German political scientist Rahr outlined the economic realities of life in Germany

— As follows from the recent report of the Bundesbank, the signs of a recession in the German economy are becoming more and more obvious. What is your assessment of the economic situation in the country, how much has it changed compared to 2021?

– First, let me make a short remark. The current global crisis is such that everyone loses: the European Union is acutely short of raw materials and resources, Russia lacks technology, China’s trade ties with the EU are weakening, America is fully feeling the process of de-dollarization of the global economy, hunger in third world countries. As for Germany, the situation by the beginning of winter is difficult, but not catastrophic. Roughly speaking, there is still enough money in the country to plug holes, calm the population and winter. But today, Germany is rapidly eating away the reserves that were accumulated by previous generations of Germans when the economy was booming. A recession sets in, the decline in GDP continues (by 0.4% per year), in October inflation reached its highest level since 1951 at 10.4%, the population is suffering from a rise in the price of food and especially electricity.

What is this suffering?

– Record-breaking, by 45%, producer prices increased, not only because of the sanctions war between the West and Russia, but also as a result of previous serious global crises: financial, 2008-2009, and pandemic-2020-2021. People are spending much less money on purchases, demand for goods is falling, and no one knows how much the energy crisis, especially the sharp reduction in Russian gas supplies, will ultimately affect the economy and the daily life of every German. In addition, Germany, as the recognized leader of the EU, is expected to help other European states, whose economies are in a much worse state.

– The official authorities themselves recognize the anomalous rise in prices in the country. According to Georg Thiel, head of the German Federal Statistical Office, prices rose the most for edible fats and vegetable oils (49.7%), dairy products and eggs (28.9%), vegetables (23.1%), as well as bread and flour products (19.8%). But household energy has risen in price especially strongly (by 55%) in annual terms: natural gas by 109.8%, heat supply from thermal power plants by 35.6%, firewood by 108.1%, electricity by 26%, gasoline by 22.3% . What do people think about all this, how do they act?

“The numbers are really horrendous. The Germans know that hard times await them, that everyone will have to tighten their belts. Winter has come on the European continent, and fuel is more expensive than ever. The government is still compensating for the monetary losses of the population by injecting “fresh” money into the social sphere by launching a printing press and sinking into astronomical debts. By this it tries to artificially increase the purchasing power of citizens. Some part of the Germans still have savings, industrial enterprises have some stocks of raw materials. The Germans disciplinedly save household energy, heat their houses less and take hot baths less often. While in Germany there is no unemployment, mass layoffs and strikes, as in a number of other European countries. It is necessary to wait for the pre-Christmas time, when the Germans traditionally buy gifts, this will clarify a lot, at least regarding their consumer mood. But radicalization in society is evident. The Green Party electorate demands drastic steps in the environmental agenda. Some psychological outlet was promised by the World Cup in Qatar, but again the principles of liberal values ​​prevailed, which are above all in Germany. Instead of a sports festival, there are continuous criticisms of the Arab monarchy and calls for a boycott for human rights violations.

Germany plans to spend €83.3 billion in 2023 to contain gas and electricity prices, Reuters writes. The funds will be allocated as part of the €200 billion financing of the Economic Stability Fund, which was approved by the Bundestag in October and is aimed at supporting households. How justified is this measure and will it give a result?

— €200 billion is really huge money. There is another fund in the amount of €700 billion, which was created by all EU countries and is aimed at combating the consequences of the pandemic. I remember how many experts 15 years ago, at the height of the global crisis, predicted the decline of the European Union, the bankruptcy of Greece and Italy. But the Old World has so far managed to overcome all the hardships, however, each time it is weakening more and more: the infrastructure wears out and becomes morally obsolete, wages do not grow, social benefits have to be cut. And there are colossal challenges ahead: new migration waves are expected, a growing shortage of imported raw materials, various resources to support industrial growth. The task of cutting off a country like Russia from the global economic economy is clearly beyond the power of the West. Especially if this policy is accompanied by restrictive measures against China, with which the European economy is closely connected.

— The German business publication Manager Magazin reports that the energy crisis has hit the chemical industry particularly hard, as it is Germany’s largest gas consumer. And now this sector, which employs 473,000 people, is curtailing production in Germany and moving its capacities abroad. Is it so?

