Economics/Class Relations

Is Germany Shooting Itself in the Foot By Joining the West’s Economic War Against Russia?

By Jose Nino

Since Russia’s invasion of Ukraine on February 24, 2022, Europe has committed itself to sanctioning Russia to the last European with five Euros in his pocket in an effort to strangle its economy, thereby throwing a major wrench in its military campaign. So far, Russia appears to be chugging along without many issues and is poised to liberate the Donbass from Ukraine.

However, things may not be looking so good on the Old Continent. Germany, Europe’s premier economic powerhouse, looks like it committed an own goal by hopping on board the European Union’s sanctions train. According to a report by Reuters, 46% of German companies have indicated that they want to slash investments because of rising energy prices. In addition, German exports to Russia have fallen by 62% as sanctions have gone into effect. Germany’s exports to Russia are valued at roughly $26.1 billion.

As for natural gas and oil imports, Germany buys 25% of its oil and 40% of its gas from Russia. Because of its dependence on Russia for its energy needs, various German interest groups such as large employers and unions have been hesitant about implementing a full-fledged energy embargo against Russia.

“A rapid gas embargo would lead to loss of production, shutdowns, a further de-industrialization and the long-term loss of work positions in Germany,” declared Rainer Dulger, President of the Confederation of German Employers’ Associations (BDA), and Reiner Hoffmann, President of the German Trade Union Confederation, in a joint statement released on April 18, 2022.

Should Germany follow through with an embargo or other forms of punitive economic measures that make it harder to import Russian oil and gas, it will go through an unprecedented level of deindustrialization, thus permanently tarnishing its reputation as a manufacturing powerhouse.

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