The fallout from Project Ukraine is familiar to the average German. It’s now reaching the country’s political class where the disgraced ruling coalition heads for the exits after wrecking the country with their blind support for “trans-atlanticism” at the expense of most Germans.
Don’t shed a tear for them as they’ll likely be rewarded handsomely for a job well done.
They got the ball rolling with the energy/economic crisis, which now looks likely to usher in forces seeking to further empower the financial sector in Germany at the expense of the working class.
One Government, Two Economies
The so-called traffic light coalition of the Social Democrats (red), Free Democratic Party (yellow, and the Greens was always an odd grouping.
United by their tickets on the Biden Administration-driven Project Ukraine bus, party pretenses like fiscal conservatism and minimal protections for the working class were tossed out the window on the road to Moscow. But the bus is now in a ditch, the Americans are halfway down the road and the Germans are stuck.
As it became impossible to ignore the folly of the grand plan to use Ukraine to collapse Russia, the coalition began to unravel and fight among themselves after the German constitutional court slapped down an attempt to get around the country’s so-called debt brake in order to throw more money down the Ukraine pit.
The government has been struggling for months to finalize a budget, and Chancellor Olaf Scholz finally threw in the towel when he fired Finance Minister Chrisitan Lindner over his renewed commitment to fiscal prudence after two years of lavishing gifts on Ukraine.
Lindner’s FDP has taken on so much water that it’s currently sits below the five percent threshold to be included in the next Bundestag.
The Greens, which are the most slavishly Atlanticist of the bunch, will likely pay the lowest electoral price. They might not have gotten their hands on all of Russia’s strategic minerals for the clean energy future, but Germany is on its way to becoming an agrarian society that uses less fossil fuels.
Scholz, who has seen his party embarrassed in the recent European elections and a few German state votes, is hoping to hold a no-confidence vote on January 15 and then new elections in March with the hope that he could get a provisional budget through with some popular items that could attract voters back to his party. The outcry from the opposition and wider public over waiting until late Spring 2025 for a new government to be installed is now forcing Scholz to consider moving up his dates.
A final brief obituary note on the worst post-WWII German government: It’s commonly assumed that the country’s vassalage explains its recent ineptness. While there’s certainly some truth to that, Berlin’s decision to go all in on the harebrained resource-grab plan makes a little more sense when looking under the hood.
Germany’s economy had been sputtering for some time. There’s only so long you can rely on wage suppression and low investment. Grabbing Russian (and Ukrainian) resources could have had an immense payoff even if the Americans took the lion’s share, and there are two key points about the risk-reward calculation of the German elite:
First, despite the crisis for the industrial economy of the past few years, the wealthiest Germans, the asset-owning class, is doing quite well. Unsurprisingly wealthier Germans were always the biggest backers of Project Ukraine because they did not face the consequences and this is reflected in the country’s politics and media.
Second, crisis creates opportunity. As Michael Hudson summarized back in 2022:
The economy is to be Thatcherized – all by riding the crest of the American anti-Russian sanctions and claiming that this creates a crisis requiring dismantling of public infrastructure and its privatization and financialization.
He was right, and that trend looks set to accelerate.
The Trump ‘Crisis’
Let’s first step back and take in the wreckage.
I’ve been pounding this drum for a while here at NC, but going hand in hand with war against Russia is a war at home on the German working class.
The German social partnership model — which rests on the lie that the interests of capital and labor can peacefully coexist — is getting the final nail in the coffin after years of feckless leadership whose main goal was putting a happy face on wage and benefit cuts. (This is probably long overdue and possibly one positive outcome of the events of the last few years.)
Meanwhile, the energy outlook remains dire.
The industrial economy is dying.
A mixture of public housing being sold off to investors, less building, millions of immigrants, and rent freeze loopholes has the country in a severe housing crisis.
Real wages are well below what they were in 2020 despite ticking upwards recently.
German companies are increasingly outsourcing industrial production as a fix to Berlin’s self-imposed decline in competitiveness
Subservience to the US has been cemented in Berlin, as well as Brussels.
