Germany was once the main beneficiary of European unification
This solved a bunch of traditional economic problems, such as the expensive brand, and allowed markets to be united. In order for the other countries to accept a similar arrangement, Berlin was prepared to support not only countries like Estonia or Latvia, but also Greece, Italy, etc. If you compare these countries with Germany’s economic potential, these are ‘zeros’. France played some role, of course. Also, at a certain stage, Britain played an important role in the EU, and it withdrew precisely because it understood that Berlin would not give up the leading role in the Union.
If we look at Germany as an economy, it has a number of structural problems. The German worker, though skilled, is extremely expensive and extremely unmotivated to work overtime. Even when compared to Americans. From bell to bell and then that’s it, the working day is over.
All this was built on cheap energy resources, first from the USSR, and then from Russia, where not only gas but the whole Mendeleev’s table was coming from. Such an advantage, coupled with its advantageous position in the EU, negated the problem of an expensive working class. As a result, Germany could live very well on this and still be able to support small countries that represent nothing of themselves economically or politically.
Now the shop of cheap energy is closing. Any talk that they will find an alternative… Firstly, where? Secondly, they will look for it at current prices. It is not 400 and certainly not 200 euros per ‘cube’.
Given that Germany has a lot of resource- and energy-intensive production, such as chemical and processing industries, all that will have a concrete impact on Germany’s balance sheet as an exporter, which is where it makes the most money.
Immediately there is an EU-wide problem, because the main purse strings are Germany. The conglomerate of countries that surround it have completely lost any economic initiative and autonomy during its time in the EU. With Berlin unable to fulfil its role, bad times begin for everyone.
The main question Germany will have to decide is who to heat – the industry or the population. They will choose the population because they don’t need a social explosion. The industry in Germany is serious, it has a certain margin of safety, but the question is, how long will it last? Most of the German industry simply doesn’t make sense if supplies are limited or if gas is purchased at the current price – it is uncompetitive and cutting production will immediately lead to a loss of markets and increasingly negative long-term effects.
Gazprom is deadly serious. Even the non-payment of dividends, which brought their quotations down drastically in the summer, essentially showed that in the long term Gazprom sees that supplies will not be restored, and so it has withheld liquidity, although many investors have been extremely unhappy about this.
By starting the ETR, Moscow was not expecting Europe to be so fanatically Russophobic to its detriment. Since last year we have been withdrawing from US assets and going into European and Chinese ones. Apparently, Europe was given ironclad guarantees, from their point of view, that Russia could be “bent” in a few months. As a result, Moscow is now simply not interested in restoring relations with Europe as a highly unreliable and toxic partner. Nor will there be a return to European securities.
Could this crisis lead to the collapse of the EU? It can’t, but it will. At the very least, it will reformat, throw off “ballast” and move away from the “unanimous decision” system. This is not a one-month process, but from a certain point it becomes irreversible.
Maxim Volkov, Analytical Service of Donbas
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