Deutschland gebrochen

Regular readers will know I take a dim view of Angela Merkel’s Germany, and not just because of her lunatic decision to open the borders to millions of migrants a year or so back. In May last year I made the following comment:

I think [Merkel] presided over some serious economic skulduggery and corruption, the VW emissions scandal being just the tip of the iceberg. I think Germany has happily taken on the role of the economic engine of the EU, as it allows it to ensure the economic structure and interests of the EU are perfectly aligned with those of Germany. The entire Euro project appears to have been set up to ensure poor European countries could magically afford German products (mainly cars), and Germany’s treatment of Greece a couple of years ago showed exactly how Germany sees the rest of Europe. I think there is a prevailing attitude around the EU that what is good for German companies is good for Germany, and what is good for Germany is good for the EU. German companies have been given a free-hand in writing much of the industrial legislation (particularly environmental stuff) imposed by the EU on the whole bloc, and stuff like corruption (Siemens), dodgy financial dealings (Porsche takeover of VW), and emissions cheating are all ignored in favour of German corporate giants (it seems to fall to non-EU governments to complain).

I think there is a lot of rotten structure under Germany at the moment which everyone – particularly the EU lot – are turning a blind eye to. How robust is Deutschbank, for example? And would we be told if there was anything amiss? Merkel might be long-gone by the time all of this comes to light and unravels, but she’s presided over it and much of it will be deliberate policy not benign neglect.

A few months later I came across this story:

Russia has delivered electricity turbines made by Germany’s Siemens to Crimea, a region subject to European Union sanctions barring EU firms from supplying it with energy technology, three sources with knowledge of the delivery told Reuters.

Reuters was unable to determine if Siemens knew of or condoned the equipment transfer, but the move exposes the German company to potential accusations of indirect sanctions-busting and of not taking sufficient safeguards to ensure its equipment does not end up on territory most countries view as illegally annexed, say legal experts.

Streetwise Professor has written about the rather incestuous and opaque relationship between Deutsche Bank and the German government. He also wrote a post on Germany preaching European unity in one breath while stitching up eastern Europe in the next in order to preserve their commercial interests with Russia.

I was therefore not particularly surprised to read this:

The longest investigation in EU history found that the Kremlin-controlled energy giant Gazprom has used its enormous power to pressure vulnerable states in Eastern Europe, and to fragment the EU’s unified energy market with coercive pricing policies.

The report suggests that Germany has been enjoying a sweetheart deal with Gazprom, gaining a competitive advantage in gas costs at the expense of fellow EU economies and leaving front line states at the mercy of Moscow’s strong-arm tactics.

Hundreds of pages leaked  from the European Commission paint an extraordinary picture of predatory behaviour, with Gazprom acting as an enforcement arm of Russian foreign policy. Bulgaria was treated almost like a colony, while Poland was forced to pay exorbitant prices for imported flows of pipeline gas from Siberia.

But it doesn’t stop there. Raedwald has this to say:

In 2017 Ernst & Young investigated the extent to which corruption has become embedded and institutionalised within the German economy. This second phase roll out of German corruption proved as insidious as an invasion of Japanese knotweed, with crooked tentacles reaching into every crevice of German economic life. The rapid growth of online trading in Germany in the last five years has exacerbated the criminality – German firms trade corruptly and criminally with impunity on the internet as the German legal system provides few affordable remedies for their victims. And all this is done with the complicity and support of the German government.

And all done under Merkel’s chancellorship. More damning is this:

Whilst Germany is not alone in seeing a rise in economic corruption, the country is unique in being able to roll it out on an pan European industrial scale, leading an entire continent in implementing then covering up emissions testing, and now corrupting the trade in two-thirds of the continent’s gas imports. The corrupt appointment of the German zealot Martin Selmayr to the heart of the EU raises suspicion that the repression of the truth and blocking of all measures to tackle corruption has begun with a German takeover of key appointments.

And in regarding the latest Gazprom revelations:

The southern nations will be aggrieved that they have been bullied, coerced and hectored by a deeply crooked nation wearing a false disguise of moral superiority. And eastern nations such as Poland and Bulgaria, countries Germany has robbed of billions of Euros in corrupt complicity with Gazprom, will be looking at concrete measures to get their money back.

