Export World Champion under Pressure

BERLIN (Own report) – With intense shuttle diplomacy, members of the German government are seeking to avert the impending US punitive tariffs on European goods and the loss of access to the important US market. Following Germany’s Finance Minster Olaf Scholz’s visit to the US capital yesterday, Chancellor Angela Merkel is expected in Washington on Friday. Already in the run up to these visits, Berlin seems ready to envisage a revival of the Transatlantic Trade and Investment Partnership (TTIP). This strategic decision is accompanied by a clear frontline position against China, as was resolutely demanded by the Trump administration. In addition, German-Russian business relations are increasingly under attack in Washington. At the same time, EU criticism of Germany’s unilateral trade policies is growing. Germany’s export oriented economy is particularly vulnerable to the protectionism that is gaining strength on a global scale. Berlin’s Beggar-thy-Neighbor-Policy could prove a strategic disadvantage under these new global economic conditions.

The Economy of Secession (II)

BERLIN/BARCELONA/MILAN/ANTWERP (Own report) – As can be seen in an analysis of the separatist movements in Catalonia, Lombardy and Flanders, the deliberate promotion of exclusive cooperation between German companies and prosperous areas in countries with impoverished regions has systematically facilitated the autonomist-secessionist movements in Western Europe. According to this study, Flanders, as well as Lombardy – two already economically prosperous regions – have been able to widen the gap between themselves and the impoverished regions of Belgium and Italy, also because they have played an important role in the expansion of the German economy, the strongest in the EU. Through an exclusive cooperation with the state Baden Württemberg, Catalonia and Lombardy have been able to expand their economic lead over more impoverished regions of Spain and Italy, which has spurred their respective regional elites to seek to halt their financial contributions for federal reallocations through greater autonomy or even secession. The consequences of deliberate cooperation – not with foreign nations – but only with prosperous regions, can be seen with Yugoslavia.

Germany, Austria vs. US Senate: America and Europe on Collision Course

 

Germany and Austria have lashed out against US Senate for approving a legislation tightening sanctions on Russia. The bill has a provision that enables the United States to impose sanctions on European firms involved in financing Russian energy export pipelines to Europe. European companies could be fined for breaching US law. In a joint statement, German Foreign Minister Sigmar Gabriel and Austrian Chancellor Christian Kern accused the US of threatening European economic interests, describing it as an illegal attempt to boost US gas exports. The United States recently started shipping liquefied natural gas to Poland and has ambitions to cultivate other European customers.

The bill says the US government «should prioritize the export of United States energy resources in order to create American jobs, help United States allies and partners, and strengthen United States foreign policy». But the European foreign chiefs believe that «Europe’s energy supply is Europe’s business, not that of the United States of America». Gabriel and Kern said they «can’t accept» proposed US sanctions targeting European energy companies as part of measures against Russia.

A New Era in the Middle East (II)

TEHERAN/HANOVER/MUNICH (Own report) – Now that the sanctions are coming to a close, German enterprises are initiating major investments in Iran and multibillion-dollar gas deals with Teheran. Over the past few weeks, several business delegations have already visited Iran. The state of Bavaria will soon open a business representation in the Iranian capital. On the one hand, German business circles have their eye on the Middle East market, because Iran “is the ventricle of an economic zone comprising a cross-border population of 400 million people.” With car sales in Iran, Volkswagen would like to compensate for the slump it is suffering on other major markets, particularly China and Brazil. On the other hand, Berlin and Brussels are trying to acquire access to Iranian natural gas. The EU Commission estimates that by 2030, Iran should be annually selling 25 to 35 billion cubic meters – probably liquid – gas to the EU. BASF natural gas subsidiary Wintershall has also shown interest. During his recent visit in Teheran, Lower Saxony’s Minister of the Economy proposed the construction of a LNG terminal in Wilhelmshaven as a German-Iranian joint venture. This is all happening at a time, when the conflict over Syria – with Iran and Russia on the one side and the West on the other – is escalating.

German-Russian Flagship Projects

KASSEL/MOSCOW (Own report) – The German natural gas company, Wintershall Holding GmbH, is intensifying cooperation with Russia’s Gazprom and will receive direct access to large Siberian gas fields. Last Friday, the two companies announced they would finalize an asset swap this year, which would allow Wintershall to participate in the exploitation of two blocks in the Achimov formation of the Urengoy natural gas field. The deal had been signed back in 2013, but was canceled by Moscow in late 2014, because of the escalation of the conflict with the West. This resumption enables BASF’s subsidiary, Wintershall, to continue its rise in the global gas sector. The Austrian company, OMV, since July 1, under the management of former Wintershall CEO, Rainer Seele, is also participating. Gazprom, Wintershall, OMV and other gas companies have agreed to expand the Russia-to-Germany “Nord Stream” pipeline with two more pipelines. German business circles explicitly describe both as “flagship projects” and push for a rapid re-intensification of cooperation at the political level.

An Unofficial Plebiscite

BERLIN/BARCELONA (Own report) – The German establishment is sending mixed signals in reaction to the announcement of an unofficial plebiscite on Catalonia’s secession from Spain. Catalan Prime Minister Artur Mas has declared the September 27 regional elections a de facto plebiscite on the region’s secession. Should his alliance secure the absolute majority, he will proclaim independence from Spain within 8 months. In the past, Germany had repeatedly supported Catalan secession. Influential German think tanks are demanding that secession not be obstructed. However, there is opposition rising from within business circles. Catalonia is a central site for German companies in Spain. Engaged in trade throughout Spain, they do not want to see their business possibilities limited to one region and Barcelona’s secession from Madrid could possibly prove an obstacle. According to German government advisors, on the other hand, these problems could be solved. Some economists contend that the EU’s currency, the Euro, can, in the long run, only be maintained within a uniform economic area. This would exclude Spain, but include a seceded Catalonia, the strongest economic zone on the Iberian Peninsular.

