Karl Marx’s maxim “history repeats itself, first as tragedy, second as farce” is overused. But it comes to mind when one reads statements by German representatives on how their country’s presumed dependency on China is “overblown.” This is almost exactly the same tune then-foreign minister Heiko Maas was playing years ago about Berlin’s dependency on Russian energy: “There is no dependency on Russia, certainly not in energy matters.”

Alas, yesterday’s words can come back to haunt: just as there supposedly was no dependency on Russia in the past, there is no dependency on China in the present. The numbers, however, say different. Starting six years ago, Beijing has become Germany’s largest trading partner, with a yearly volume of €245bn — or 9.5% of its foreign trade, up from 1% in 1990. ...  Continue reading

There are growing rifts within the European Union, beginning with Franco-German disagreements about energy and a common policy towards China — a disagreement now so serious that a meeting between President Macron and Chancellor Scholz was almost cancelled. Poland, the most powerful Eastern European member of the Union, is in an open dispute with Brussels since the European Commission refuses to approve financial transfers to Warsaw for a supposed lack of democratic standards. This is a situation approaching the ongoing standoff between the Commission and Hungary’s Viktor Orbán. Simultaneously, Poland is demanding €1.3bn from Berlin as reparations for the Second World War. ...  Continue reading

The Austrian economist Joseph Schumpeter once wrote that “the first thing a man will do for his ideals is lie.” No sentence is a better embodiment of the ongoing farce around the continuation of Germany’s remaining three nuclear power plants. 

Since the beginning of Russia’s invasion of Ukraine there has been a debate as to whether Berlin should postpone the 2011 plan to exit nuclear energy, a power source that in 2021 was still providing around 13% of Germany’s electricity. Even the Green Party, with its general suspicion towards everything that is not wind or solar powered, felt it necessary to at least commission a study regarding the feasibility of keeping nuclear power online.  ...  Continue reading

The recent news cycle has been dominated by the election successes of Right-wing parties in Europe, from the Sweden Democrats to Giorgia Meloni’s Brothers of Italy.

But something is afoot in other countries as well. Driven by farmers’ protests in the Netherlands, the Farmer-Citizen Movement (BBB) that was barely scraping 1% of the vote in the last election is now polling neck-and-neck for second place with Geert Wilders’s Party for Freedom. Similarly in Germany, the AfD (Alternative for Germany) is making a strong showing in the polls, rising by 5% to 15%.

The question, however, is whether or not these parties have any capability to rule once they are in government. ‘Right-wing’ has become such a broad term that it often blinds us to the significant differences among right-of-centre European parties. ...  Continue reading

In early October, the so-called “European Political Community” (EPC) had its first summit in Prague. 44 countries — 27 EU member states plus 17 additional ones, including Turkey, the UK, and Serbia — came together as part of a “platform, an organisation for European leaders to discuss the main issues of the day, like the war in Ukraine, climate change and economics”, according to Dutch Prime Minister Mark Rutte.

While Europe might be running short on energy, it is not running short on platforms. In addition to the EU, there is the Council of Europe (not to be confused with the European Council) with 46 participating states. Then there is the Union for the Mediterranean with 42 members, an organisation that was created to support the already existing Euro-Mediterranean Partnership. ...  Continue reading

The International Monetary Fund has recently updated its world economic outlook, predicting a global growth rate of only 2.7% (compared to 6% in 2021). One of the worst performers is the Eurozone, which is expected to grow by only half a percentage point — and even that prediction could turn out to be too optimistic.

The problem is particularly acute in Germany, where borrowing costs are beginning to rise and the markets are noticing. The backbone of German innovation and a major source of future growth are its small to medium sized businesses. Almost 40% of total corporate turnover is generated by these enterprises, and they account for 55% of value added in the German economy. They also train the future industry workforce, and are responsible for 1.3 million of the 1.5 million training places in German companies. Keen innovators, smaller companies are often investing twice as much in research and development as their larger competitors. Unfortunately, the current crisis is hitting precisely this sector of the economy hardest, driving up insolvencies among Germany’s so called ‘Mittelstand’. ...  Continue reading

There was an almost celebratory mood among German economists this week, triggered by the news that industrial gas consumption fell by 20% — something that supposedly seemed impossible just a few months ago. If one views this demand destruction as positive, there indeed is reason for celebration: German industrial orders are continuing to drop and heavy industries are reducing or stopping production, like the aluminium producer Speira that plans to halve its output, or Arcelor Mittal, the steel producer that will close down two blast furnaces indefinitely.

Outside of the economists’ bubble, however, the German people are less sanguine. In a disastrous interview on a popular German talk show, the Green Vice Chancellor Robert Habeck opined that German companies are not threatened by insolvency, they just might have to stop producing — for an unknown period of time. In the mind of many German politicians and journalists, the approach to the intensifying crisis appears to be to shut down industry, provide bailouts (to companies) and handouts (to the population). Then, once the war in Ukraine is over, things will return to the status quo ante before the Russian invasion. ...  Continue reading

In late March, the Green Vice-Chancellor of Germany pleaded with the German people to save energy wherever they could: “Every kilowatt-hour of energy saved helps”, a plea he repeated in June, with a European energy crunch looming.

Apparently Berlin counts on kilowatt-hours, but does not care about terawatt-hours. In 2021 six nuclear power plants produced over 65TW/h, providing no less than 13% of German electricity generated. Three of these plants were closed in early 2022, with the remaining three being phased out in December. Though there have been calls by other European states and by German industry to keep them running, so far the government is not willing to reconsider its original plans. ...  Continue reading