I have an inkling that others in Europe, and particularly the US, are beginning to get a whiff of the rotten state of Merkel’s Germany:

Chancellor Angela Merkel’s attempts to engage President Donald Trump just got harder.

Trump lavished praise on the U.K. and France at the weekend “for their wisdom and the power of their fine Military,” after they joined the U.S. in hitting Syrian targets. All Merkel earned was U.S. criticism for not taking part.

The U.S. disregard for Germany’s postwar aversion to using military force adds to a sense in Berlin of being sidelined by the Trump administration at a time when global challenges are multiplying. The cooling ties are both a personal snub to Merkel, the longest-serving leader of the Group of Seven and the European Union, and economically alarming, with the threat of U.S. trade tariffs hanging over the EU, and Germany especially.

Where Merkel was feted by President Barack Obama, the Chancellery in Berlin now struggles to even make contact with the White House.

I think there is more to this than simply Germany’s declining to take part in the attacks on Syria. When Trump was elected, Merkel took the lead in offering only grudging congratulations through gritted teeth, and was only too happy to self-righteously bash the 45th president during her re-election campaign. Trump is particularly sensitive to this sort of criticism, but is no stranger to handling brazen hypocrisy from ageing women whose own house stinks to high-heaven. Trump is a smart guy in many ways, and will know damned well what sort of corruption is going on in German companies with the blessing of the German government. After all, the VW scandal broke on his watch; you can be sure he asked questions about it. And this is smart politics:

Merkel’s cold shoulder contrasts with Trump’s attitude to French President Emmanuel Macron, whom he has invited to Washington next week for a state visit. Merkel’s team is still trying to finalize the chancellor’s visit to the White House later that same week.

The French did not hesitate for a moment in supporting the U.S., and Macron was superb, said the official. Macron and Trump have a great relationship, the official added.

When Macron was elected, everyone assumed this youngster with no experience would fall into line and do whatever Merkel told him to do. But Macron, perhaps because he already has one older woman in his life telling him what to do, had other ideas. He surprised everyone by rolling out the red carpet for Trump, neatly sidestepping any suggestion he was not his own man, elevating France, and leaving Merkel somewhat isolated. Trump, to his credit, played along and relations between France and the US are probably at their highest point since the D-Day landings. Or since the Iraq War, anyway.

This isn’t to say that France is about to abandon Germany and the EU project, but it did undermine Merkel, who is only still in office by the skin of her teeth. Now we have France, the UK, and US cooperating on military strikes against Syria, Merkel is finding herself increasingly out on a limb, which might explain the timing of these revelations over Gazprom. It wouldn’t surprise me if there is a minority in Germany, the EU, and abroad who have long-waited for an opportunity to expose the corrupt mess that is German industry, but can’t while Merkel is still in charge. Now she’s wobbling, some might be making their move. I think we can expect more of this.

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19 thoughts on “Deutschland gebrochen

  1. I find all this tremendously reassuring. Firstly, because it demonstrates Brexit is the right thing to do. (And if the Selmayr power grab didn’t convince you, nothing will.)

    Secondly because German industry will pressure their government and the EU to agree a deal that doesn’t shaft an important market.

  2. “Reuters was unable to determine if Siemens knew of or condoned the equipment transfer”

    A Russian official was quoted in Vedomosti, a leading Russian business newspaper, describing exactly what Russia would do with the equipment, about 2 years prior to the fact. If someone believes Siemens did not know, I incidentally have a beautiful antique bridge in Brooklyn for sale.

  3. Germany is also changing its core attitudes to following rules. Even if corporate Germany is bent as a thrupenny bit, most ordinary Germans still follow the rules, join queues, pay their taxes, etc. But not the new Germans. They have come in in their millioins and simply do not give a shit for all that. In this sense the new Germans are un-German. It does not bode well for a happy country. Especially a country that is dying demographically quite as fast as Germany is.

