Instability in Germany: How the crisis in Europe's biggest economy could impact the world

The War in Ukraine opened up the differences in priorities between European countries. It became evident that the unity of the continent is shaken and that the way in which the pieces of this puzzle are put together will make all the difference to international geopolitics. At the same time, the war highlighted problems faced by Germany, making clear the importance of the next decisions of the German Chancellor, Olaf Scholz, for the destiny of Europe and the world.

As well as France and the Italy, Germany is on the “team” of European countries that urgently call for peace negotiations between Russia and Ukraine. Even though it has extended its hands to the Ukrainians, in the supply of military materials and in cash, everything is done with caution, to protect the economic destiny of the continent. The three countries are walking on eggshells to “not humiliate Russian President Vladimir Putin”, as French President Emmanuel Macron said at the European Parliament in his May 9 speech.

Eastern countries question Germany, France and Italy

On the other hand, Poland and the Baltic States, especially Estonia, are the ones that most criticize this lack of positioning of Western European countries and ask for political and military support to Ukraine.

The president of international relations of the Parliament of Tallinn, Estonia, Marko Mihkelson, provoked, in an official speech: “(Emmanuel) Macron and (Olaf) Scholz should stop making calls (to Putin) and buy a ticket to Kiev”.

Likewise, Polish Prime Minister Matheusz Moraviecki questioned the French president: “Would you negotiate with Hitler, Stalin? or Pol Pot?” On the occasion, Moraviecki amended a criticism of Germany, pointing out that the country is the main obstacle to the implementation of sanctions against Russia. The prime minister also stated that the German policy in recent years was responsible for leading Russia to conquer a monopoly in the export of raw materials.

For most of the Eastern European countries that are in the European Union, Ukraine must not cede territory or give up the war. They also believe that Europe should strengthen the sanctions imposed on the Russians.

Germany is stuck with Russia and China

Dependence energy in relation to Russia and economic with China contribute to the fact that Germany is, in a way, on the fence. It supports Ukraine, but avoids making enmities with the East.

Russian gas corresponds to 80% of the fuel present in Germany . If Russian energy is withdrawn, Germany could finally go into recession. Furthermore, since 2016, China has been Germany’s biggest trading partner, one of the biggest importers in the German automobile market.

In March, the German minister Finance Director Christian Lindner told the German newspaper Zeit that he was uneasy about the country’s economic dependence on China and Russia. “We must diversify our international relations, including our exports,” he said in an interview with the newspaper.

At the time, in a press conference, the German chancellor stressed that the market transition, however, ” could not be done overnight”.

Germany, globalization and crisis

Since the beginning of the years 2000, the country intensifies exports to the BRICS (Brazil, Russia, India, China and South Africa). In the last 10 years, Germany has strengthened ties with most developing countries.

The most European continent, inevitably, is also one of the most affected by the war, apart from those directly involved in it. Germany’s growth is expected to be below 2% this year, with German officials expecting twice as much. Inflation reached a record in May, at 7.9% (the highest in 50 years), according to the German Federal Statistical Office (Destatis).

According to the German federal authority, rising energy prices are mainly responsible for high inflation. Energy increased 11, 3% compared to the same period last year, while food prices rose 11,1%.

In the military area, Germany began to move

For the structure national military, Germany has created a strong dependence on the United States in recent decades. The scenario, however, began to change. Encouraged by the war in Ukraine, the country last week signed the approval of investment in the Department of Defense – the largest in the last 80 years.

The German parliament decided to modify the country’s constitution and create a fund of 477 billion euros (R$ 477 billion). This maneuver will allocate 2% of GDP to the defense area. This will make Germany the largest military power in Europe and the third in the world, behind only the United States and China.

This movement can change the way the country has positioned itself in the world since the fall of the Berlin Wall, which reunited the country in 1989.

Where will the mediator position itself?

Due to mercantilist interests and pacifist positioning, Germany usually places itself between the opposites, reallocating Europe in front of the United States and China. The country also interferes diplomatically in minor conflicts. In the historic rivalry between Turkey and Greece, which has recently focused on the fight for oil and gas, for example, Germany has sought to negotiate with both sides in recent decades, always aiming at de-escalation of conflicts.

Germany’s economic and diplomatic priorities have put it ahead in globalization compared to neighboring countries. Until then, this characteristic gave stability to the country.

But this time, the Russian card, with the invasion of Ukraine – shortly after the crisis reinforced by the coronavirus pandemic-, put Germany in a fair play: you have to follow the game and know what the country is going to bet on. Perhaps, more clearly: which side will Germany actually take.

The future of international relations depends a lot on the next steps of Europe’s largest economy, also one of the most active in European institutions, known as the “heart” of the continent.

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