Eurasia note #63 – Europe Reels From Germany’s Impending Decline

New south-north axis for energy and political influence could reshape continent

Oct 29, 2022

European Union in jeopardy as German industrial powerhouse handicapped.
New alliances — Three Seas Initiative and Hanseatic League — arise.
U.S. and Mediterranean energy projects may take advantage of Russia’s departure.

Destruction of Nord Stream pipeline opens path to new energy sources.
But they don’t address Germany’s needs, raising question of intent.
China and U.S. may compete for dominance or split Europe between them.

Related:
Europe, Gas And The Endgame (Sep 30, 2022)

Great Game Over: Did The Investors just give Afghanistan to China? (Aug 17, 2021)
Afghan Squid (Aug 28, 2021)
China and Israel, The New Silk Road (Apr 14, 2022)
U.S. Initiates State Control Of Food Supply (May 20, 2022)
When The Skies Were Free - Clouds, currency and carbon (Jun 12, 2022)
Russia Turns Off Gas (Sep 6, 2022)
Not Enough Minerals For Green Energy (Sep 8, 2022)
Europe Reels From Germany’s Impending Decline (Sep 29, 2022)
Nuclear Threat Follows Bombing Of Pipeline (Oct 26, 2022)

(2,700 words or 13 minutes of your time.)

Tbilisi, Sep 29, 2022

The failure to prepare a replacement for Russian gas is costing Germany dear. Chemicals giant BASF is permanently shifting parts of its operations from Germany to China, and steel company Arcelor is likely the first of many to tamp out furnaces.

Last month European non-ferrous metals association Eurometaux warned of an existential threat to industry and “permanent job losses” at electricity-intensive industries. Some European countries are prolonging the use of nuclear reactors and digging more coal. Germany is even dismantling a wind farm to expand the Garzweiler lignite strip mine in North-Rhine Westphalia.

The Wall Street Journal minces no words, declaring: “Rising fuel costs boost fears of a deindustrialization of the continent.” Except that it’s not a fear, it’s a reality. The chemicals industry is hit harder than most because it uses natural gas not only to power plants, but to crack into components that make, in BASF’s case, 40,000 different products. [1]

BASF Chief Executive Martin Brudermüller said: “The challenging framework conditions in Europe endanger the international competitiveness of European producers and force us to adapt our cost structures as quickly as possible and also permanently.”

That is damning. The industrialists, or rather their owners, are abandoning Europe for China.

The company’s gas costs were €2.2 billion higher in the first nine months of 2022 than a year ago. It will slash costs by 500 million euros/dollars per year until 2024 at least, including research and development, production and managerial staff.

Brudermüller slapped down the European Commission, saying its plans for new rules and regulations created uncertainty. This is devastating. The European Commission is the non-democratic ruler of the European Union in which corporations but not individuals have rights — yet now even corporations have had enough of bureaucracy.

According to WSJ, “BASF is building a $10 billion production site in Zhanjiang, southern China. The company says the country, the largest and fastest-growing chemicals market in the world, is central to its growth strategy.”

What more evidence does one need that corporations answer to their owners — that you, the employees and consumers, can go hang. BASF is not evil, though it was one of the six member corporations of the German-American corporation IG Farben financed by the Warburg banking family and what later became Citigroup.

In many ways the driver is China. In the first eight months of 2022 China employed 20 per cent more foreign capital, year-on-year. In high tech the rate of 33 per cent was more than twice China’s foreign investment — suggestive of inward investment.

BASF’s negotiations to build a new centre in Zhanjiang have persisted for five years, accelerating this year due to energy costs. Germany’s Merck group is building a plant in Wuxi and another for “semiconductors.”

See Dec 2021 — Lieber Case: Crossed Wires and Parallel Lines
Dec 2021 — Lieber Case: Filling In The Blanks

In addition, Swiss, French and Spanish companies are among those accelerating plans to relocate in full or in part to China. Such companies work in the fields of chemicals, semiconductors, batteries, machinery and equipment and the automotive industry.

Knowledge of history provides context: these are precisely the sectors that expanded most rapidly in Germany during the 1930s and 1940s with the use of American capital. Almost 100 years later, similar industrial sectors are being transferred to China. The reason now, as then, is labour costs and flexible regulation.

An article on LinkedIn credited to Tiedada Group quotes Rhodium Group as reporting investment in China by Germany, the Netherlands, the United Kingdom and France has accelerated in the high-tech sector in particular. [2]

Consequences for EU

Germany’s earnings help prop up the European Union: not only its annual contribution of almost 30 billion euro the biggest, but more crucially its economic engine drives the continent. Slowing exports will impact the rest of the Eurozone.

At the start of this year, before Russia’s invasion of Ukraine, Germany’s economy minister Robert Habeck had expected growth of 2.3 per cent in 2023. This month he revised that to a decline of 0.4 per cent.