  4. Incidentally, I do hope Bloke in Germany desists from his usual reflexive defence of Angela Merkel and does the sensible thing by running for Chancellor when her shaky coalition inevitably collapses. 😉

  5. It is actually quite easy to defend Merkel: just look at the alternatives. Like Trump, Merkel is a symptom, not the disease.

  6. And it’s not like the disease of industrial-scale corruption is peculiar to Germany, given e.g. where Gazprom is getting its financing. The City and Siemens may have different specializations, but they are equally happy to get their crumbs from the table of the Russian gangsters.

  7. “Germans still follow the rules, join queues, pay their taxes”

    Germans join queues? Hardly.

  8. My reflexive defence of Angela Merkel is really based only on the competition. Germany hasn’t done too well historically as leaders go. I would happily see her booted out, but to be replaced by what? I’m an FDP supporter personally, and they aren’t going to form a government any time soon.

    Merkel has to go now, but there is no successor being groomed. Clearly she doesn’t want to groom anyone, but no one seems to want the job either.

    I think blaming crap like VW and Deutsche on the government is a bit like blaming Lehman on Bush, or Enron on Clinton. The company that starts and finishes with an S has been crooked for decades. The government doesn’t own (a meaningful number of) shares in said company.

    You know, It’s not as if there isn’t plenty of stuff you can genuinely blame 100% on the regime. There have been a host of disastarous and ruinously expensive public works projects, with plenty of graft (much allegedly involving a company that starts and finishes with an S). In any other country, Berlin-Brandenburg Airport would have taken the government down about 6 years ago. Bits of the terminal, never opened, are already reaching the end of their service life and being replaced.

    It’s no secret that Russia turns up the gas prices to exert leverage, there’s nothing new in that. Isn’t the problem rather Russia there though? And that the Kremlin is basically in charge of Gazprom (in a way the German government, for it’s faults, isn’t in charge of Deutsche Bank, or even really, despite big shareholdings, VW?) Were it a private company wanting to sell at the highest price to customers wanting to buy at the lowest price, it wouldn’t be a political tool.

  9. I think blaming crap like VW and Deutsche on the government is a bit like blaming Lehman on Bush, or Enron on Clinton.

    This is where we differ. I’ve worked for US companies and they are absolutely terrified of falling foul of the US government in some way, and are always banging on about compliance and the FCPA. In fact, one thing that surprises me is how large of a gap there is between American industrial companies and the US government; companies enjoy a much more cosy relationship with their host governments in Europe.

    The government doesn’t own (a meaningful number of) shares in said company.

    Yeah, and I hear this a lot these days: a Norwegian was recently trying to tell me that Statoil is no longer a state company because it doesn’t own more than half the shares. The fact is these giant European companies are subject to a lot of political pressure regardless of the shareholdings, mainly because they are often seen as being duty-bound to further the national interest, often in contrast to what is best for the shareholders. When there is cosy merry-go-round of top positions between industry and politics to such an extent they almost seem interchangeable, the number of shares owned by the government is irrelevant.

    My reflexive defence of Angela Merkel is really based only on the competition.

    I wasn’t being entirely serious.

  10. “Secondly because German industry will pressure their government and the EU to agree a deal that doesn’t shaft an important market.”

    The Prime Appeaser resident in Downing Street will make sure that German industry won’t need to pressure their government. Our own government will shaft the UK unaided.

  11. The German government bullies companies to follow the national interest while being cosy with them and not threatening them with the regulatory thicket that you have in the USA?

    What’s it going to be then, eh?

  12. I struggle with the Gazprom ‘scandal’.
    Russia/Gazprom charges some national customers more than others, based on the customer’s ability to pay, and availability to them of alternative energy supplies: good business.
    Russia/Gazprom uses gas and price as a political tool/sledgehammer: good politics, and hardly unexpected, Reagan warned against this in the 1980s.
    Russia/Gazprom blocked attempts to use THEIR pipeline to send Norwegian gas eastwards, in an attempt to undermine their own gas market! – What restaurant would allow people to sit inside at the tables and eat their own picnic!
    Russia/Gazprom does not follow EU law: why should they? I don’t follow Burundi law. Seems to me that inflicting EU(german) law on Russia was tried a while back. Generally agreed to not turn out well.
    So where’s the scandal? This is all sensible, predictable and entirely unavoidable behaviour to a Europe utterly dependent on Russian gas.
    So why the smokescreen….some other story to hide?
    OT: Anyone connecting the Windrush scandal in UK, to the somewhat silent announcement of mandatory biometric ID cards in all 28 EU states?

