Europe’s sinking economy: how many causes can we name while ignoring the Russia factor?
As I indicated in my last essay, a great deal of information that would allow one independently to come to a comprehensive understanding of what is going on in the world is available in mainstream media, however counterintuitive that may be for those who revile the Washington narrative and its commercial purveyors. However, the facts we need to know are either buried deep in articles that have titles and opening paragraphs that contradict the content lower down OR as I wrote in that last essay, they are separate dots that are never connected by the journalists and their editors to draw the big picture they do not want to see.
My case today is not taken from the Ukraine war but from its consequences: the visible and statistically demonstrated decline of the European economy and in particular of the country that has long been celebrated as its locomotive, Germany.
This issue has featured in much of the reporting of The Financial Times and other major media these last several weeks when numbers for the economic performance at the end of last year and start of this year have been published. The latest growth estimate for Europe put out by the European Central Bank is an anemic 0.6% while Germany is likely entering a second quarter of recession.
A lot has been written about the leading causes of the bad economic results, in the expectation that once they are identified suitable corrective measures can be put in place. Of late, attention has been directed at the weak capital markets in Europe, compared to the United States, for example, all of which deprives industry of funds for investment that will raise productivity and make Europe more competitive on world markets.
Additional points for discussion are eagerly awaited from Mario Draghi, former Italian prime minister and former President of the European Central Bank, who has been tasked by the European Commission to deliver recommendations on how European competitiveness might be improved.
However, these approaches overlook the fact that deficient capital markets and the many other handicaps that Draghi is likely to name have been around for a long time but that the present stark weakness of the German economy is something very new and, frankly astonishing, to anyone who cares to look at the figures on the collapse of German automobile manufacturing, for example.
Going back six months or more there were articles in our press and feature programs on the BBC and other media recounting how German industrialists are moving abroad and making new manufacturing investments there rather than in their homeland. At that time the high cost of energy ever since Russian pipeline gas was discontinued following the destruction of Nord Stream I was openly mentioned as a factor in the deindustrialization of Germany.
However, that objectivity and frankness has since been put aside. In a BBC report on German industry a week ago, I heard that high energy costs due to the end of cheap Russian gas is not a significant factor in Germany’s economic travails since only 6% of German industry is very energy dependent.
Today, when European gas prices have dropped dramatically from the record levels of late 2022, there is some truth in reducing the weight we give to energy when explaining the German economic decline that is ongoing. However, natural gas has a far greater role in economic and social life than just to fuel the metallurgical or glass industries. It also is feedstock for the chemical and related industries as well as for fertilizers needed to maintain German and European agricultural output. Moreover, the decision of the German and European governments to prioritize geopolitics over domestic economic performance has been a very clear message to industry that Europe is not the place they want to be. Industrialists may not say much in public, but their falling investment here speaks volumes.
The facts are so obvious when you look at them that even the propagandists at The Financial Times have been obliged to give them space. See the article a day ago entitled “German industry unlikely to fully recover from energy crisis, warns RWE boss.” Here you see it in black and white: “German industry is unlikely to recover to pre-Ukraine war levels as elevated prices from imported liquefied natural gas have put Europe’s largest economy at a ‘disadvantage’, the chief of one of Germany’s leading energy companies has warned.”
This is not Russian propaganda. It is highly authoritative and responsible German executives speaking and they are reported in the viciously anti-Russian FT. No investigative journalists like Sy Hersh need apply to light the way for the general public.
©Gilbert Doctorow, 2024