Germany’s Apokalypse Now

Being a Germany watcher in the early 21st century can often feel like being an expert on ancient Greece: You kind of missed all the exciting bits. Alas, that seems to be changing. At the same time an economic cyclone is threatening to wreck one of the world’s more deceptively combustible societies, Germany is also emerging as the fulcrum of Vladimir Putin’s strategy to salvage his war in Ukraine by breaking Western solidarity—a gambit that now involves a credible nuclear weapons threat. For a country with an almost uniquely pathological fear of inflationary shocks, populist politics, and nuclear technology, the winter of 2022 is shaping up to be a horror show.

What is currently grist for German nightmares may also turn out to be a genuine tragedy for the entirety of Europe, as well as the United States. For several decades, Germany was able to build strong domestic cohesion, a solid social welfare system, and limited income inequality on the back of a strong manufacturing sector and competitive exports. This kept unemployment low, wages stable, and politics bland. Their high quality of life often came at the expense of poorer members of the eurozone, but few Germans could argue with the result: the world’s fourth-largest economy and one of its most steady and apparently sane political societies.

But the last two years, and the last seven months in particular, have revealed this model to be something of a Ponzi scheme. The entire German system, it turns out, depended on a never-ending supply of cheap Russian gas, immaculate just-in-time Chinese supply chains, and ever-expanding foreign markets. No other country bet more on the end of history, and we all know how that turned out.

Until the end of September, there had been widespread speculation that Chancellor Olaf Scholz was willing to trade sanctions relief in exchange for a revival of the halted Nord Stream gas pipelines. Now that the pipelines have exploded, the loss of the cheap energy that underpinned modern Germany is all but irreversible. Meanwhile, the Chinese market is becoming tighter and more hostile, even as Chinese firms have started to outcompete German firms in everything from cars to machine tools. Because Germany depends so disproportionately on foreign markets, remains ideologically committed to large savings surpluses, and suppresses wages to keep exports competitive, Germans themselves cannot consume enough of what they make—while German workers make things that are especially vulnerable to inflationary pressures. Baseline inflation forecasts for Germany are now in double-digit territory. Steel, fertilizer, chemical, and toilet paper plants are shutting down or on the brink of closure, and German automakers are threatening to shift more production to places like South Carolina and Alabama. The anger and frustration of a large number of increasingly nationalist voters—the worst fear of the German establishment, for obvious reasons—has benefited the far-right Alternative für Deutschland (AfD), which now polls as the most popular political party in all five states of the former East Germany.

In response to all this, Berlin resolved last week not to reverse course on nuclear power or invest in economic modernization—both of which remain poisonous in German domestic politics—but to embrace a 200-billion-euro national energy subsidy that whipped a majority of the European Union into a frenzy. By opposing an EU price cap while unveiling a surprise domestic relief package to keep its own voters warm and its factories from shutting down, Germany was seen as sabotaging EU state aid programs, efforts to build a unified response to the energy crisis, and attempts to ensure that poorer member states can bid for gas on a level playing field—the union’s core reasons for existing. The German national subsidy, which has since been slightly downscaled, could still make energy more expensive for its neighbors—none of whom have forgotten that Germany’s two big contributions to Europe over the last 15 years have been the cult of fiscal austerity and dependence on Vladimir Putin.

Berlin has taken a Wilhelmine attitude to its allies’ fury. At a meeting of EU leaders last Friday, Scholz dismissed Polish, Italian, and other provincial frothing about his subsidy—which he refers to, approvingly, as a “double ka-boom”—as simple “misunderstandings.” Economy Minister Robert Habeck meanwhile recently appeared to accuse the United States of war profiteering by putting Germany in the position of having to buy expensive U.S. liquefied natural gas exports, now that its rightful cheap Russian gas is spilling into the ocean.

