Capitalism is increasingly reminiscent of what is called a ‘Royal Rumble’ in professional wrestling. In this sport what is happening in the ring becomes more and more confusing due to the arrival of more and more participants in the ring and changing alliances of the fighters. But while in professional wrestling a clearly defined script is followed, the winner is already pre-determined and the participants usually do not have to expect serious injuries, these guarantees do not exist in the arena of the capitalist nations. The covid-19 pandemic and the crisis that has been going on for over a year, have clearly demonstrated this. Supposed winners quickly turn into losers and vice versa. The ruling class in Germany is also increasingly faced with problems and strategic questions and not only in the fight against the pandemic.
Germany’s role in the world cannot be viewed in isolation from the changes taking place in the capitalist world order. These are not caused by the covid pandemic, even if it has massively strengthened many tendencies. But even before covid, there were major changes in the international balance of power: the decades of the USA as the sole superpower dominating the globe after the collapse of Stalinism are over. They have been replaced by a multipolar world order in which a rising China is competing with the USA.
This is accompanied by protectionist measures and a certain decoupling of global supply chains and trade relations, especially between the USA and China. Even with Donald Trump’s (involuntary) departure from the White House, this trend will not fundamentally disappear – after all, it was Joe Biden and the Democrats who repeatedly called for a hard line against China. The Sol and the CWI foresaw this development and warned against placing illusions in an eternally advancing globalisation as long as capitalism endures.
Instead, we are witnessing the beginning of a new “world disorder” and a massive increase in intra-imperialist tensions. This is intensified by the economic downturn: the effects of the covid pandemic have plunged the already weakening world economy into a deep valley. This constellation exacerbates the international bickering of the capitalist states, which want to secure influence, sales and profits for “their” banks and corporations. In other words: if it was already difficult to divide the shares of a growing cake, a shrinking cake definitely leads to quarrels.
The causes for these developments are, ultimately, to be found in the capitalist mode of production. This system is riddled with contradictions. While production is socially organised, banks and corporations are privately owned by a small minority of capital owners. They compete for profits and markets. While supply chains and trade are more globally networked than ever, this system is based on the barriers of the capitalist nation-state, which seeks to enforce the interests of “its” capitalists in international competition. Only through a democratically planned economy, based on common ownership of the big banks and corporations, can these contradictions, and thus war and oppression, be overcome and replaced by international solidarity and cooperation. Therefore, the struggle for socialism is also the best answer to growing conflicts.
Currently, the conflict between the two major powers, the USA and China, is in the foreground. The trade war that has been going on for several years, the protectionist measures and tariffs of both countries have led to a certain decoupling. This also increases the pressure on other countries to position themselves in this conflict. The problem for German capital is that it is extremely dependent on the world market and is caught between two stools because it does good business with both countries but is also in competition with them.
Germany and the USA
The USA has been Germany’s most important sales market since 2015. Between 2016 and 2019, exports of goods rose to around 119 billion euros, accounting for 8.9 per cent of total exports. Imports from the USA rose to 71 billion euros (6.5 per cent of all imports – third place). The German trade surplus (exports minus imports) fell only minimally in the process. As we will see later, however, the 2020 crisis meant major changes here. But relations between the two capitalist nations were not without conflict even before that.
The export surplus was the reason for the US under Donald Trump to impose tariffs on imports from Germany and the EU. Additional tariffs of 25 per cent on steel and 10 per cent on aluminium products have been in place since mid-2018. Further US tariffs have existed in aircraft manufacturing since October 2019 following the WTO’s ruling over EU subsidies to Airbus. This conflict was already smouldering before Trump’s presidency and in November – a few days after Joe Biden’s election victory – the EU followed suit against the US-owned Boeing.
The trade war is thus not limited to China and the US alone, even if the US tariffs have, so far, only affected a very small part of trade between Germany and the US, and have not had a major material impact (except for the corporations affected). Trump’s threat to impose tariffs also on car imports from the EU was not been realised by him, but the legal justification suggested by his administration still exists. These would also hit the German economy more directly and provoke countermeasures from the EU.
The Federation of German Industries (BDI) is therefore calling for a change of course and the resumption of negotiations on a free trade agreement between the EU and the USA. In 2016, efforts within the framework of TTIP (Transatlantic Trade and Investment Partnership) failed – partly because millions of people protested against the associated dismantling of labour and health protection in the interests of the bosses. Since then, there have been efforts to resume negotiations for an industrial goods agreement. But, so far, there has been no progress: The EU rejected the demanded US access to the agricultural sector while making the lifting of US tariffs a precondition for an agreement.
