Germany’s economic entanglements and imperialist foreign policy

German army soldiers (photo: Wikimedia Commons)

In the new world situation of deep capitalist crises and intensification of inter-imperialist conflicts, German imperialism is facing new challenges and divisions within the ruling class on the question of how the position of German capital in the world can be strengthened. An expression of this development is the ‘turning point’ (Zeitenwende) proclaimed by the German government, which is accelerating a political upheaval characterised by contradictions at the economic (especially energy policy), military and foreign policy levels.

German capitalism today is integrated into global capitalism to a particularly high degree. This is particularly evident in its long-standing large volume of foreign trade and high dependence on goods exports, as well as in its dependence on imports as a country with few raw materials, especially in the energy sector.

The increasing imperialist conflicts and the development of rival, competing blocs, between and around the USA and China therefore represent a major challenge for German capital. Additionally, the end of the half-century-long supply of seemingly reliable Russian gas and oil to German industry is, because of the Russian invasion of Ukraine, now a burden for industry.

On top of more expensive energy prices for German industry, there is the general weakness of the global economy, higher interest rates to combat inflation and increasing competition in key growth markets, such as China. Chinese state-owned companies have been able to catch up technologically in recent years thanks to massive government investment; the German automotive industry, for example, is coming under increasing pressure from Chinese car manufacturers, particularly in the rapidly growing market for electric vehicles.

So far, there are few signs that the German economy can be expected to recover quickly – both the current and long-term forecast growth rates are the lowest of all industrialised nations. In times of imperialist tensions and global capitalist crises, the previous basis for the success of German capitalism – the export-orientation and strength of industry through cheap energy supplies – is turning into an Achilles heel.

Attacks on the working class in Germany

Part of the German capitalist class is now increasingly reacting with the threat of job cuts, including plant closures and the subsequent relocation of production to regions with cheaper labour, such as Eastern Europe – moves which have been threatened for several years now. At the same time, representatives of bosses’ organisations and the bourgeois media are increasingly calling for the strengthening of the international competitiveness of German-based capital.

On top of calls for tax cuts or subsidies for German companies, there is a demagogic debate against the Bürgergeld (Citizen’s benefit), arguing that people in Germany are no longer working enough due to ‘excessive’ social benefits. This debate is linked to additional planned attacks on the German working class, such as an increase in both weekly working hours and the retirement age.

However, the implementation of such a programme to improve the position of German capital poses dangers for the capitalist class and the federal government. The federal government faced a budget crisis at the end of 2023 triggered by a decision of the Federal Constitutional Court declaring the previous budget unconstitutional due to budget tricks circumventing the ‘debt brake’, a decision that called into question planned subsidies for German industry.

Under these conditions, enforcing the interests of capital must go hand in hand with intensified attacks on the working class in the form of social cuts and attacks on workers’ rights. This can lead to the high level of dissatisfaction with the federal government being expressed in the form of mass movements against cuts.

The recent protests by farmers against the cancellation of farm subsidies and the support for these protests by most of the population are a warning sign for the ruling class that such a development is a realistic possibility in Germany. Preparations are already being made for such a situation of escalating class struggles, with capital representatives in the media calling for restrictions on the right to strike due to the increase in strikes and industrial action since the beginning of 2023 because of inflation and excessive workloads. The ruling class wants to reduce the clout of the working class against planned attacks.

Dominant force within the European Union

One advantage for German capital is its leading role along with France within the European Union. This block represents both an economic alliance of capitalist nation states and an attempt to build a unified imperialist European power bloc in an increasingly multipolar world order.

The common ‘single market’ formed with the lifting of all trade restrictions within the EU has contributed to the assertion of German capitalism’s position, making Germany the most important trading partner of most European states today. The implementation of neoliberal austerity programmes during the post-2009-euro crisis in southern European countries under Germany’s leadership has led to far-reaching deindustrialisation (which German capital benefited particularly strongly from by creating new opportunities for the export of goods and capital). Regarding countries such as Greece, economic dependencies were created that are like the conditions of exploitation in the neo-colonial world.

Even though German capital has used the EU in the past as a vehicle in which it has generally been able to assert its own national capital interests even in the face of resistance from other EU states, the EU has repeatedly faced problems in acting as a unified imperialist power bloc to the outside world since its foundation. This is due to its contradictory structure as an association of competing capitalist nation states, each with their own national capital interests. This became clear not least in the handling of the Russian invasion of Ukraine, where there is still no unified line, but also in past political crises, such as the handling of refugees and the euro crisis.

