Germany and the crisis of globalisation: adjustment strategies
Germany and the crisis of globalisation: adjustment strategies

Author(s): Sebastian Płóciennik
Subject(s): National Economy, Energy and Environmental Studies, Economic policy, Environmental and Energy policy, Government/Political systems, International relations/trade, Globalization
Published by: OSW Ośrodek Studiów Wschodnich im. Marka Karpia
Keywords: Germany; Globalisation; Dependence on foreign trade; economic and political dependencies;
Summary/Abstract: Germany is among the biggest beneficiaries of the global economic system based on free trade and on cross-border organisation of production. However, the functioning of this system has been recently disrupted by the COVID-19 pandemic, which has highlighted the vulnerability of excessively stretched supply chains. It has also been hit hard by Russia’s attack on Ukraine and by the resulting sanctions, which are aggravating supply-related problems and stoking political divisions between the major powers. All of these forces may lead to the global economy splitting into competing platforms, and to the logic of cost optimisation being abandoned infavour of risk mitigation. If this happens, Germany would face a difficult strategic dilemma and embark on one of the following three options. The first option would involve defending the increasingly unstable status quo and the benefits of exchange patterns associated with it. In the second option, Berlin could favour a political and military consolidation of the West, and at the same time let businesses operate freely and move between the competing platforms. The third option involves taking part in the creation of an alliance of democratic states, accompanied by partial de-globalisation and an overhaul of the present economic model. While this is the most radical scenario, in the context of the continuously expanding sanction regime targeting Moscow and the mounting chaos in global supply networks (caused by China’s pandemic restrictions), its likelihood is increasing.

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