The fact that German politics and diplomacy, for the first time since reunification, are starting to become less banal, less consensus-driven, and less fanatically conformist doesn’t have to be a bad thing. But these are troubled waters. For 150 years, the wealthiest, most populous, and most powerful country in Europe has struggled to pursue its own interests without also destabilizing the continent. In all of German history, in fact, there have been only two periods of relative stability: in West Germany after 1945, when Bonn balanced between Washington, Moscow, and Paris; and after 1990, when a reunified Germany pursued its interests in Central and Eastern Europe without frightening its Western allies by anchoring itself in NATO, the EU, and the euro. A political commitment to a kind of high-minded, respectable cowardice was also a part of this balancing act, as well as a cultural commitment to wearing permanent sackcloth and ashes by way of apology for two world wars and the Holocaust.

Angela Merkel’s plan was to recalibrate Germany’s delicate balance to accommodate—and benefit from—a rising China, a supposedly restored Russia, and an increasingly unstable United States. In her vision, while Chinese markets expanded, the EU single market would continue to serve as the primary destination for German exports while Brussels would function as a force-multiplier for German power—giving the helpful impression that Berlin was tightly bound by alliances, its ambitions properly subsumed in multilateral institutions. That plan is now kaput.

Instead, Germany is approaching what would be a worst-case scenario for the Western alliance: a more or less unaligned, frightened, and insecure behemoth floating in the middle of Europe. Far from the realization of some long-held dream, this kind of geopolitical independence would be more terrifying for Germans than for almost anyone else. Contemplating the simultaneous calamity of an inflationary spiral, an industrial collapse, a blackballed Russia, a recalcitrant China, an anti-German Europe, a lunatic United States, and a potential nearby nuclear attack, the last thing Germans want is to feel they must now create and secure their own destiny.

But where, exactly, are they supposed to turn? Not to the United States, whose own president has been telling anyone who will listen that America is indeed an election away from succumbing once and for all to “semi-fascism” and white supremacy, and that an “out of control” Supreme Court may soon ring down the curtain on American democracy. Even a more objective assessment than Biden can be expected to deliver still leads Germans to similar conclusions. To American complaints about Germany’s current account surpluses and austerity policies, Germans respond that America’s $5 trillion pandemic stimulus is starting to look like a policy blunder of generational proportions. To accusations of cretinous energy policy, Germans point out that the United States is currently suppressing domestic oil and gas production while making itself a supplicant of petrostates it is simultaneously sanctioning and threatening. Memories of the Biden administration having to beg the Taliban for help withdrawing from Afghanistan after 20 years of incoherent U.S. engagement remain fresher in Europe than the administration wants to admit, and don’t inspire confidence in its (or any administration’s) ability to make consistent, competent decisions.

Nor do the Germans seem as optimistic as they once did about the EU. Discontent with Berlin and Paris is rising among smaller European states, and the Franco-German partnership itself, which once gave “Europe” a semblance of coherence, seems to be breaking down. Not even China inspires as much optimism in the German imagination as it did only a year or two ago. “It’s about maintaining the status quo for as long as possible,” as a diplomat close to the Chancellery recently explained the rapidly shrinking ambitions of Berlin’s China policy. “If you have to pull out from China at some point in the future, you pull out. But until then, you make as much money as you can.” With so much of Northern, Central, and Eastern Europe moving closer to the United States as a result of the war in Ukraine, Merkel’s strategy of working through the EU to play Washington and Beijing against each other seems off the table for good.

What about Russia, though? Having been the least credible Kremlinologists over the last 20 years, Germans have been forced by circumstances into a refreshing realism about Moscow that is often less abundant in the United States. Brilliant Ukrainian advances against Putin’s armies have led to an understandable euphoria among many Westerners, as well as a justifiable panic that the threat of nuclear war may increase with the odds of a Russian defeat. Germans are quick to point out that this is only part of the story.