In addition, there are other areas of dispute, such as the planned taxation of large digital corporations like Facebook, Google and co. The rulers in Germany hope that under the Biden presidency such conflicts can be discussed in a more constructive tone. In their first telephone conversation since he took office, Joe Biden and EU Commission President Ursula von der Leyen agreed to suspend tariffs on aircraft production for four months for the time being. But it is unlikely that this will be the prelude to a major new free trade agreement, not least because there would be massive protests on both sides of the ocean against attacks on workers’ rights. This does not rule out that there can and will be sectoral or partial agreements and that the tone will change compared to the Trump administration. But the competing interests of European and US corporations remain fundamental.
And there is also potential for conflict on geostrategic issues. This becomes clear, for example, in the dispute over “Nord-Stream 2”, the Russian natural gas pipeline to Germany that is about to be completed. Parts of German capital want to push through this project to secure energy supplies, at all costs. The USA, on the other hand, fears Russia’s growing influence in the EU – as do Eastern European countries like Ukraine, through which the natural gas has been transported so far (and which would also lose 1.8 billion euros in transit revenue).
However, Biden is also likely to be keen to engage Germany and the EU in the fight with China. While his Secretary of State Anthony Blinken invoked the common alliance at the NATO ministerial meeting in March, he also made promises that the US would not demand that other countries turn their backs on business with China. The strategic partnership between the rulers of the US and Germany that grew through the post-World War II international constellation has suffered under Trump, but they are still closer than Germany and China. Against this background, it is not impossible that Biden is also prepared to make concessions.
But for many large German companies, an escalation with China would be bad for business. Decoupling (even if only limited) of the German export-oriented economy from China would have painful consequences for their profits.
This is massively evident in the covid crisis, in which China was the only major economic power that showed growth last year. This has concrete consequences: for example, despite a decline in turnover, the Daimler Group made a profit of four billion euros in 2020 partly due to the luxury business in China. This allowed the company to distribute 1.4 billion euros to shareholders, while at least 20,000 employees and entire factories are facing job losses and closure.
China has risen to become Germany’s most important trading partner and has held this position for five years now. Between 1991 and 2018, China’s share of total imports grew from 1.8 to 9.7 per cent; of total exports from 0.8 to 7.1 per cent. In particular, these shares grew after China’s accession to the WTO and between 2008 and 2011, when the Chinese economy became a lifeline for the global economy and also Germany after the crisis. According to Commerzbank, 18 per cent of the turnover of the 30 Dax companies is now dependent on China. In particular, the automotive industry, which is important for Germany, depends on its demand: VW now sells in China almost every second car it produces worldwide.
Jürgen Matthes of the Ifo Institute calculates that value-added exports1 to China account for 2.8 per cent of Germany’s total GDP. By way of comparison, the USA’s share is only 1.2 per cent. In an international and European comparison, Germany is significantly more dependent on China than other countries. Matthes points out, not without reason, that this high dependency should not be overestimated and that almost 97 per cent of value-added still comes from other sources. In the same report, he calculates that if German value-added exports to China were to halve over five years, economic growth would fall by 0.2 percentage points per year. But a lot has happened since February 2020 (when this report appeared): the German and global economies have slumped massively. A shrinking cake carries the fight for every crumb.
According to the preliminary publications of the Federal Statistical Office, China seems to have had a stabilising effect (at least for the time being) on the German economy during the crisis year 2020. Exports here fell by only 0.1 per cent. In contrast, exports to the USA fell by 12.5 per cent – the most since the 2008 crisis. The German export surplus thus also fell significantly by eleven billion to 36 billion euros.
However, this does not mean that China will automatically play a similar locomotive role as in the last crisis or that it would not also compete with Germany. At the moment, the Chinese leadership is discussing a reorientation of its economic policy. This includes a stronger orientation towards its own domestic market at the expense of investments abroad. Lending for overseas development by the two largest economic policy banks has already been massively cut, falling from 75 billion euros in 2016 to just 4 billion in 2019! The “One Belt, One Road” project, which was announced with a volume of one trillion US dollars, has stalled – not least because the ability of many states to comply with the interest rate agreements is being called into question even more by the current crisis.
