Will the German economic crisis engulf the whole of Europe?
As is known, independence costs a lot. Germany’s political awakening may cost not only the Germans and to the German government, but the whole of the European Union as well. The negative position of American businessmen and the political coldness of the US administration toward Chancellor Schroeder and Germany’s new foreign policy are meant to be a warning to Germans and all other Europeans.
It was very wittily said that after the reunification of the two Germanys, the Federal Republic of Germany faced once again its traditional problem. Germany is once again too late for the partition of the world: all markets that are of any significant value are already controlled by the US capital. Meanwhile, the potential of the German economy presses for expansion. If nothing is done, a recession and subsequent collapse are inevitable.
It seems that there is only one way open to German capital. German capitalists don’t make any haste with bringing their capital to the East, to Russia. International cooperation of this kind would have settled Germany’s problems concerning raw sources. Thrifty and pedantic Germans, who have just recovered from the crisis of the former German Democratic Republic’s absorption, won’t stay in the chaos and suddenness of Russian markets.
Certainly, German businessmen can do business in Ukraine rather successfully as well; its remains of the Soviet industrial potential suit perfectly profitable investments. However, Ukraine’s political situation is unstable. Moreover, although Ukrainian President Leonid Kuchma is rather displeased with the fact, Russian oligarchs (and Germany considers them not irreproachable) have been developing Ukrainian business for several years already.
However, expansion is essential. This is the explanation for the undisguised flirtation with Iraqi leader Saddam Hussein, interest toward Iran, etc. Germany needs new markets and resource bases in order to regain its rightful position as a super power and the leader of the new United Europe. Otherwise, after several years, we will miss not only Germany itself, but the whole of the United Europe as well.
Nowadays Germany is on the very verge of a financial crisis, the largest one over the whole history of the Federal Republic of Germany. Experts explain the situation with arrears of taxes that have reached many billions already; these are the arrears to the state budget, as well as to the budgets of the regions. How can the arrears be explained?
According to Russia’s news agency RIA Novosti, the total arrears of taxes in Germany will reach 18 billion euros by the end of the year, and the amount will increase to 16 billion euro in 2003. Germany’s Der Spiegel supposes that the total arrears of taxes in Germany may reach an unbelievable level of 89 billion euros by 2006.
German Minister of Finance Hans Eichel said in a Sunday interview to the Die Welt newspaper that the shortage of the German state treasury is connected with the present-day economic situation first of all. And what does this mean? Expensive oil and the withdrawal of foreign investors from Germany’s economy. Therefore, American threats to turn the world’s flow of currency away from Germany seem to be coming true.
Unlike the federal minister of finance, ministers of finance in almost all federal lands of Germany are not restrained with by international politics and are actively sounding the alarm. Rheinland-Pfalz Minister of Finance Gernot Mittler says that tax collection is 8% behind this year (which means that tax arrears in the state budget are 600 million euro already). Niedersachsen Minister of Finance Heinrich Aller says the statistics the government currently releases isn’t comforting. The volume of tax collection in Niedersachsen dropped by 1.3 billion euros this year, which is 12% less compared with the previous year.
The precrisis atmosphere in Germany negatively affects the German banking system. For instance, the market value of the three largest banks of the country, Deutsche Bank, HypoVereinsbank, and Commerzbank, is 57 billion euros less than at the beginning of the year. Western analysts say that Germany’s bank sector is reaching a crisis similar to that one experienced in Japan. Experts say that excessive expenses, the large amount of irretrievable loans, and the falling of shares negatively affect the banking sector. Moreover, specialists expect up to 40,000 corporate bankruptcies in Germany this year.
However, the German economy is developing and decaying not on a desert island. The crisis experienced in the Federal Republic of Germany, the country whose economy is currently the strongest in Europe, will inevitably draw other EU members in. This also means that euro, the common European currency, will suffer as well.
In September, Nobel Prize winner Milton Friedman delivered his pessimistic forecasts concerning the euro. He said: “Such large states as Germany, France, and Italy will soon realize that the creation of the euro zone was a mistake.” Milton Friedman thinks that the euro system will collapse because of the political fragmentation of the countries making up the euro zone. And he adds that the system can be preserved only by creation of a state that is actually united, the United States of Europe, which would be united not only economically, but also politically.
Today, real political unification of Europe may seem like an utopia. Great Britain is a devoted vassal of the USA. France and smaller European countries are scared by the strengthening of Germany’s role in Europe. The reelection of Gerhard Schroeder means that Germany has been struck off the list of the US’s long-term strategic partners. Thus, Germany cannot claim the leader’s role under such conditions, and the idea of a United Europe in turning in fact into a falling house of cards.
Meanwhile, EU countries are currently experiencing all kinds of economic problems. This is largely because of the increasing prices for hydro materials and the departure of foreign investments (American, first of all). Moreover, American businessmen don’t conceal their intention to improve their affairs mostly at the expense of their European allies, and at the same time, to get rid of a serious rival, a united Europe.
In any case, all military operations recently held by the USA (the war against Yugoslavia and the upcoming war operation against Iraq) are designed with a view to deliver a blow against the euro and against the European economy, which has for several years been a serious rival to the USA in the struggle for world markets. This especially concerns Germany, which is for the third time too late for the partition of the world.
Dmitry Slobodanuk PRAVDA.Ru
Translated by Maria Gousseva
Read the original in Russian: http://economics.pravda.ru/economics/2002/7/21/64/2762_euroGermany.html
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