By: Contribution to Syrializm
Germany, the leader of Europe and the backbone of the European Union, and currently taking the US spearhead in supporting Ukraine, is still struggling to maintain the cohesion of its economy, which has grown at record levels over the past three decades.
Unfortunately, today it’s slipping into recession, as the information showed that during the last quarter of last year, 2022, the German economy declined by about 0.5%, as it declined in the first quarter of this year, 2023, by about 0.3%, which means that the German economy actually entered a state of recession after two consecutive quarters of growth decline.
The problem here doesn’t concern Germany alone, as since the creation of the European Union, Europe has united with the economies of its member states in the Union, of which Germany represents a quarter share, and Germany is the first trading partner for most European countries.
Therefore, the problem of the fall of Germany means the fall of all Europe, because if Germany faces crises and shocks in its economy, this will affect the economies of European countries as a whole.
The difficulties that the German economy is facing during the current period, with a decline in growth, are causing many problems.
As one of the most important reasons for this decline and stagnation is due to the reluctance of the German people to spend, as the Germans, who are the most eager people in Europe not to spend extravagantly, are now heading towards reducing spending further, and are now heading towards buying cheap goods, moving away from the trademarks and large vendors of expensive products.
As a result of the inflation affecting the German economy, public spending declined during the current year by 1.2%, and government spending declined in the first quarter of this year by 4.9% compared to the last spring of last year.
The German government is facing severe pressure to cut spending.
As a result of these factors, and without forgetting the most important factor, which is the high energy costs, as a result of which both the manufacturing sector and the German people were affected, due to outcomes of the ongoing Russian war in Ukraine, and the position taken by Germany and Europe as a whole against Russia and its participation with the rest of the Western camp alongside the United States in imposing sanctions on Russia.
In addition to losing its supplies of Russian oil and gas, which for three decades remained the backbone of Germany’s industrial renaissance, Germany’s tendency to dispense with Russian energy imports and turn to other sources and suppliers.
Perhaps the German auto sector, which is the pride of the German industry, is an example of the economic decline in the country, as German car exports to a country such as China declined by 24% during the first quarter of this year.
The consumption of natural gas in various sectors of Germany constituted about 27% of the entire mix of energy products in Germany.
The country is relying on the natural gas to cover the German people households.
Today, natural gas imported into Germany from Norway and Holland, which sell natural gas to Germany at about three times the price of what was imported from Russia.
This is a striking example of the level of European solidarity in crises!
In addition to the greed of the neighbors, the country responsible for the calamities, the United States, came to play its role as well, taking advantage of Germany’s need for energy and natural gas, and now supplying it with quantities of liquefied gas at high prices, in addition to the LNG supplies coming from Qatar.
All of these sources of supply caused Germany a very big logistical problem that the Western media ignores talking about; even the German media tries to circumvent it in order to preserve the shape of the political and national orientation of Germany that is following the trend of the hostility against Russia.
Germany is under a costly dilemma of the infrastructure that manages transports and invests gas in Germany, which has been designed based on natural gas supplies that mostly arrived from Russia.
And therefore, as a result of this diversification of natural gas sources and the form and methods of its arrival to the country, the German budget is facing an additional burden, as it’s obligated to make changes in the infrastructure, build new facilities, and perhaps create transportation and storage projects that are commensurate with the new natural and liquefied gas supplies thatvarrive from different directions ad methods.
Thus, the new requirements are challenges related to the environment, terrain, and other conditions that the government in Berlin is force to change and adapt.
With the recent European statements and trends that announced that the European Union is heading towards a total boycott of Russian energy resources, the pace of the crisis expected to slow.
The total cessation of Russian energy supplies to Europe, replace it with various energy sources, and from other countries is the real reason for what is currently guiding the European economy.
Also, the insane spending and costs that European countries have charged themselves in terms of going towards military spending and supplying Ukraine with weapons, equipment and ammunition to confront Russia.
Certainly, the costs of this support aren’t low, and the US pressure is on the European Union countries, who are themselves members of NATO, to continue supporting Kiev in various ways means, the increase of the European bleeding, which doesn’t mean anything to Washington.
Moreover, all of that and the worst is yet to come.
After the increase in the number of companies and factories in Germany and in other European countries to close their doors and stop work, with the dismissal of employees and the reduction of expenses and production, plus the increase of companies filing for bankruptcy.
Also, and with the increase in strikes in many service sectors and public utilities, especially the transportation sector, poured more oil on the fire of economic collapse.
The transportation sector in Germany is in a state of near complete halt, as a result of the country’s two largest workers’ unions announcing a comprehensive strikes, which is caused, of course, by high inflation.
German workers unions are calling on the German government and the company owner’s especially transport services companies to raise wages.
The Verdi Trade Union, the largest German trade union, with 2.5 million members working in various public services, especially the public transport sector and airports, demanded an increase in workers’ wages by about 10.5%.
This past April, all flights at Berlin Airport were canceled as a result of a strike by airport workers, who had been ordered by their trade union, Verdi, to stop working from 03:00 PM until midnight.
The second union, the AVG labor union, which has about 230,000 working members, most of whom work for Deutsche Bahn, Germany’s largest train and Bus Company, has demanded a 12% increase in workers’ wages.