This also includes the potential for conflict between Germany and China. If China wants to boost production at home and become less dependent on foreign countries, this also means lower demand for German or European investment goods. 96 per cent of European firms in China say they are already affected by the ongoing unbundling: More than half are already feeling negative consequences. Moreover, the international race is on in researching and deploying new technologies, such as Artificial Intelligence, electric-powered vehicles, 5G, digitalisation and green energy generation. The OECD estimates the market potential of artificial intelligence alone at up to 130 billion euros.
German capital now sees China as a “systemic rival” on which it is nevertheless dependent. That is why there are different attitudes on how to deal with this rival. This is why the investment agreement between the EU and China has recently been the subject of discussion. Shortly before the end of the year – and thus also shortly before US President Joe Biden took office – it was passed after seven years of negotiations, mainly under pressure from the German government. Among other things, it includes commitments by China to open markets for European companies as well as relaxations in technology transfers within the framework of joint ventures. While parts of the bourgeois celebrate China’s concessions as the right step, others warn of the negative effects on relations with the USA. However, this agreement still needs to be ratified by the European Parliament, which is far from certain given the recent exchange of blows with mutual sanctions between the EU and China.
German imperialism is not in the same league as the USA and China. But it is pursuing the strategic goal of further expanding its position in the world and its influence. With reunification over thirty years ago, there was a huge push in this direction. Since then, strategists of German capital who think in the long term have endeavoured to anchor great power ambitions in the public debate by arguing that ‘Germany must assume more international responsibility in a more conflict-ridden world.’
The importance of the EU
The EU, in which Germany dominates together with France, is crucial for this. The common internal market and the euro give German entrepreneurs advantages they would not have on their own. According to German capitalism, the EU should be a central lever for asserting its own interests on the world stage.
But the EU is an alliance of different capitalist nations. They are united in attacking the working class and its rights. This is what the EU has ensured in the post-2008 crisis in the Southern European countries and this is the spirit in which its treaties are kept. But on other issues, the different EU member states also have their own minds.
The centrifugal forces in this alliance remain enormous. The first reaction to the pandemic of the EU states was characterised by nationalism and border closures. Crisis reveals character. We have analysed elsewhere the conflicts over the EU reconstruction fund. Different groups of states (Core Europe, the Frugal Four or Five, the South, the Visegrad Group…) were pulling against each other. At the time, it was the real danger of a break-up of the EU that also made clear to the German ruling class that, in view of the strategic importance of the alliance of states, it had to give up its historical position and advocate joint EU debts for financing. However, the dispute over the concrete form of the allocation of EU funds, their conditions (i.e. attacks on social systems and the working class) or their financing through the common budget can break out again at any time. The bickering over the distribution of anti-covid vaccines among the EU states is also a current example of how other political developments, not least within individual countries, can also lead to major conflicts in the EU that call its existence into question.
This is not unrelated to international competition and the influence of other nations. While the EU abandoned Italy at the beginning of the covid crisis, China sent medics, protective clothing and respirators. Already in 2019, the EU’s third-largest economy after Brexit participated in the “One Belt, One Road” initiative with a declaration of intent. Hungary, which has repeatedly come into conflict with EU leaders, is the first EU country to vaccinate using vaccines from China and Russia.
Where does German big business want to go?
For the rulers in Germany, the continued existence of the EU is crucial if they want to come closer to their world power ambitions. That they will succeed in this crisis in its current form is more than doubtful in view of the conflicting interests of the individual nations. Other countries could follow Britain out of the EU or new alliances and regroupings could emerge.
In the face of these problems and questions, different parts of German capital are also struggling to find the right course. The Greens, who will probably be part of the German government after September’s general election, emphasise the need for a tough course against China and an orientation towards the USA. The CDU executive also stressed the need for a “transatlantic China strategy” when Joe Biden took office. But part of this should also be what has been repeated excessively in recent years as the ‘assumption of more international responsibility’: the rearmament of the Bundeswehr, its increased deployment abroad and compliance with NATO’s two-per cent target for the defence budget.
In 1999, under the SPD-Green Schröder-Fischer government, the Bundeswehr was sent into a NATO war for the first time in the history of the Federal Republic. Currently, about 3,000 soldiers are deployed in 12 countries on three continents. Thus, the Bundeswehr participates in imperialist interference in so-called “crisis regions” – often under the guise of a mission for security, order, democracy, etc. In the final analysis, this is all about geopolitical and economic interests.