Previous plans to develop a joint army and defence industry in the EU under the leadership of Germany and France have also failed due to this contradiction. However, the realisation of such plans cannot be ruled out, especially if Trump is re-elected. Even after his first election, Trump’s foreign policy was perceived by the ruling classes in the EU as an unreliable ally, as his protectionist economic policy affected the EU, as well as regarding China. Trump’s recent statement that he will not provide military support to NATO allies that do not meet the two per cent target for military spending in the event of war, may help to forge more political unity that has been lacking within the EU for the creation of a European army and a Europeanised arms industry. How far and how long such a unity might last is an open question given the EU’s multi-state character.

‘Turning point’ = militarisation and rearmament

For a long time the primary strategy of German capitalism was to enforce the imperialist interests of German capital through economic dependency relationships under the slogan “change through trade”. Since German reunification, in 1990, we have seen a more aggressive military orientation of German imperialism under capitalist auspices. The participation in the 1999 NATO war in Yugoslavia – the first war of aggression from German soil since the Second World War – as well as the war missions in Kosovo and Afghanistan, and the series of foreign missions in countries such as Mali recently, show that German capitalism no longer shies away from using military means to defend its capitalist interests.

With the ‘turning point’ proclaimed by the German government since the beginning of the war in Ukraine, we are seeing a qualitatively new level of armament of the Bundeswehr (German military) and militarisation of society. The justification for this is that Germany has to able to intervene militarily as a global power (in the interests of the ruling class, of course). This turning point is part of a global trend: apart from a temporary stagnation between 2010 and 2015, military spending has risen steadily globally and doubled from 1 trillion to 2 trillion euros between 2000 and 2020; the war in Ukraine is leading to new records in military budgets.

The over fulfilment of the two per cent of GDP military spending target announced by Federal Chancellor Olaf Scholz through the one hundred billion in special funds for the Bundeswehr, will see Germany overtake France, the UK and Russia, and in future Germany will have the largest armaments budget in Europe. And despite the budget crisis, there is no end in sight to the arms build-up: various forces, including Defence Minister Boris Pistorius (SPD), are now demanding that a further 200 billion euros are needed to make the Bundeswehr “fit for war”. A strategy paper from the governing SPD (Social Democrat Party), which controls the Ministry of Defence, literally calls for “a leading military role” for Germany in the world, supported by a “geopolitically self-confident Europe” to survive in the bloc confrontation with the “system rivals” China and Russia, in particular. A military alliance with the USA within NATO is still favoured, but with the expectation that Germany, together with the EU bloc within NATO, will also assume a more important position within the alliance with its greater military contribution.

One expression of this new global claim to power is that the Bundeswehr wants to develop a military presence via its navy on all the world’s oceans. The primary aim is to protect international maritime trade routes that are relevant to the supply chains of German capitalism. This is the central reason why the EU, with Germany’s support, has decided to launch its own military operation in the Red Sea against the Houthis in Yemen, and why German frigates are now in the Red Sea to protect merchant ships from possible attacks and kidnappings by the Houthi militias. Independent initiatives are also being implemented by the German navy. Since 2021, the Bundeswehr has been conducting regular manoeuvres with military units not only from Japan but also from South Korea with the aim of pushing back China’s influence in the Western Pacific. The framework is provided by the “Asia-Pacific cruises”, which now include all types of troops.

‘Turning point’ = change in energy policy

A second turning point can be seen in the end of half a century of energy policy co-operation, first with the Soviet Union and then with Russia. The political economy of German capitalism, with its intertwining of capital interests with foreign policy, is clearly visible here. For a long time, there was a consensus among the various capitalist factions in Germany – even during the height of the Cold War – that this economic cooperation was in the interests of German capital and that an energy policy advantage was ensured by a “secure” and cheap supply of energy. The outbreak of the war in Ukraine saw the abrupt termination of energy supplies by Russia which, in combination with the EU sanctions imposed on the Russian economy, has had a major impact on German industry.

This turnaround in energy policy was justified by the German government with the defence of a “value-based” foreign policy. However, a closer look reveals a continuity, as co-operation with other reactionary capitalist regimes is now being intensified to secure the energy supply of German capital. To secure the interests of the capitalist class, the German government is prepared to cooperate with oppressive regimes, which exposes the defence of “values” as an empty propaganda slogan.

One of the most important new energy partners is now Azerbaijan, which committed ethnic cleansing against tens of thousands of Armenians in Nagorno-Karabakh after winning the brief war last September. The German government remained conspicuously silent during these crimes, as gas deals were agreed with the Azerbaijani regime. Gas deals for the supply of liquid natural gas were also agreed with Qatar, which is notorious for its desolate human rights situation and massive exploitation of workers in slave-like conditions.