By the way, the situation is also not better in Britain, the country that defected from the EU, and in which the state of strikes in its sectors has become an almost daily issue that has affected life in the entire country with something akin to paralysis, which increases the severity of the economic crisis that the country is experiencing and the inflation that is hitting the country.
It harms workers in the transport and train sectors in Britain, for the same reason, which is also the demand for higher wages.
Britain is currently suffering from a set of severe crises, the first of which is the high inflation rate, which currently stands at 8.7%, with inflation in the rate of food cost increase in Britain, which has reached 15.4%.
The education sector in the country isn’t in the best condition, as after the major strike of teachers in the country last February, the country entered into a series of strikes that are the largest in the history of the UK, which included more than half a million people working in various sectors such as education, transportation and public services.
These strikes caused schools to close and railway services in most parts of the country to stop working, which forced the British army to stand on high alert to intervene to provide assistance and alleviate the paralysis in the country, while British Prime Minister Rishi Sunak continues his role in showing Support and solidarity for the Ukrainian president, letting his people face their problems through strikes and demonstrations in the streets.
The costs of strikes on the industrial sector in Britain, hit the British economy with losses amounting to 243 million pounds ($301,465,800) resulting from the loss of working days due to the ongoing strikes.
To confirm that the state of strikes is nothing but a systematic process, the British website strikecalendar.co.uk post and update a table showing strike dates according to each sector.
In Italy, the country where Mrs. Georgia Meloni is struggling to hold her country together is also facing a severe economic crisis, as workers are also on strikes, like their colleagues in the rest of the European Union, and for the very same reasons.
Inflation rate in Italy reached 7.6%, and the workers in the transport and airports sectors in Italy are calling for higher wages.
Italian airports also faced a series of strikes, especially the strike of airport workers, pilots, and air and ground hosts late last year.
Currently, the transport sector has been facing, since June 4, a massive strike, which included workers in the aviation, bus and metro sectors in Italy.
As a result of this paralysis in the transportation sector and airports in Europe, a vital sector, which is the tourism sector, is threatened this summer, as those coming to Europe from the rest of the world and Europeans within the European Union will face a problem in movement and transportation.
The rate of cancellation of flight reservations in Europe as a result of strikes reached 65% last March, and it remained high during the months of April and May.
Inflation rates in the rest of the EU countries are not much different from Germany, Italy and Britain, as in France, for example, the inflation rate is 5.1%, and due to the same conditions as strikes in a number of service sectors, in addition to the tension that resulted from the French president’s recent decision to raise the retirement age, which ignited a wave of demonstrations and popular anger in the country.
Holland is also suffers from a high inflation rate of 6.1%, while Spain has an inflation rate of 3.2%.
The decline in the purchasing power of the European peoples prompted them to take to the streets and demonstrate against their governments, which still insist on burying their heads in the sand, without having real solutions to all these crises.
The state of instability in the energy market and the dire situation in which the European continent has become today visible.
Returning to Germany, there are renewed warnings that the country will face bottlenecks in energy supplies and high prices as a result of the current conditions.
The Federation of German Chambers of Industry and Commerce warns of the country’s exposure to bottlenecks in energy supplies to the country and an increase in its prices as a result of Germany’s cessation of the use of nuclear energy as a source of energy on which the country relies significantly at some points.
The German trend in recent years was the result of pressure from environmentalists and the Green Party, which is in power today, on the one hand, and on the other hand, the state of reassurance that the country experienced from the stability of obtaining sufficient supplies of oil and natural gas from Russia at very low prices, not to mention what would have been provided by the Nord Stream 2, if it was activated.
What took place in Japan in 2011 in the radioactive leakage disaster at the Fukushima reactor, prompted the German government to shut down and stop the country’s nuclear reactors.
The German pledge to permanently shut down the country’s nuclear reactors and dispense with their use as an energy source was a very big challenge under the current circumstances, but it was forced as a result of pressure to close its last nuclear reactors at the beginning of this year.
Despite the good news that showed a decrease in the inflation rate in the country by 6.1% in the data for the month of May, after inflation had reached the limit of 7.2%, this decrease remains dependent on the ability of the German government to maintain the support it provides to citizens, which will be a burden on the German federal budget in light of the increasing commitments that the German government has placed itself into.
Without being too optimistic about these news, of this decline in the inflation rate, which was also linked to the European Central Bank’s decision to raise the interest rate during the past month, meaning that Europe is solving one problem and causing another, so raising the interest rate to face inflation will result in the collapse of the European economy in the event of a more recession time, caused by raising interest rates.
The European Central Bank, seems, not completely satisfied with raising the interest rate from 3 to 3.25%, as the European Central Bank announced a week ago that there will be another rise of interest rate to confront inflation, which is currently recording a rate of 6.1% in the European Union.
Undoubtedly, the war in Ukraine and its consequences are responsible for what afflicts Europe, but who is responsible for all that… Is it Putin or those who live in Washington?
The costs of the continuation of the war in Ukraine are the cause of what Europe is suffering today.
It became clear that the sanctions imposed on Moscow backfired, harming much more those who imposed them.
Today, Europe is facing two choices:
Either it must yield to popular pressure and the pressure of strikes and increase spending, which will drain its already exhausted budgets.
Alternatively, it will ignore the strikes and face more losses as a result of businesses interruption, private sector fall apart.
It seems that what the Russian President said was correct, “The next ten years will bring danger to the European continent”.