For the European political class the current crises are not about saving the planet but preserving their neo-liberal ideology and the entitlement of the ruling oligarchy. The climate movement is not seen as an ally, but as an enemy threatening this system. Nowhere is this clearer than in Germany.
Mathew D. Rose is an Investigative Journalist specialised in Organised Political Crime in Germany and an editor of BRAVE NEW EUROPE
The German Green Party that is currently a member of the ruling coalition is offering German citizens “real solutions” to deal with dual crises of climate breakdown and energy. While the Green Minister for Economics, Robert Habeck, has recommended that Germans take cold showers to save energy, his Green colleague, Winfried Kretschmann, Minister President of the major federal state of Baden-Württemberg, has recommended that Germans not shower at all – there is not only a shortage of gas in Germany but also a major drought – instead using a flannel and a basin of water to wash.
Not that the rest of the coalition government is doing much better. Its plan for reducing the impact of the accelerating climate and energy crises is derisory: stop illuminating public buildings, banning lighted advertising after 10pm, reducing heating in some public buildings to 19 degrees, and similar measures of little consequence. Instead of grasping the opportunity to make real changes towards a carbon neutral economy and society that the energy crisis has offerred, the government is clinging to the past neo-liberal, climate destroying economic system. The rest is virtue signalling. Priority is not to damage business in any form or reduce entitlements of the better off. Habeck made the government’s position clear in March explaining „The only thing that has to be accepted is a “loss of comfort in the individual area”, which means for the less well off.
Despite the Social Democrats leading the coalition, it appears solutions will not entail any sort of social justice. There have been publicity stunts with no lasting positive economic or environmental effects. Although gas and electricity prices reached record highs in the past week one of the few paltry symbolic programmes that the government has adopted to help consumers (and that half a year ago) is a 300 euro tax credit, which in the current situation is next to nothing. . In this case the catch is that those most in need do not earn enough to pay taxes and will not receive anything. Thus billionaires will be receiving the three hundred euros (assuming that they pay any tax at all) and those on low incomes nothing. Taxing the rich or windfall profits appears to be out of the question, as would be expected from this government.
What is becoming ever more obvious is that the German government, like most other European nations, have no realistic plan to deal with the many crises facing their societies. This is the result of the European political class selling their nations’ sovreignty to corporate interests and reducing its role to enforcing neo-liberal policies, especially via the EU, which was modelled for exactly this purpose. In return they only have to jostle with one another to get snouts in public and corporate money troughs. Now that they have been railroaded by the US into a war – not a declared one, but a war no less – whose economic burden is overwhelming Europe, they have no effective solutions. Add to this the increasingly real effects of climate breakdown, which has been inexorably driven on by economic interests enabled by the EU political class.
We are already seeing the failure of the German government. Millions are being plunged into poverty due to exorbitant energy bills. The nation is entering a major recession and its whole mercantile basis is crumbling. Growth in the second quarter was just 0.1%, German exports to non-EU nations fell in July 10% year on year, in June new orders for manufacturing and German retail sales were both down 9% year on year. In May mercantilist Germany registered its first trade deficit since 1991. Inflation is currently at 8.8%, energy prices are soaring, and food prices will probably follow. Real wages already decreased 4.4% in the second quarter of this year.
After Angela Merkel and the Christian Democrats sabotaged renewable energy and CO2 reductions in Germany and the EU for 16 years to make way for cheap Russian gas under German dominance, the nation is suffering its fourth drought in five years. The main water arteries such as the Rhine have been closed or had limited navigation due to this. The harvest will be disappointing for lack of rain, driving up food prices further.
Germany already has one of the highest inequality rates in Europe and one of the lowest wealth tax rates. The current coalition of Social Democrats, Greens, and Liberals want to keep it that way. Currently they are simply following the neo-liberal playbook of using every crisis to transfer public funds to the wealthy.
The most recent example is Habeck’s plan to introduce a gas surcharge. Originally his argument was that the surcharge was necessary to prevent energy companies from getting into financial difficulties. However when Habeck’s concrete plan was presented to the public last week, the criteria for applying for compensation under the new law is no longer that a company is facing a risk of bankruptcy. Energy corporations that are presently making windfall profits will also receive funds. As Habeck’s press-spokeswoman explained: „We are of the opinion that a company must also make profits in order to position itself more broadly“. While Habeck is willing to intervene in the free market to support fossil fuel companies, his government refuses to introduce a windfall tax for excessive profits in the branch – because the government does not want to interfere in the free market. As the German economist Marcel Fratscher commented: „This is the privatisation of profits and socialisation of losses“.