Time may still favor Putin, many German officials believe. He is far from running out of options for escalating Russia’s military mobilization. He can shift focus from direct confrontation with Ukrainian forces to the country’s water and energy facilities, to civilian housing and schools—in a word, to rape and terror—perhaps in hopes of inflaming a refugee crisis. He can simultaneously attack civilian infrastructure in Europe. (Last weekend, it’s worth noting, half of Germany’s rail network shut down because communication cables were mysteriously cut in two main nodes, an operation considered to be impossible without the complicity of insiders; two days later, the Interior Ministry announced that it plans to sack the country’s cybersecurity chief over links to Russian security services.) Russian reservists may be overweight, underpaid, untrained, and craven, Germans note, but Putin doesn’t need them to match the mettle of the heroic Ukrainians; he only needs them to stretch the war beyond the point that Ukraine and the West can afford to continue financing it, while indiscriminately murdering civilians from afar.

Confidence that the Western sanctions regime will outlast Russia’s financial resources likewise overlooks the fact that the Russian central bank can print money if it needs to, which it currently doesn’t. EU countries have paid more than 100 billion euros to Russia for fossil fuel imports since the invasion began. Russia will record a current account surplus this year of some $200 billion; the West’s hit to its foreign exchange reserves, while unprecedented, was still relatively modest. Many of Russia’s Western imports are being rapidly substituted by China and even U.S. allies like India, South Korea, Taiwan, and Japan, while markets for Russian energy are being expanded all over Asia and the Middle East. Perhaps the Russian system under Putin really is so rigidly corrupt that it won’t be able to adjust to the shock of Western expulsion; but overconfident Western predictions of Russian economic weakness and irrelevance were part of what got us into this mess in the first place.

Furthermore, even if Russia’s economic picture is as dire as many hope, and even if the Russian elite is as humiliated by the war as it deserves to be, that does not automatically mean that Putin will suffer a crisis of legitimacy. Even on the day of the Russian invasion, Putin spoke of his war aims in genocidal terms; at best, the vast majority of his subjects and courtiers demonstrated a remarkable degree of apathy. The war has since gone very badly, and has inflicted pain on elite and ordinary Russians alike. But Russians have never known any other kind of war.

There are plenty of Germans who are panicked that Putin would sooner ignite a thermonuclear exchange with the United States than be removed from office or killed: Their analysis does not go anywhere the president of the United States didn’t go in his remarks at a Democratic fundraiser last Thursday, when he warned of “the prospect of Armageddon.” But there are also German officials and policymakers who, all too reasonably, read Putin’s snowballing nuclear threats as a strategy aimed specifically at Berlin.

Washington has signaled that a Russian nuclear strike on Ukraine could trigger NATO’s Article 5 collective defense clause on the grounds that radioactive fallout would spread to NATO territory. It is unimaginable that Poland, for example, would accept anything less. At the end of September, U.S. national security adviser Jake Sullivan claimed that, “We have communicated directly, privately, and at very high levels to the Kremlin that any use of nuclear weapons will be met with catastrophic consequences for Russia, that the U.S. and our allies will respond decisively.”

As many Germans see it, Ukraine’s dazzling advances do not leave Putin with the binary choice of accepting his own death and defeat or else embarking on Armageddon. He may instead be left with the potentially attractive option of deploying a tactical nuclear bomb to achieve a limited military objective in Ukraine, or of causing an “accident” at the Russian-occupied Zaporizhzhia nuclear plant and attempting to blame it on the Ukrainians. This would almost certainly trigger some sort of NATO attack on Russia—to which Germany would never, under any circumstances, ever agree. Berlin would instead lead a small dissenting bloc within NATO, including Hungary, refusing any use of its funds, communications, weapons, or territory. In other words, Germany would violate its treaty obligations—as Putin has likely judged.

NATO would thus officially break along the lines Putin knows it is already broken. The EU’s commitment to Ukraine would also fracture. The U.S.-German alliance would be no more. Even a small nuclear explosion would send markets crashing, and the German economy would grind to a halt. All of Europe would enter a depression more severe than anything Russia has experienced to date. It would no longer make sense to speak of “the West.” This, as much as reclaiming lost territories, would be Putin’s life’s work.

When Germans, or anyone else, explain such things, you have to remind yourself that these are not scenarios being gamed by students in military colleges or memes being volleyed on Twitter. These are eventualities being considered in the highest offices of political power. It is the world that Americans and Germans have strenuously sought to avoid, often working together, since 1945. Now, it’s here.