Germany and the EU are supposedly facing a myriad of crises. A closer look reveals them all to be self-inflicted or imaginary, however. Ukraine/Russia, economic/competitiveness (which is aided by austerity), and now comes Trump, which I fail to see as anything new for Berlin. Here was the German leadership class a few weeks ago throwing a party for Biden despite his role in bringing the country to its knees:
US President Joe Biden has been awarded Germany’s highest honor, the Grand Cross of the Order of Merit at a ceremony in Berlin, on his farewell trip to Europe. pic.twitter.com/pNZOyos0e7
— DW Politics (@dw_politics) October 18, 2024
And they’re now up in arms about Trump potentially shoving the knife in a little deeper?
Aside from upstarts like the Alternative for Germany (AfD) party on the right and the Sahra Wagenknecht Alliance (BSW) on the left, these “crises” do not lead to a call to rethink policy towards Russia or China, with which the EU is pursuing a trade war while being wholly unprepared as many products they rely on from China like certain drugs, chemicals and materials have no substitutes.
Nor do they bring questioning of the sanctity of the transatlantic relationship despite the “de-risking” strategy with China and Russia making Europe more reliant on Washington:
Europe now relies on the US for security, the US for (fossil) energy and the US for demand …
to rephrase an old trope about Germany https://t.co/0lxEdquQCn pic.twitter.com/m2aaIiYQn5
— Brad Setser (@Brad_Setser) October 18, 2024
In other words Germany has effectively boxed itself in so that must be prepared to do whatever it takes to avoid those tariffs Trump is proposing on German exports. How about all the endless talk about Europe (primarily Germany) shouldering more of the heavy load of the “rules-based international order”?
Lo and behold, we have the plutocrat-funded think tanks ready with a solution to this crisis of Trump:
Henning Hoff [from the German Council on Foreign Relations] believes that it is now important for the German government to “make up for its failures.” “A much stronger signal is needed to show that the Europeans, especially the Germans, are truly prepared to shoulder a greater burden of their defense. If we continue to fumble along and argue — we have the dedicated funds (for the Bundeswehr), so the defense budget need only increase minimally — then we won’t be able to impress anyone in Washington, not now and certainly not under Trump.”
What does that mean in practice? Unfortunately for Germany and the EU, that will almost certainly include pressure from the US to prop up whatever is left of Ukraine and probably making sure its bondholders are made whole.
While all the reports coming out about Trump’s plans should be taken with a grain of salt due to those wily neocons and their allies in the media potentially trying to box him in, the Wall Street Journal recently reported that Trump’s plan to “freeze” the war includes European and British troops enforcing a buffer zone between the two sides.
“We are not sending American men and women to uphold peace in Ukraine. And we are not paying for it. Get the Poles, Germans, British and French to do it,” one Trump staffer reportedly said.
Either way, the EU is also to continue to serve as a waiting house for NATO so it must find spare change to bring Armenia, Moldova, Georgia, and who knows, Kazakhstan(?) on board as well. How to pay for all the color revolution efforts, bribes, military hardware, state aid, and everything else required by the EU’s now-openly subservient role to US imperial ambitions? The think tanks and hacks like French President Emmanuel Macron, European Commission President Ursula Von der Leyen, and economist for hire and sometimes unelected prime minister Mario Draghi say it’s common EU debt. (In theory, there could be benefits to common debt, especially for countries like Italy which face higher borrowing costs, but going down that road to pay for the US empire ain’t it.)
Berlin has long been opposed, but now here comes the big bad orange man saying what many of the European elite have been saying — yet failing to act on. Europe must get serious about defense or at least pony up to keep the Americans on board.
Who’s riding in to save the day for Germany? None other than [checks notes] former BlackRock board member Friedrich Merz.
That’s the same BlackRock all tied up into Project Ukraine. It took $17 billion in losses on Russia exposure after the war began and has been at Zelensky’s side ever since.
Step on up Herr Merz!
Merz is the odds-on favorite to lead the country as his increasingly rightwing Christian Democratic Union has a comfortable lead in the polls.