Independent of Moscow (II)

KASSEL/BERLIN (Own report) – Wintershall, the giant German gas company, has begun reorienting the focus of its expansion drive westward. This subsidiary of the mega chemical company, BASF, had set high hopes on having direct access to Russia’s enormous gas deposits – the largest in the world – which would have brought it to within reach of the summit of the world’s natural gas sector. This perspective was obliterated by the escalation of tensions between Moscow and the West. An additional impetus for the necessary search for an alternative is provided by the fact that German gas imports from the Netherlands are on the verge of being shut down. Beginning 2020, The Hague intends to drastically reduce gas production from the country’s largest gas field, because draining the deposit would heighten dangers of earthquakes. Wintershall is particularly expanding its activities in Norway and has already begun shale gas production in Argentina, where the world’s second largest shale gas deposits are estimated to be found. Wintershall’s orientation shift also reduces its interest in business with Russia, while reinforcing its transatlantic interest.

The Scrapped Pipeline Project

MOSCOW/BERLIN (Own report) – Moscow’s cancellation of the South Stream pipeline project is causing Berlin and Brussels headaches. EU bodies and government leaders of EU member states have expressed their wish to continue negotiations on the pipeline, which, in a few years, would annually have pumped 63 billion cubic meters of natural gas to Western Europe. They still see some possibilities for clarification. By delaying the project, Brussels had hoped to exert pressure on the Russian government. Moscow, however, got tired of banging on closed doors and announced South Stream’s cancellation on Monday. Germany is one of the losers, because it would have been able to expand its influence on the European gas supply through its BASF subsidiary Wintershall participating in the pipeline project. Turkey is the winner, because the planned Russian South Stream gas will now probably transit through its territory. Turkey, a loyal transit country, could become an influential gas distribution hub for the EU – at a time when tensions between Berlin/Brussels and Ankara are rising.

Energy as a Weapon (II)

BERLIN (Own report) – In view of the EU’s summit meeting, later this week, the “fracking” lobby and NATO are intensifying their pressure for the EU to initiate the highly controversial “hydraulic fracturing.” There are indications that the German Bundestag could speed up legislation allowing this dangerous gas production technique. The outgoing NATO General Secretary Anders Fogh Rasmussen is implying that fracking opponents are in fact working as agents for the Russian government. This incredible slander coincides with global transatlantic strategies aimed at using the current fracking boom in the USA and other western countries, to significantly weaken or even eliminate Russia’s influence as a producer of natural gas. If Moscow can no longer sell its gas to the EU, it could hardly avoid painful budget cuts. This would have serious consequences for Putin’s position of power at home and his influence in global politics. Regardless of such campaigns, German and US energy companies are pressing ahead with fracking in Europe – while continuing to do business with Russia.

Global Policy Orientation

By now it should be clear where Europe, or Germany rather, stands in regards to its dealings with Russia and what side it will likely take should it have to decisively choose between it and the West.

BERLIN/MOSCOW (Own report) – In the debate over a possible expansion of EU sanctions against Russia, the German chancellor is suggesting a possible continuation of cooperation with Moscow. “In the intermediate and long term,” Merkel explained, “the close partnership with Russia should be continued.” She sees “no necessity” in a policy of “isolating” Russia, patterned on the cold war’s “containment” policy. Merkel was reacting to the persisting anxiety in leading German business circles, that sanctions against Russia could seriously dampen their expansion opportunities. This is not only an anxiety shared by gas companies, but also by top corporations in other branches with significant commercial and production sites in Russia. On the eve of the Russian president’s visit to China, observers are warning that if the EU and the USA impose boycott measures, Moscow could forge also stronger ties to Beijing, thereby tangibly strengthening China. Hard-core transatlantic circles are up in arms over the prospect that cooperation with Moscow could be continued – pleading for the creation of a global front of NATO countries and their allies against Russia and China.

Artic Oil

HANNOVER (Own report) – The German government’s Agency for Geological Studies and Natural Resources (BGR) is intensifying its exploration for Arctic oil and gas deposits with a new exploration trip to the Arctic Ocean. “Deliveries of natural resources from countries in the Arctic” – i.e. Russia and Norway – are “of great importance” to Germany, the BGR declared. It is very inconvenient that the prediction of the volume of Arctic resources is based only on unreliable estimates. This research institute is, therefore, consolidating its exploration of the mineral resources of the Arctic Ocean, into a new research program. The melting of the polar cap could soon allow these resources to be profitably exploited. Within the framework of the natural resources policy offensive launched by the German government around eight years ago, the BGR has been intensifying its activities for German industry. The BGR, which has long since been closely linked to the German business community, founded, in 2010, the Agency for German Resources (DERA) which now serves German industry directly. The BGR sees itself in the undaunted continuation of the institutions in German Empire and the Nazi period.

Germany’s ascendancy over Europe will prove short-lived

Although the article has a point and the population is truly in decline, Germany should not be counted out. Germans have the know-how, a very modern infrastructure, are still the most industrious and forward thinking people with a vision that no other on the European continent has or can be compared to. It didn’t literally give its manufacturing base to the Chinese.

Germany has peaked. Its hegemony in Europe is a “power illusion”, a confluence of fleeting advantages soon to be overwhelmed by the delayed effect of error and the crush of historic forces.

If demography is destiny, it may be clear within five years that ageing Germany is going the way of Japan. Within 20 years it may equally be clear France and Britain are regaining their 19th century role as the two dominant powers of Europe, albeit a diminished prize.