With worried eyes, the European Union sees its first economy falter. Previously cited as an example, Germany achieved, in the first quarter of 2022, one of the worst results within the euro zone. The country’s growth remained flat, compared to 0.8% in the first three months of the year, weighed down by the acceleration of inflation that reached almost 10%. Very unsatisfactory results compared to some of its European neighbours, raising the specter of a recession. It is hard to imagine, six months ago, that the German industrial giant would collapse. However, the challenges facing the country are not new and it is now forced to review its strategy based on low-cost energy imports and dynamic exports of high value-added products, in particular thanks to its close trade links with Russia and China. Let’s go back to the reasons for the fall of the German model.
Russian gas dependency
This is the main weakness of the country, which has long benefited from low-cost energy imports without seeking to diversify its supplies. Since the outbreak of the war in Ukraine and the economic sanctions imposed on Russia by the West, the Russian gas giant Gazprom has continued to reduce its gas shipments to 27, much to the chagrin of Germany, which more than 50% of its imports came from Russia. , both for its industry, which consumes 30% of the gas burned in Germany, and for its population, which mainly uses gas for heating. ” In 2005, this dependence on Russian gas was only 40%, but Germany has accentuated it over the years, says Jacques-Pierre Gougeon, a university professor specializing in Germany and director of research at the Institute for International Relations and Strategies (Iris). This is also the subject of a big political debate at the moment in Germany, because the previous governments see it as a big mistake. ». Beyond the economic argument, Germany has introduced a ” political strategy » since 1969, “Ostpolitik” based on close ties with Moscow. ” There are it always had since unification, and even before, a privileged relationship with Russia. Germany considered itself the European power that could dialogue with it », Jacques-Pierre Gougeon remembers.
A At a forced march, Germany finally managed to reduce its imports of Russian gas to 35%. But this effort now increases the risk of shortages next winter. At the end of June, Berlin activated level 2, called “alert”, of its emergency plan for gas supply, the last level before the organization of rationing by the State. While the population has rushed for electric heating, the government is studying new sources of supply, even if that means going back to more polluting energies. ” To reduce gas consumption, less gas must be used to generate electricity. Instead, coal-fired power plants will have to be used more »This was announced by Robert Habeck, Minister ofmeeconomy and climate protection, co-chair of the Greens, despite commitments made by his party to bring coal phase-out forward by 2030. A decision ” bitter » but ” indispensable », according to the minister.
Other routes are being studied, those of nuclear, solar or wind energy, but also gas from Norway, the Netherlands or even liquefied natural gas (LNG) from the United States or Qatar. But it will cost you more. Because beyond the instructions given to the Germans to take shorter and colder showers, it is when paying their bills that the effort will be greatest. The energy crisis ” is yet to come for the economy »Robert Habeck recently warned, anticipating ” a difficult winter ». In great difficulty, energy providers are struggling to cope with rising costs. So much so that the government was forced to take a 30% stake in the largest of them, Uniper, to avoid bankruptcy. The company will be able, as of October 1, to transfer the prices to its clients.
A close economic link with China
There is another country with which Germany has established a strong trade relationship. After having made foreign trade one of the pillars of its economy – according to the World Bank, trade in goods represented 72.2% of German GDP in 2020 – Germany turned to Asia and more in the 1980s, particularly China. The latter offered German companies important commercial opportunities and the possibility of moving part of their production there at a lower cost. Germany has become its main economic partner. In 2021, more than 245,000 million euros were exchanged between the two countries.
But the health crisis and supply chain disruptions as well as repeated lockdowns in China have come to a standstill in the gears of German trade. Especially since the sanctions adopted by the West against Russia after its invasion of Ukraine have led Germany to question its dependence on Beijing given its democratic shortcomings, in particular with respect to the Uyghur people. ” We must diversify our international relations, including for our exports. »German Finance Minister Christian Lindner said in an interview with the daily Die Zeit, on April 6, 2022, adding that ” now may be the time to do business preferably with those who are not only business partners, but also want to be value partners ».
A change of course with respect to the German policy followed until then, which consisted of ” separate politics from economics »explains Paul Maurice, a researcher at the Committee for the Study of Franco-German Relations (Cerfa) and at theFrench Institute of International Relations (Ifri). pointing out regarding China, ” a kind of blindness »he explains : ” There has been, for two or three years, a very strong political hardening in China that has not been taken into account by Germany, considering that it was necessary to continue strengthening ties with this country. And this, until being faced with a fait accompli and having to look for new partners. ».
An industry struggling to renew itself
This lack of anticipation is also found in its industry, in particular in the automotive industry, of which Germany is the world’s leading exporter. However, the country has lagged behind in the transition from thermal to electric motor, which is however working to catch up to face other players like Tesla. This development is all the more necessary since on June 8, 2022, the European Parliament voted in favor of banning the sale of new vehicles with a gasoline or diesel engine from 2035. ” The issue of the transition to electricity was anticipated more by German industrialists than by politicians and they urged the government to review its position on the matter. », explains Pablo Mauricio. According to the Ifri researcher, ” A change will also have to take place for the chemical industry as well as for the technologies used for solar and wind energy, by virtue of the energy transition and in which Germany is called to be at the forefront. However, the country has remained in a traditional industry, which runs the risk of slowing down its development, because we cannot catch up ten or twenty years ago so quickly »he adds.
Therefore, the picture seems to have darkened considerably for the main European economy that could become ” the patient » among the twenty-seven. And if the crisis that Germany is going through cannot make us forget the economic strength it has shown in recent years, it was built on a model that must now be completely rethought.
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