With Russia shutting down the NordStream gas pipeline for maintenance, Peter Zeihan wonders if the end of Germany’s vaunted economic engine is nigh.
Some takeaways:
- That cheap natural gas.
Their economic model it is based on access to large volumes of cheap Russian energy, both in terms of for electricity, and as industrial inputs to power the entire German manufacturing model. So that all by itself could kill the German system almost overnight. Well, not overnight, but within a year.
- “The Germans rely on a large, robust, highly skilled workforce, but Germany has one of the fastest aging societies in the world…Germany will hit mass retirement this decade, and so the model was always in danger on demographic grounds.”
- Third: “Access to central European labor all the way from Poland to Romania and even further east…but that’s going away too. Because just as the Germans are rapidly aging, the central Europeans are aging even more rapidly…the birth rate in all of these countries is actually lower than it is in Germany, so it’s every bit as terminal.”
- Fourth, you need the global economic trading system that is now breaking down and America is backing away from.
His conclusion:
All of this put together suggests that the manufacturing model that has sustained Germany, that has provided the tax base, that has provided economic growth, that has made the population relatively happy with their situation, it’s gone. And it’s going to vanish within the next year. And a Europe that does not have a German motor at its heart is a Europe that all of a sudden needs to find a very very different way to function.
As with a lot of Zeihan’s observations, he has a lot of fundamentals right but his conclusions seem overstated. Germany has the resources to abandon their green delusions and restart coal and nuclear plants, assuming they have the political will. And the degree to which globalization is breaking down is the significant subtraction of China and Russia from it. There’s still a lot of U.S./EU trade to be had, even if it does get a bit more expensive. And Germany, so high up on the value-added foodchain, is well-position to survive.
The labor shortage is a trickier problem to solve, and probably was one of the main reasons Angela Merkel was so intent on raking in Islamic “refugees.” But maybe real refugees from the Russo-Ukrainian War might provide an opportunity. It would be pretty ironic if Ukrainians were to find their lebensraum in the bosom of Germany…
Tags: demographics, Germany, natural gas, Nordstream, oil industry, Peter Zeihan, Poland, Romania, Russia, Russo-Ukrainian War, Ukraine, video
ah “lebensraum”, such a historically momentous word. Always love to see it written in context. Well done, LP!
Exactly. The Ukrainians will find their lesbianism in German bosoms.
The Germans have been committing suicide since the time of the Kaiser. Think about the tremendous human capital they expended to no use during both world wars… What’s happening now is that the bill is coming due, finally.
Demographically, the Germany we knew is effectively dead. All the welfare-drawing third-world types they brought in aren’t going to do the same sort of high-value labor the Germans became famous for. Expect “German engineering” to earn a much different reputation, in years to come.
The Germans could start acting rationally about energy, but despite their situation being dire and obvious, they show little intention of doing so. See yesterday’s WSJ editorial about the Bundestag voting overwhelmingly to continue shutting down their last three nuclear power facilities. It may take hanging greens on lampposts for the country to change directions.
And the Germans sell out Ukraine to the Russians for gas this winter in 3,2,1…
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