That’s dreaming. The leading economic forecasting bodies said last month that the economy could contract as much as 7.9 per cent in 2023, and another 4 per cent in 2024. [3]

That was after Arcelor mothballed its furnaces but before BASF’s announcement. Many more furnaces are to close. [4]

Inside Putin’s head

President Vladimir Putin this week pointed to the decline of world institutions, the erosion of the principle of collective security, and the replacement of international law with specific rules, in which some global players “have the opportunity to live without any rules at all, and they get away with everything.”

Speaking at the 19th Annual Meeting of the Valdai Discussion Club — headlined, “A Post-Hegemonic World: Justice and Security for Everyone” — Putin pointed to the incitement of war in Ukraine, provocations around Taiwan, and destabilizing the world’s food and energy markets, which he blamed on “several systemic errors.”

He said the West was characterized by a persistent delusion of superiority, which did not allow for free speech but regarded any alternative point of view as propaganda.

Cultural superiority had reached the point of banning Dostoevsky and Tchaikovsky because Russia’s opponents consider themselves “exceptional” and everyone else to be “second class.”

Western powers were trying to impose their values and, in a mercantilist fashion, to capitalize from this cultural hegemony. Bizarrely the West was trying to do that by bringing “everyone under one umbrella” and “newfangled trends” in the form of pride parades and new gender categories.

This is quite an insight. As Westerners we see society and culture being subverted but from Eastern Europe it looks like another tactic of hegemony.

He said there were two Wests, one rich in culture and tradition, and another colonial, aggressive, but the world was changing: “the upper classes cannot, and the lower classes do not want to live as before” — they would witness the most unpredictable decade since the second world war. This certainly sounds like The Great Reset. It would have happened, he said, regardless of Russia’s actions in Ukraine.

Rivals to the European model

As if to underline Putin’s words a power struggle has emerged over control of southeastern and Eastern Europe and who is to rebuild Ukraine.

Though it might seem to soon to talk of such things, Germany has called for a Marshall Plan for Ukraine. Even before the invasion comparisons were being drawn with the post-WW2 reconstruction of Europe. The chair of Georgian think tank Geocase, Victor Kipiani, called for such a plan in the Black Sea region.

Meanwhile the U.S. has been backing a new economic alliance — the Three Seas Initiative (3SI) based on the the Baltic, Adriatic and Black Sea — as a counter not only to Russian influence but also to German.

The clue is in 3SI’s focus on transport and energy infrastructure. It was formed by the Polish and Croatian presidents in 2016, and prompted by a report pointing out the weaker infrastructure of Central, Eastern and southeastern Europe.

That 2014 report by the Atlantic Council, the U.S-led lobbying group that reflects corporate interests in the region, particularly in energy, noted that the communist legacy had bequeathed poor infrastructure running north from the Balkans to the Baltic with inadequate integration. Currently, there are 12 members of the initiative: Estonia, Latvia, Lithuania, Poland, Czechia, Slovakia, Austria, Hungary, Slovenia, Croatia, Romania and Bulgaria. [5]

By building new infrastructure running south-north, it would also challenge the post-WW2 east-west axis and would also provide a different trajectory for gas supplies that exclude Russia.

The U.S. also views the 3SI as an opportunity to sell shale and liquefied natural gas, underlined by the attendance of then president Donald Trump at the its summit in Warsaw in 2017.

Germany, fearing a loss of influence, has joined discussions since the 2018 summit though it is not a member. However the Paris-Berlin-Brussels nexus has much on its plate with the debt crisis in countries like Italy, the cost of the Covid response and now the food and energy crisis.

Enter China. It had already launched in 2012 the “17 + 1” project under its Belt and Road Initiative — formally called Cooperation between China and Central and Eastern European Countries. Beijing sent a representative to the original 3SI meeting, who spoke of its interconnection with BRI.

The EU and US know if they don’t fund the project, then China will. The initial target is to raise up to 5 billion euro, though the ultimate needs of the region is put at 100 times that. So far, of 90 projects, two have been completed.

Then there is the New Hanseatic League, formed in February 2018 by Denmark, Estonia, Finland, Ireland, Latvia, Lithuania, the Netherlands and Sweden as a way to “modernize” the EU, in a spirit of free trade and Atlanticism — and resistance to further attempts to federalize the EU.

Based on the free-trading city states of 14th century northern Europe, it is a counterbalance to German and particularly French influence.

Only the Baltic states overlap with the Three Seas Initiative. Whether the Central, southeastern and East European countries cooperate with China or the U.S. to varying degrees, it is clear that the European Union is no longer the unchallenged model.

It’s worth mentioning one other sign that Europe finds itself in play. Fourteen NATO allies plus Finland have proposed a European air defence system to counter drones and longer-range missiles — the new European Sky Shield Initiative.