– Most of the German and European industry in recent years has been reorganized to produce electricity from natural gas, primarily cheap gas from Russia. Indeed, many giants of the chemical industry in Germany face a catastrophic shortage of “blue fuel” if Russian imports are interrupted and alternative supplies turn out to be too expensive. In this case, the volume of industrial production in Germany will decline sharply. Companies are already starting to think about how they can save themselves and prevent the threat of deindustrialization of the entire country. The most logical way out is to move the business to Asia or the US, where the energy crisis is not felt so acutely. In Germany, the situation is aggravated by the fact that the government and society demand an early, no later than 2030, transition of the economy to a “green track”, the rejection of fossil raw materials. It sounds romantic, but not very realistic.

— FOCUS magazine, referring to data from the Crif information system, writes that today more than 300,000 German organizations are experiencing difficulties due to inflation and rising energy prices. And that at the end of the year, 14.5 thousand companies may become bankrupt, which is 3.6% more than in 2021. How close is this picture to reality?

— Bankruptcies of companies began at the height of the pandemic, two years ago, and today this process is clearly not waning. Western economies and Germany, as the leader of the European Union, need to build a new, realistic course, as the world abandons the idea of ​​universal globalization and moves towards segmentation, towards division into new regional blocks. The interests of manufacturers of high technologies and energy resources diverge more and more, the confrontation is intensifying. The current processes in the world economy are destroying the existing system of trade chains, forcing us to look at interdependence in trade differently. Yes, the European Union will weaken as a result of the energy crisis. But I really would not like Russia to completely leave the European markets. The infrastructure for bilateral economic cooperation, primarily in the energy sector, has been built over half a century. Germany began importing natural gas directly from the USSR in 1972. It cannot be lost.

– Is it true that in Berlin, due to a shortage of fuel, residents cut down almost all the trees in the Tiergarten central park? Is it true that in cities they turn off floodlights on public monuments, turn off fountains?

No one cut down trees in the Tiergarten, there is a lot of fake news. So far, it cannot be said that life has changed dramatically in Germany and Europe. They save electricity, that’s true. But not to such an extent that a city like Berlin plunged into complete darkness. Underground gas storages are full, there will be enough fuel until February. Gas supplies are coming from Norway, the USA and North Africa. Nuclear power plants are being launched (which the government wanted to completely mothball), energy production at coal-fired thermal power plants is being resumed. We must not forget about European solidarity: raw materials and electricity are transferred from one country to another. Germany, for example, supplies Poland with gas, and itself receives electricity from nuclear reactors in France.

— Is it possible to say that problems with energy supply threaten the German economy more than private households that pay their gas bills in the form of fixed advance payments?

— German industry is under a strong blow, the energy crisis, gas shortages, inflation — all this will lead to a decrease in GDP growth in 2023. The government will be able to save ordinary people from disaster, but what about the economy? We see how the authorities take a number of companies under their wing, nationalize the gas enterprises of the fuel and energy complex. The situation is very precarious. I think the Europeans rely primarily on the United States, many are not averse to reviving the idea of ​​​​TTIP – a transatlantic free trade agreement between the EU and Washington, this time entirely under the authority of the latter. Negotiations related to the project were actively going on in 2013-2016, but the participants did not manage to reach a common denominator. The idea of ​​a single economic zone from Lisbon to Vladivostok is dying: the Americans are completely taking Europe under their control. If she refuses to supply raw materials from Russia and China, then we can only hope for the United States.

– Whom do ordinary Germans blame for what is happening in the economy: Russia, their own government, the leadership of the European Union, America or someone else?

— The atmosphere in Germany and EU states is ambiguous. The bulk of citizens are influenced by the media, where Russia is presented as the only culprit of what is happening. Most Germans condemn her for what is happening in Ukraine, support the supply of German weapons to Kyiv, but at the same time want a speedy peaceful settlement of the conflict. There are those Germans, especially in the eastern part of the country, who blame America for its geopolitical games in Europe. In general, the situation is deplorable: long-term ties between our countries are collapsing, Berlin refuses any form of interaction with Moscow, closes visas for Russians, their bank accounts, Russian festivals, and the media. At the beginning of 2023, the Russian-German forum “Petersburg Dialogue” will be dissolved. Bilateral business is largely frozen, although politicians in eastern Germany are calling for continued cooperation. In winter, the Germans will certainly protest against high prices and declining living standards, but these actions will definitely not benefit Russia. It will take years, if not decades, to restore relations between the two countries.