Habeck and the German Greens seem to have a penchant for fossil fuel companies. It was he who pushed through the scandalous labelling of gas as „green“ for the EU taxonomy. The Greens also backed a three month subvention of petrol and diesel for cars in Germany purportedly to reduce the financial burden for car owners, but without any price control. So the car fuel companies simply raised their prices further to include the subvention, pocketing the government subvention themselves and leaving drivers without any benefit. This is what Green politics looks like in Germany. Their coalition partners are no different, just their rhetoric.
How odd it is. The Greens have had decades to prepare for this opportunity. One would expect them to have drawers full of plans for a transition away from fossil fuels and a CO2 oriented economy. Instead they have abandoned their original values of environmental protection, peace, and democracy and joined the neo-liberal pack, putting profits ahead of people and the environment.
What the Greens and their coalition partners refuse to admit is that any major reductions in energy consumption can only be acheived on the demand side by closing down energy intensive industries, which is anathema for the German political class, who have spent over a decade pampering exactly these companies.
This problem may take care of itself however. Already loss-making industries in Germany are closing down or radically reducing production due to excessive energy costs in branches such as fertilizer, chemicals, and smelters. Last week there was an interesting tweet by a German economist specialised in energy, Lion Hirth, who wrote: „I’ve talked to a number of financial energy traders and market operators this week. They all say much of German industry has stopped buying power and gas forwards, i.e. they stopped hedging. Either prices will fall, firms say. Or they’ll stop producing.“
I've talked to a number of financial energy traders and market operators this week. They all say much of German industry has stopped buying power and gas forwards, i.e. they stopped hedging.
Either prices will fall, firms say. Or they'll stop producing.
— Lion Hirth (@LionHirth) August 21, 2022
There are rumours that others will close down, selling their energy contracts that were purchased at pre- or early crisis prices, making incredible profits.
The German political class finds itself in another dilemma. They are clamouring for higher interest rates to bring down inflation, which will further drive the economy into recession and increase unemployment. Add to this that the euro this week fell below parity against the dollar for the first time in two decades. This will drive inflation further as imports – mainly gas and oil – are becoming more expensive.
German exporters, and they are the most potent economic players in Germany, on the other hand, need a cheap euro to increase exports outside of the eurozone. This is becoming more difficult as the US has cheap gas while other nations are buying discounted gas from the Russians. A weak euro was one of the principle reasons for joining the monetary union, whose value is far below where the Deutsche Mark would be, offering Germany worldwide export advantages and enabling its mercantile policy. Thus we shall see dissension on this issue among the various industrial branches within Germany.
Of course the German government will blame their abject failure on Putin and call for sacrifice. My impression is that most Germans are ambivalent about the Russian aggression and are not convinced by the governments’s aggressive policy. This is covered up with the ubiquitous mainstream media war propaganda and the vociferous middle class metropolitan elite. Add to this that the German government has already lost much of its authority, as became evident with regard to its Covid policies. This is not being helped by a wave of corruption affairs, including a virulent one concerning Germany’s Social Democrat Chancellor Olaf Scholz. This is German corruption as usual, the only anomaly of the case is that it is actually being adamantly pursued by the public prosecutor – up to now. The fact that Scholz never seems to be able to remember the meetings he held with bankers who benefitted from this affair has resulted in the creation of a new verb in German: „scholzen“: not remembering important, incriminating events. The Social Democrat Scholz is literally fulfilling the German saying that the fish always start to stink from the head. In the current crisis the endemic corruption in Germany’s political class is becoming increasingly visible. Even the head of Germany’s main state propaganda broadcaster, ARD, had to be removed, as she is being accused of massive corruption. Although Germany’s conservative unions will back the government’s socially unjust policies, much of the citizenry may not.
As in the rest of Europe, Germany is heading towards what could well be a true winter or discontent.
Support us and become part of a media that takes responsibility for society
BRAVE NEW EUROPE is a not-for-profit educational platform for economics, politics, and climate change that brings authors at the cutting edge of progressive thought together with activists and others with articles like this. If you would like to support our work and want to see more writing free of state or corporate media bias and free of charge. To maintain the impetus and impartiality we need fresh funds every month. Three hundred donors, giving £5 or 5 euros a month would bring us close to £1,500 monthly, which is enough to keep us ticking over.