Led by Germany it is part of a plan to promote the country’s defence industry. However, neither France nor Poland has joined, and the U.S. is thought to oppose the plan which would involve the use of some U.S. components, preferring to sell its THAAD system. Poland has been a hub for the U.S. equipment to enter Ukraine and also works closely with Britain. [6]

China’s ambitions

The port of Rotterdam, which is part of China's Belt and Road Initiative linking by rail to Shanghai, is right next to the planned, coastal Tristate City, to be constructed by Netherlands, Belgium and Germany on the land that the Dutch government aims to expropriate from 600 evicted farmers. [7]

The German cabinet has also agreed the partial sale of Hamburg port to China's state-owned Cosco.

The various Green agendas such as reducing nitrogen and water use, the ending of meat consumption, the herding of people into smart cities, interweave with the reduction in fertility and population.

While Europe is contracting, China is expanding. There seems to be coordination between China and interests that have power to make Europe submit.

Nord Stream game changer

The destruction of the Nord Stream pipeline casts a different light on the Three Seas Initiative as a route for gas imports to Europe, and on Germany’s industrial decline as a result.

In a flash, Europe ended its reliance on Russian gas not by a gradual transition to renewables; nor by a flotilla of tankers carrying liquefied natural gas (LNG) — rather by a kinetic exit from the Russian gas market.

A network of pipelines running from the south of Europe to the north would be of especial benefit to hydrocarbon fields of the Mediterranean basin, discovered in large volumes as recently as 2015.

See Moneycircus, Sep 30, 2022, Insight – Europe, Gas And The Endgame

In Jan 2019, energy ministers from Egypt, Greece, Cyprus, Italy, Israel, Jordan, and the Palestinian Authority met in Cairo to establish the Eastern Mediterranean Natural Gas Forum. Then the U.S. became interested in the region’s energy resources, attending the second meeting of the forum.

Routes include a pipeline from Israel to Cyprus and thence Greece, linking to the European network via southeast Italy; through Lebanon and Syria to Turkey; or liquefied natural gas terminal via Egypt or from a new floating terminal off the coast of Cyprus, and thence to the Greek mainland, Italy, and via Bulgaria to Europe.

The interests involved in Mediterranean oil and gas could not be more influential. They include Genie Energy which gained the first licence, in 2013, to explore for oil and gas in the occupied Golan Heights. In 2019 president Donald Trump recognized Israel’s 1981 annexation of the Golan from Syria.

The advisory board of Genie Energy includes Lord Jacob Rothschild, Rupert Murdoch of News Corp, former U.S. Vice President, Dick Cheney, former U.S. Treasury Secretary Lawrence Summers, and former Director of the CIA James Woolsey.

Europe’s battle

Europe faces deindustrialization, and with it the ability to support its culture. It is deliberate and we know who is responsible and governments could take them out. But they won't.

If one is too scared to name Rockefeller, Rothschild & Rex — along with other players — ask why the bankers are not stopping this carnage. Why aren’t the moneyed families, the old aristocrats and banking houses, the new money and the hedge fund owners, speaking out… any of them?

Is it the case, as president Woodrow Wilson wrote, that “since I entered politics, I have chiefly had men’s views confided to me privately. Some of the biggest men in the United States, in the field of commerce and manufacture, are afraid of something. They know that there is a power somewhere so organized, so subtle, so watchful, so interlocked, so complete, so pervasive, that they better not speak above their breath when they speak in condemnation of it”?

“The world is governed by very different personages from what is imagined by those who are not behind the scene.” British prime minister Benjamin Disraeli in his book Coningsby goes on to describe the power of bankers in every major country.

Ask yourself what other interest or power has no tie to any land and would immolate whole continents? By definition it has to be money, which knows neither loyalty nor home.

If and when famine comes it may last several years, triggering pestilence, war and mass migration.

Britain and Germany have shelved plans to close nuclear power plants, and reopened coal mines, to cope with the fuel shortage.

However, in the case of the food shortage, the Netherlands refuses to delay plans to close 600 farms and reduce the use of nitrogen fertilizer, regardless of the resulting starvation.

This tells you, says David Dubyne to Mike Adams of Health Ranger Report, that the agenda has nothing to do with emissions. It is population control. It is about culling most of us and herding the rest into smart cities. With the reduction of livestock farming, cornfields will be turned over to soy to make ethanol for energy. He says the production of “renewable diesel” in the U.S. requires an additional 30 million acres.

This suggests the globalists will take care of their energy needs at the expense of our ability to eat. Dubyne expects rationing cards to be circulated in some countries from the start of next year. Britain’s new prime minister Rishi Sunak has already said he is committed to a central bank digital currency. Pay attention to the timeline of introduction.

Moneycircus