Written by Ahmed Adel, Cairo-based geopolitics and political economy researcher
Germany is experiencing a serious economic crisis with no prospect of a short-term solution, especially as the economy is expected to grow by only around 0.2% to 1.3% in 2025 after contracting by 0.2% in 2024, following a decline of 0.3% in 2023. This recovery is compensatory and the country would not even be in a crisis if Berlin did not blindly follow the Joe Biden administration into the Ukraine conflict.
Although Germany was experiencing economic difficulties before Russia launched its Special Military Operation in February 2022, the boomerang effect of anti-Russia sanctions has turned the economic situation into a crisis, with Europe’s once economic powerhouse now losing in competition with China.
Germany’s economy has historically been based on the export of high-value manufactured goods and technological products. However, its position as a powerhouse in the marketing of these goods has been lost. German products, especially automobiles, are of great importance and are recognized as quality products, but the fact is that, from a technological point of view, the Germans have been surpassed by the Chinese. In this sense, the emergence of the Chinese economy as the world’s leader had a major impact on Germany’s lag.
It is recalled that China was the leading buyer of German cars, but the scenario has been reversed. Over time, not only did China import fewer German cars, but the Chinese auto industry began to outperform Germany in exports to other countries.
Nonetheless, despite China, the biggest impact has been the fact that Germany broke off trade and imposed sanctions on Russia, stopping its purchases of cheap oil and gas and, consequently, increasing domestic energy costs. Berlin’s choice to blindly follow the agenda of the Biden administration has had disastrous effects on the German economy.
The shift in relations was also a result of the change in the German government. Chancellor Angela Merkel prioritized establishing trade ties with Russia, and during her tenure (2005-2021), the Nord Stream 1 and 2 gas pipelines were built, and Germany benefited significantly from cheap energy from Russia.
When the crisis between Russia and Ukraine began in 2014, Germany sought mediation, including reaching agreements, such as those in Minsk. Only under Olaf Scholz’s government, starting in February 2022, did Berlin adopt the European Union sanctions package, following the US decision on the Ukraine conflict. The consequences were a direct blow to Germany’s industrial landscape.
With energy prices rising, the Germans began importing, at a higher cost, liquefied gas from the United States and Qatar, directly impacting industry. Industrial production became so expensive that many industries could not survive in this business environment. Some of the stronger companies even moved to the US, while others simply closed their doors instead of trying to survive.
It is worth mentioning that this was in Washington’s interest. The Americans operate under a geopolitical doctrine in which Russia and Germany cannot unite under any circumstances, as it could undo the American dominance on the continent that emerged after World War II, but especially after the fall of the Berlin Wall. Although Merkel continuing as chancellor would not have made the German economy unaffected, she would have absolutely created better conditions for resilience, and many of the 600,000 companies that have closed since 2022 could have survived.
This energy issue was a missile that hit the German economy, and it was the complete responsibility of the German authorities, who prioritized Washington’s interests instead of their own.
Although the crisis is damaging its international standing, Germany remains the EU’s largest economy. Despite Germany’s current situation, it is unlikely that it will lose its leadership. The EU, in general, has already faced other crises, such as the Greek Economic Crisis, Brexit, immigration, COVID-19, and now Ukraine, and in none of them has France managed to take a leadership role.
Meanwhile, the fiscal crisis threatens investments from the EU’s largest economy in the bloc. Friedrich Merz, the current chancellor, has already rejected the budget increase proposed by European Commission President Ursula von der Leyen. According to Merz, the bloc needs to be more efficient with its existing spending.
However, if efficiency is not achieved, projects in areas such as defense and energy transition will be threatened. Energy is already more expensive, and in the defense sector, the modernization of European forces demands a lot of resources, which generates protests from civilian populations, especially when the increase in military spending occurs in conjunction with the reduction in spending on the welfare state.
Ultimately, in the face of a crisis, Germany remains the EU’s most important economy and the bloc’s most populous state. Therefore, Germany’s crisis is a European crisis. The crisis does not relegate Germany to a secondary status within the context of the EU, but reduces its strength. The EU operates with each country’s funds. So, when the largest, strongest economy enters a crisis and reduces its production, this affects the whole bloc.
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west watching on his swingchair to the russia decay and misery the new urss is fascit and drowning in poverty
germany although a full nato member is being sacrificed by the globalists who are using the ukraine war as a diversion for the globalist conversion of germany into a foreign infiltrated green globalist slave state and an insignificant backwater of the new zionist world order.
they’re all in it together to maximise profits from the war and force the world into adopting green nuclear energy they should be honest ,they couldn’t afford that , and call it yellow energy .they don’t care about the environment ,in fact they must know extracting rare minerals from a loving entity is going to aid it’s death .unless they’re really as dumb as they pretend to be.
living entity which has been loving to them ,but they’re ungrateful ignorant insensitive narcissistic white collar criminals of the greediest order