coup in 2014 and the explosion of the Nord Stream gas pipelines in 2022. If these actions coincided with the policies of the Obama-Biden and Biden-Harris Democratic administrations, a new Trump team shouldn’t be expected to reverse this process any more than it did during its first presidency. The question is whether he will continue along the openly warmongering path of his predecessor, or leave the ‘Ukraine enterprise’ in the background and leave the bill to the Germans.
Ricardo Nuno Costa ‒ geopolitical expert, writer, columnist, and editor-in-chief of geopol.pt, especially for «New Eastern Outlook»