  13. What’s it going to be then, eh?

    How about the German government expects German companies to follow regulations, and if they believe they are too onerous then they change them? Or is that too much to ask?

  14. So where’s the scandal?

    The scandal is that Germany makes damned sure the EU serves its own interests and is forever posturing about the importance of the EU for stability and security in Europe, while at the same time taking part in EU sanctions against Russia; meanwhile, Germany does cosy deals with Russia to the detriment of the smaller EU members, handing a coup to Gazprom, one of Russia’s biggest geopolitical levers.

    Nobody minds that Germany is acting solely in its own interests, it’s the expectation that the EU must also serve Germany’s interests at the same time that grates, and when the EU and Germany’s interests conflict it is Germany’s interests which prevail even at the expense of the other member states.

  15. Via Twitter, Streetwise Professor links to this article:

    German leaders want the Trump administration to exempt their country’s companies from tough new U.S. sanctions on Russia.

    During a visit to Washington this week, Germany’s finance minister will push for special treatment and Chancellor Angela Merkel is planning to raise the issue with President Donald Trump when the two meet later this month, German officials said.

    In addition to voicing concerns about the sanctions, meant to punish Moscow for meddling in U.S. elections, Ms. Merkel also intends to warn Mr. Trump about the potential economic fallout from U.S. trade policies, an aide to the chancellor said. “It will not be an easy visit,” the official said.

    German industry has been lobbying Ms. Merkel’s government to urge the U.S. to soften its stance or come up with arrangements to ensure German companies, many of which do substantial business in Russia, don’t fall victim to deteriorating relations between Washington and Moscow.

    The new U.S. sanctions announced earlier this month target more than three dozen Russian individuals, including government officials and businessmen, and bar companies active in the U.S. from doing business with these people or the businesses they control.

    So much for solidarity, eh? Look, I don’t care if Germany wants to throw it’s lot in with Russia. But don’t jump on the Putin as evil overlord bandwagon because you don’t want to be politically isolated and lecture everyone else on morality and principles, then a few weeks later ask to be exempt from sanctions because its harming your commercial interests. The double standards are nauseating. Sure, the French do it but they don’t do it with such irritating levels of sanctimony.

  16. Due to certain historical episodes which we need not get into here, it is very important to Germans that they do not view their country as even having national interests, let alone acting in furtherance of them.

    It is therefore not surprising that they conflate ‘German interests’ and ‘EU interests’, as if they can tell themselves they are acting in furtherance of the latter then they can do so, whereas the former… well, you know, historical episodes.

    (The one thing I will give Merkel credit for is that she fought against Juncker (and therefore, indirectly, Selmayr), so she clearly realised what a disaster he was going to be for the EU (I think on the list of ‘people who won the Leave vote’ he’s definitely in the top three), but she was outmanoeuvred by Martin Schulz).

  17. That blogger with a Saxon nickname seems to think that repeating the word “corruption” as often as possible – twice per sentence, at least – is the best argument and the clearest explanation. The piece he links to, by Ambrose Evans-Pritchard in The Telegraph, in addition to being essentially a hissy fit, presents the obvious as a sensation – something I didn’t expect from Ambrose-Pritchard, who can be eccentric but is seldom ill-informed.

    It’s not E.On’s or BASF’s fault that, when LNG volumes freed up by the American shale revolution made Gazprom’s oil-linked prices uncompetitive, Gazprom cut prices for those who had access to LNG or Norwegian piped gas, but not to its captive customers. You might as well blame Centrica for gas prices in Poland. It was the EU’s job to hold Gazprom responsible for the price discrimination, and to its credit, the EU started its probe in 2011 and eventually got Gazprom to drop the non-resale clause in all its contracts and a few other restrictive conditions as described here.

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