About Morocco, under Foreign Minister Baerbock, we see official support from Germany for the Moroccan royal family’s “Autonomy Plan for Western Sahara” that confirms Morocco’s 1975 annexation of the area. This official support which was a departure from the previous German foreign policy guidelines. German capital interests also play a decisive role in this case. Large-scale investments in solar energy parks are planned, to produce hydrogen in Morocco that will be transported to Germany via newly built LNG terminals. This is intended to restore a “green” and favourable energy supply for German industry in the future.

Contradictions in China policy

On the central conflict line of imperialist disputes between the world powers, USA and China, a remarkable zigzag course can be observed in Germany as a post 1945 traditional ally of the USA in relation to China. This is an expression of the fundamental contradiction that German capitalism is one of the most extensively integrated states in the global economy and that China is one of its most important trading partners. At same time, China, alongside Russia, represents the central imperialist competitor for German capitalism.

These contradictions are reflected in the changing political decisions of German ministries: on the one hand, security policy considerations are calling for bans on Chinese corporate investment in critical infrastructure in Germany, such as communications and energy infrastructure. On the other hand, the German government has granted the Chinese state-owned company Cosco a billion-euro investment in the Hamburg port terminal despite the opposition of six federal ministers.

The increasing imperialist conflicts pose a particular threat to German capitalism, as it is dependent on the function of international supply chains. This applies particularly regarding China and the import of important technologies and resources, such as semiconductors, rare earths, and solar panels. China is also a vital export market for major German corporations in the automotive, electrical, and chemical industries. For eight years now, China has been Germany’s most important trading partner, with a goods value of almost 253.1 billion euros (imports and exports) in 2023, although this total was 15.5% down in 2022.

The dependence of German capitalism on Chinese imports and market access is now seen as a risk by German capital. China views access to the Chinese market as a weapon that could be used against its interests. In a speech in April 2020, President Xi Jinping said that the country wants to become independent of foreign countries in all security-relevant areas of production. At the same time, saying it is necessary to “increase the dependence of international production chains on China to build a strong deterrence and retaliation capability against foreigners”.

Under these conditions, “de-risking” is the new buzzword in the ruling class, which is understood to mean a strategic reorientation of China policy. This means that economic cooperation with China should not be abandoned because of German capitalism’s dependence on the Chinese market. However, the risks posed by imperialist conflicts in the form of supply chain problems are to be minimised in relevant areas by diversifying supply chains and raw material suppliers. According to a study by DZ Bank in December 2022, two thirds of the German companies surveyed are planning to diversify and shorten their supply chains, including a reorientation towards more production in Eastern Europe and Southeast Asia, and more than half of the companies are planning to expand their storage capacities.

Overall, the example of German capitalism shows that, contrary to what bourgeois commentators have often claimed in recent years, no simple de-globalisation is taking place. The volume of foreign trade remains relatively stable globally despite the coronavirus pandemic and imperialist conflicts. But there is a trend towards the transformation of trade flows along economic blocs – for example, in transatlantic or Southeast Asian economic alliances – which are, however, increasingly unstable, and changeable due to inter-imperialist contradictions between competing regional capitalist powers. This development of a shift in economic interdependencies along imperialist conflict zones is, not least, an expression of the realisation that inter-imperialist conflicts (particularly between the world powers USA and China, especially in the Western Pacific around Taiwan) could come to a head in the coming years.


The worsening multiple crisis of capitalism with its increase in imperialist conflicts means that the working class in Germany and internationally must prepare for stormy times. This is because the imperialist policies of capitalist states towards the outside world always go hand in hand with an intensified class struggle from above in the form of social attacks on the working class. For Germany it is obvious that the financing of massively increasing military spending in phases of recession and ‘debt brake’ must go hand in hand with massive cutbacks in social areas.

This spiral of militarisation and the struggle of German capital for “a place in the sun” in the world has a systematic connection with the profound capitalist crisis we are facing today. As Lenin explained about the connection between capitalist crisis and imperialism, capitalism is in an imperialist phase in which the global markets are largely divided between capitalist power blocs. Rearmament and military confrontation between the global power blocs is the consequence of the capitalist competition to open new markets and for access to resources for the national capital factions by military means. Today, this competition mainly takes the form of imperialist proxy conflicts, but the danger of direct confrontations between imperialist power blocs, especially between China and the USA, is growing.

If the working class does not want to pay the price for this profound crisis of the capitalist system, it must organise itself and build mass movements. This is not only to push back the social attacks and the war course of the capitalist class, but also to lead the struggle for a revolutionary break with capitalism and the construction of socialist democracy internationally.

For further reading see: PERSPECTIVES FOR GERMANY | A New Era of Capitalist Barbarism and the Struggle for Socialism | (

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March 2024