Global Challenges: Deglobalization or self-weakening

Federal Chancellor Olaf Scholz repeatedly warns of the danger of deglobalization, as it undermines “the foundations of German competitiveness”. On the one hand, this statement is correct. On the other hand, it falls far short.

Given Germany’s traditional focus on exports, geopolitical upheavals such as the Ukraine war and the hegemonic conflict between the USA and China will certainly lead to noticeable economic losses. At the same time, however, international tensions serve as an excuse to distract from problems of our own making – problems that have been smoldering for a long time.

The attempt to present the last two decades of globalization as a special proof of competence in German politics and business is dishonest. It would be honest to admit that the success is due to several special circumstances. These include in particular our “deals” with two unjust regimes. The deal with Russia ensured cheap supplies of gas.

The deal with China seemed to be in mutual economic interests for a long time. What has been forgotten or suppressed, however, is that Beijing’s declared strategic goal is to achieve world market leadership in a wide range of sectors with enormous state aid – and to snatch market share from Germany in particular. The fact that we have not strictly adhered to the principle of reciprocity with China for a long time will increasingly take revenge. The deals with Russia and China also led to a great deal of self-deception.

Actually relevant core questions – Are our politics and administration, our infrastructure, energy and environmental policy, our pension scheme and the education system actually sufficiently modern and efficient? – have been discussed again and again. In practice, however, little happened. Germany’s mantra that success in exports would fix it all stood in the way of more decisive action.

In our country, this mantra has led to a kind of escapism into globalization which, in view of the Ukraine war and China’s increasingly authoritarian demeanor – fortunately, one might almost say – can no longer be maintained.

Germany is currently in a situation in which the much greater danger is not de-globalization, but de-industrialization. Incidentally, this is also the case because German politicians, unlike the United States, cannot bring themselves to set up a National Security Council. Years ago, for example, he should have put the increasing dependency on Russian natural gas to the test.

Instead, the departmental principle or the policy competence of the Federal Chancellor applies. In the end, there are often smokescreen maneuvers, whether under Angela Merkel or now under Scholz. For example, the geopolitically important Nord Stream 2 gas pipeline was long portrayed by both as a “purely private” matter.

In addition, the growing danger of de-industrialization can be attributed to a not inconsiderable extent to the fact that energy policy in particular is far too often ideologically shaped “convicts” at work, who represent their position with almost Wagnerian pathos. The consequence: Germany emerges in this field as the world champion in announcing as early as possible as many exits as possible – whether for coal, gas or nuclear power.

The downside: We don’t even dare to get involved with technologies such as the storage of carbon dioxide. All of this is highly questionable for a technological nation with few raw materials. It gives the impression that the bill is literally made without the innkeeper.

In the meantime, the German exit rigorism is fortunately encountering more and more incomprehension. In fact, it borders on garden gnome thinking when other countries in the European Union either continue to operate old nuclear power plants or want to build new ones, but we believe that in densely populated Europe, nuclear-free Germany could become the island of the blessed. Switzerland’s recent announcement that it intends to build its nuclear repository in the immediate vicinity of the border with Baden-Württemberg should be a necessary reality shock.

One thing makes things even more difficult when it comes to energy: the Germans are not completely unfamiliar with variants of neo-colonial mastermind thinking. Example liquid gas: It can be landed here in the near future. However, the gas, which is mainly obtained from fracking, is not to be produced here.

We are happy to leave this “dirty work” to others. All in all, our current energy policy, whether intentional or not, could result in the de-industrialization of Germany. This is – across party lines – essentially due to the still fatally high degree of bureaucratization in our decision-making processes.

This phenomenon of “we have to, but we don’t deliver” has a devastating effect on other fields as well. See the sleepy mobility turnaround. In addition, Germany ranks second to last in Europe in terms of digital competitiveness, only Albania is even worse than us. Precisely because the changing structure of globalization can no longer serve as a buffer for Germany, we urgently need to face our own, home-grown problems.

Those who still want to bet on China should ask whether Beijing’s zero-Covid policy isn’t just a strategy to contain the pandemic. It is also conceivable that this is a strategy – well known from Chinese history – to seal off any Western influence.

In any case, Jörg Wuttke, head of the European Chamber of Commerce in Beijing, recently explained with a view to Chinese politics: “In the past 40 years I have never seen anything like it. Ideological decisions are suddenly more important than economic decisions.”

Against this background, it becomes abundantly clear: Germany should prepare for the new form of the globalization trap sooner rather than later and build up a delicate network of relationships on many fronts and in many regions. Diversification instead of de-industrialization is the order of the day.

In doing so, we can definitely build on a great foreign trade tradition that has unfortunately been pretty much forgotten. Seen in this way, the “turning point” proclaimed by Chancellor Scholz does not only extend to the geopolitics that were shaken up by Russia’s war of aggression against Ukraine. Properly understood, it also extends to Germany’s entire business model, which is facing an epochal challenge.

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