In Afghanistan, where the Bundeswehr has been sending most of its soldiers for years, the situation is more insecure than ever before. Since 2008, the Bundeswehr has been stationed in Somalia in the Horn of Africa, and since 2013 in Mali in West Africa. Germany has been involved in the civil war in Syria since 2015 – among other things with reconnaissance flights of Tornado jets for other NATO participants. Especially on the African continent, German and other companies are competing with China, which has increased its investments and influence there.
The Indo-Pacific Guidelines adopted by the German government last year, which are to form the basis for dealing with China and more interference in the Asian region, should also be of note. The German government wants to conclude new free trade agreements with the countries of the region through the EU and also strengthen military cooperation. In August, the German navy is sending a frigate to the South China Sea, where the USA and China are engaged in disputes over spheres of influence. Such manoeuvres are also intended to convey a willingness to intervene externally and to prepare the ground internally for further military interventions even in powder keg areas.
Crunch questions for DIE LINKE
How one positions oneself on such developments and questions is of crucial importance for socialists. Only a class position that does not start from a single country but from the interests of the working and poor of the world can provide a secure basis.
In DIE LINKE (the Left party), especially at its grassroots level, there is a great deal of sensitivity about Bundeswehr missions. Rightly, there was great resistance from within the party to the move by Matthias Höhn of its right-wing to remove the general “no” in the party’s programme to foreign deployments of the Bundeswehr and to campaign for remaining in NATO. This was a deliberate attempt to lay down markers in the run-up to this September’s federal elections that would ease the way to the possibility of DIE LINKE joining a government with the SPD (social democrats) and the Greens.
But simply rejecting Höhn’s proposal is no guarantee against DIE LINKE’s involvement in the dirty business of the ruling class. Although both newly elected joint party leaders emphasise the ‘No to foreign deployments’, one – Susanne Hennig-Wellsow – is aggressively promoting a ‘Green-Red-Red’ government and the party is on course for such coalition talks in the autumn if the election results make that a possibility. In the strategic orientation of German capitalism, however, the possibility for the Bundeswehr to undertake foreign missions plays a central role and must be implemented by a federal government. A government that does not want to overcome capitalism will have to bow to this. Even in the unlikely event that certain preconditions from DIE LINKE find their way into a coalition agreement: ‘paper is patient’, what is written can be later ignored. It would not be the first promise that the SPD and the Greens have broken, just look at 2003’s passing of the neo-liberal ‘Agenda 2010’. If in coalitions with these parties, DIE LINKE would then be complicit instead of organising resistance.
But those leaders of DIE LINKE who, in an opposite direction, signal illusions in the regimes of Putin in Russia or Xi Jinping in China are also barking up the wrong tree. These states are no less imperialist just because they are in conflict with the West on certain issues or because they once saw revolutions. Today’s rulers of China and Russia are firmly pro-capitalist. In the tussle of the robbers, socialists should not support either side or make a qualitative difference between their intentions. They are all about profits and influence, not about human rights, so-called “values-based politics” or, say, combating climate change. Neither the US nor China has policies that would be in the interest of the wage-earners and the oppressed, at home or abroad.
Our motto should be the insight of the famous Marxist and anti-militarist Karl Liebknecht: “The main enemy is in our own country!” Sol, the CWI in Germany, therefore rejects all foreign deployments of the Bundeswehr and demands the immediate withdrawal of troops from abroad. These are not fundamentally ‘humanitarian missions’ or to peruse ‘democratic’ aims. The so-called pro-democratic western powers have never consistently defended democratic rights. One of the founder members of Nato was the then Portuguese military-based dictatorship under Salazar, and today Nato is silent about the increasing attacks on democratic rights in Turkey.
We stand for socialist change, not government participation with pro-capitalist parties. When German capitalism manoeuvres between bigger sharks, it always has its own interests in mind. Those claiming to be on the left should expose and denounce this. It is not only worrying for environmental reasons when LINKE MPs like Klaus Ernst welcome the progress in constructing Nord Stream 2 and congratulate the companies involved for “not bowing to the threats from the USA”. It was equally fatal that the LINKE leadership did not take Joe Biden’s election victory as an opportunity to dispel illusions in him and warn that he will pursue just as imperialist a policy.
The workers and poor of the world are the first to suffer from the intensifying imperialist conflicts. The strongest weapons of the workers’ movement against this are international solidarity and the common, international struggle against capitalism. In view of the growing tensions in the world, DIE LINKE, but also the trade unions, have a responsibility to take protests against imperialism and war to the streets and argue for an internationalist, socialist alternative, but this means breaking with the idea of simply working within capitalism.