Aside from being a diehard neoliberal, Merz is also a trusted Atlanticist.
Merz tries to appear tougher on Russia than the Scholz coalition. He’s now talking up how he will give Taurus missiles to Ukraine.
That appears increasingly unlikely and wouldn’t make a difference anyways aside from potentially bringing Germany into the line of fire. It does signal he has no intention to pursue a thaw in the New Cold War or autonomy from the US, however.
Merz is a supporter of the planned stationing of US medium range missiles in Germany, which will provide another impediment to repairing ties with Russia.
Here’s Merz is in a conversation at Atlantic-Brucke, which succinctly sums up how a Merz government would value the transatlantic relationship and deal with Trump’s likely demands:
We are in the midst of a cultural fight about the future of our liberal order. He concludes that it is really uncertain whether we will win. But there is something that makes me optimistic: when I travel to the United States, my experience is that in these complicated times, more Americans than ever before are willing to defend what we achieved over the last seven decades. Let’s preserve our freedom and our liberty…
When Jean-Claude Juncker travelled to Washington, D.C. in July of 2018 and had a debate with President Trump in the Oval Office, he gave a very clear statement about trade. He could only convince the President not to implement more tariffs on European goods because he had a letter signed by 28 European heads of state backing his point. Europe has to be clearer and we have to be united. That brings me to another point: The Germans have to take on more leadership within the European Union.
What could that look like for Germans?
Merz wants to cut social spending, yet reform the debt brake to allow for more spending at the same time. That should tell us all we need to know.
As for common EU debt, Merz has been very careful with his words. In September, Draghi unveiled his much-discussed report calling for massive amounts of spending in order for things like AI investment, other “disruptive” tech, and of course, to paper over the bloc’s ongoing energy crisis. Here was Merz on that report:
“I want to say this very clearly, now and in the future, I will do everything I can to prevent this European Union from spiraling into debt.”
Maybe I’m parsing his words too carefully, but it’d be easy to make the argument, as Draghi does, that the investments would help pay for themselves. And as the German economy continues to tank, it could be easier to argue that a Draghi-style plan is the answer.
While Merz and the CDU look like the safe bet to lead the next German government, the biggest question is who will be their coalition partner(s). If the transatlantic asset-owning class faces any potential hurdles, it’s to be found in the AfD and BSW, but will Merz be able to keep them out of any coalition?
As of now, polling indicates there would be only five parties in the Bundestag, and the CDU would be forced to side with its fellow Atlanticists, the SPD and the hated Greens, or forget the firewall against the AfD.
The least likely is that Sahra Wagenknecht’s party would be included in any coalition due to her party’s opposition to the ongoing economic war against Russia and strong focus on working class issues.
While the AfD and CDU increasingly see eye to eye on the issues like immigration that get the former labeled the second coming of the Nazis by media in and out of Germany, the problem is that the AfD is opposed to Atlanticism. It should be noted however that the AfD firewall in the European Parliament recently broke down. Here’s Politico:
The latest example of the EPP’s flirtation with the far right, according to my colleagues Gregorio Sorgi and Max Griera, came at a vote on the EU’s 2025 budget Wednesday. The EPP, including Weber himself, tore up a deal it had made with its traditional centrist allies and backed extreme-right amendments, proposed by the Alternative for Germany (AfD), calling for EU money to be spent on border infrastructure and so-called return hubs for deporting migrants. The AfD celebrated “demolishing” Parliament’s anti-far-right firewall.
***
At first glance Biden’s visit to Germany a few weeks ago to be bestowed with honors seemed to be another in a long line of gleeful celebrations of failure from our rules-based order.
Take another glance and one can come to a different conclusion. Despite the economic wreckage across Germany and a body count in the millions across Ukraine and Middle East, these leaders from the Western ancien regime were truly there to toast their successes.
All the blueprints provided by the plutocrat-funded think tanks on both sides of the Atlantic are coming to pass. A more financialized Germany will shoulder a heavier load of the empire. Short term thinking? Sure, but for now the country is successfully walled off from the East and prepped to be set upon by the vultures in the West.
