The world is changing – Germany must take a stand

The range of topics up for discussion at the forthcoming summit of the G7 – which is slowly becoming G6 plus 1 (US) – shows emphatically just how much world politics are changing. Globalisation has led to major social shifts which policy-makers have not sufficiently cushioned. Digitalisation has significantly increased the pace of change in society. Mass migrations across the world, driven by war, poverty and climate change are leading to huge migration pressure in industrialised nations.

The consequences in the countries in question are growing fears of loss and/or fears of a decline in living standards. These developments have tangible consequences for political decision-making in industrialised nations. Human beings are receptive to populist policies and supposedly simple answers to complex problems. In addition, there is a growing estrangement between the political classes and the rest of the population.

These huge changes have led not least to Trump becoming the US President, and to the new Italian government. Trump in particular is turning international diplomacy upside down with his political style, which is largely based on unpredictability and a focus on US interests first and foremost. Even so, Trump has not been entirely unsuccessful. His tariffs have led to hectic diplomatic efforts, which are playing into US hands.

The reasons for his success in this instance are not unusually clever negotiating skills, but the fact that the US is a very important market; moreover, the Fed can have a strong influence on the world economy through the US dollar as key currency, and the US military is extremely assertive. At present, Trump is therefore largely able to impose his will on the rest of the world. This is undoubtedly advantageous for his standing at home and it is being used accordingly as a tool in the forthcoming elections.

For Europe, unfortunately, this also means that a previously important partner is no longer really reliable and predictable. If anything, this should make Europe focus on its own strengths. However, it appears that Europe has relied heavily on the US in the past, and that it cannot offer adequate answers to many questions at the moment. In addition, at present, Europe and the eurozone are also weakened politically by an impending Brexit and the situation in Italy, because they have to respond to these political developments and adjust and reorganise the institutional framework accordingly.

Angela Merkel’s government is characterised by continuity and stability. However, the German government’s problem-solving strategies have lost some of their effectiveness with the changed world political stage. Unfortunately, it is increasingly rare for a cautious and circumspect approach to lead to the desired result.

In order better to be able to represent Germany’s interests, the German government should now adopt a clear standpoint on various issues and enter into coalitions in order to strengthen its negotiating power. One example in this respect would be the tariffs threatened by the US administration, and already implemented in some cases. Although it should really be a matter which can be dealt with at European level, it is the German business model in particular which is coming under attack here.

One might ask first of all, why Germany is so successful as an exporting nation. The reasons for the success are definitely not large subsidies or cheap labour costs. The reasons for Germany’s success as an exporter are far more likely to be the high degree of innovativeness and competitiveness of German companies, which ultimately produce very good products for which there is strong demand all over the world. German companies cannot be blamed for a high current account surplus, but rather policy-makers who do not pay enough attention to investment in Germany. The German government is fond of using very high tax revenues for patronage and social benefits, instead of developing the country and its infrastructure in such a way as to make them fit for the future. An attractive place to do business with a healthy investment culture would also bolster imports, thus leading to smaller trade surpluses.

Furthermore, Germany could also join forces with other export-oriented economies in order to strengthen their negotiating clout as a whole. This happens far too infrequently, making it very easy for the US to impose its interests.

A similar trend can also be seen in the eurozone where for months now the German government has allowed itself to be swayed by French proposals. These are aimed basically at more solidarity between eurozone countries. This is undoubtedly being taken to extremes in the case of Italy’s demands. However, even in this respect, it is fair to say that the days of generally saying „no“, are over. The aim now is to achieve a balance in future between solidarity and individual responsibility. This definitely cannot happen if Germany adopts a passive attitude.

Germany is economically and socially still in a very advantageous position. It should now make the most of this position in order to help shape the framework for future social and economic development through an active and constructive policy. France and other countries stand prepared. Only if this succeeds will it be possible to provide an adequate response to populist forces in Germany and other European countries.

 

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