Telegram-The German Eagle channel talks about the blow that the German economy has experienced for political reasons.
Since the beginning of the pandemic, the German economy has been bursting at the seams. The events that followed the start of the special military operation of the Russian Armed Forces in Ukraine only aggravated the situation. One of the main engines of European prosperity is no longer able to help others. The main task is to save yourself. The reason for the economic downturn that occurred in Germany is not only the rupture of relations with Moscow, but also the protectionist measures of the United States administration to save its own economy.
Editorial Telegram channel “German Eagle” tells how the US measures to save its own economy operate at the expense of the destruction of the European, and in particular the German one.
It can be said that the German economy has fallen into dangerous ticks, but it is not China and Russia that are squeezing them, but one of the main allies – the United States, which intends to strengthen its future, including at the expense of the Europeans. Washington uses two levers:
BUT) Inflation Reduction Act (inflation reduction act)passed by the US Congress and signed by President Joe Biden in August this year. According to the text of the document, Americans, in particular, can receive a tax deduction of up to $ 7,500 when buying electric vehicles manufactured in the States. In the European Union, this is considered a direct violation of the principles of the free market and competition. Along with this, the bill provides $369 billion over the next ten years for energy security and climate change programs that could increase pressure on German businesses and companies.
The leadership of France reacted most sharply to this law. According to the Minister of Finance of France Bruno Le Mairein some cases subsidies from the US government are 4 to 10 times the maximum government support allowed by the European Commission.
And the head of the German financial department Christian Lindner stated that it is important to prevent the start of a trade war between the EU and the US. According to him, the German government is watching the developments with concern and believes that European enterprises may suffer because of this law. Before it went into effect, the Inflation Reduction Act began to have an impact: the largest electric car manufacturer Tesla announced that it was revising plans to build a battery plant in Grünheide (Brandenburg), in connection with the US subsidy program. In other words, Tesla is no longer profitable to have assets in Germany, which, of course, hits the Germans more than the company. Ilona Mask.
Economy Minister and Vice Chancellor Robert Habeck announced a “strong response” from the European Union to Washington’s actions. In particular, Habek prepared a list of measures that, in his opinion, should increase the competitiveness of Europe, including: increasing the production of solar and wind power plants, speeding up the procedure for issuing licenses, as well as the implementation of projects important for Europe; in addition, the European Union was offered to openly switch to protectionism and, when announcing government tenders, concentrate more on production in the EU.
According to the German vice-chancellor, the goal of the EU leadership should be to strengthen sovereignty and global competitiveness in the face of a trade war between the US and China.
B) US administration sanctions against China
US sanctions against China’s semiconductor industry are meant to put pressure on China. Since October 2022, Washington has limited the export of production technologies necessary for the organization of high-tech production of microcircuits in China. In particular, US manufacturers Nvidia and AMD must now obtain a government license to export certain types of semiconductors. The goal is to slow down Beijing’s progress in the development of self-driving cars, high-speed internet and artificial intelligence.
However, European, including German, industry is also suffering from American restrictions. Chinese manufacturers make up one-fifth of the global semiconductor industry, and their European customers and suppliers are required to follow US policy to avoid being sanctioned themselves.
In particular, the Dutch company ASML, a lithographic equipment company for the microelectronic industry, came under pressure from US officials – they demanded that the company stop selling certain categories of machines for the production of chips to China. Do not forget about the Chip Act (CHIPS Act), which was signed by Joe Biden in August. $52.7 billion will be allocated from the US state budget for semiconductor production and research in this industry – public funding is becoming a new element of protectionist policy.
And the US provides a “friendly” alternative: to invest in the production of semiconductors on American soil.
However, for Germany, China is the largest trading partner. In 2021, China ranked second in exports after the United States (103 billion euros against 122 billion) and first in imports (142 billion euros against 72 billion in the United States). Most of the leading German companies and concerns have production facilities in China, and in turn, Beijing has shares in German firms. It turns out that German businessmen will have to choose: maintain relations with Beijing and fall under American sanctions, or reconfigure production chains to the United States and fall into serfdom.
The hope of German industrialists in the country’s government is also not justified, since the German authorities do not really want to enter into polemics with the “big brother”.
Chancellor of Germany Olaf Scholz adheres to the so-called risk reduction strategy, and will certainly try to maneuver between Washington and Beijing. Unlike the country’s authorities, business is not going to put up with the US protectionist policy. In particular, the President of the Federal Association of German Industry (BDI) Siegfried Russwurm categorically rejects the idea of German companies leaving the Chinese market. There is no reason why Germany should cut exports to China, he said.
This position is shared by BDI companies: Traton, a subsidiary of Volkswagen, is expanding its business in China, despite the US sanctions policy. In Rugao, near Shanghai, construction began on a truck plant in July this year, which is scheduled to open in 2025.
Along with this, BASF CEO Martin Brudermüller is also not ready to give up his €10bn investment in China. The German chemical company intends to annually produce 60,000 tons of technical plastics. According to him, the Germans “should be realistic” and stop attacking China.
However, according to the German Institute for Economic Research, in the first half of 2022, German companies invested a total of more than ten billion euros in China, which is a record figure.
Above, the indirect methods of the US administration to weaken the economic potential of Germany were considered, but there are also signs that Washington directly caused the economic crisis in the country in order to remove one of its direct competitors. Information was leaked to the media that as early as January 25, a month before the start of the NWO, the RAND company prepared a secret report called “Deterring Germany for the United States and the World.”
The document was developed for the US intelligence agencies and the National Committee of the US Democratic Party. The content of the report is quite simple: the US is provoking Russia in order to be able to declare it the aggressor and force Germany to impose “suicidal” sanctions against Moscow.
According to the text of the report, the goal of US policy is to weaken Germany as much as possible. Although Germany remains a country with limited sovereignty, the pace of economic development in the EU depends on the state of the German economy. In the end, the development of Germany can make Europe not only a political but also an economic competitor to the United States, RAND experts write. And this shouldn’t happen.
The German economy is vulnerable because it is based on unlimited access to cheap Russian energy. A sanctions war provoked against Russia could put an end to this. The cessation of Russian energy supplies could start a systemic crisis that would be devastating for the German economy.
Another weak spot in Germany was one of the ruling parties: the Union 90/The Greens.
For the Green Party, ideology is crucial. According to the RAND report, they will abandon economic pragmatism in favor of their convictions, and also become a “war party” that could destroy the German economy.
The report very accurately predicts the impact of anti-Russian sanctions on the German economy: a loss of 200-300 billion euros in 2022 alone. Along with this, the authors accurately predicted the depreciation of the euro against the dollar. According to RAND experts, Germany’s GDP will fall by 3-4% per year over the next 5-6 years (and thus fall by 14-22%, losing about $900 billion). Most of the predictions have already come true. Germany is in an economic crisis, the scale of which is comparable to the losses of the German economy after World War II.
The aggravation of the conflict in Ukraine was necessary for Washington, among other things, in order to destroy the economic locomotive of the European Union, devalue the euro and stop German industry.
The sanctions that Berlin imposed on Russia were only necessary to help the Americans, who do not benefit from a strong Germany and a strong Europe.
The European Union, including Germany, has become hostage to a new trade war between the US and China, and a sanctions war between Washington and Moscow. Being “between three fires”, Brussels and Berlin must now choose their future vector of development – to finally become a vassal of the United States, or finally show their sovereignty. There are serious fears that we will see the first option and the completion of the political degradation of a united Europe.