Germany: How is Our Wealth Generated?

What is the basis of Germany's prosperity?

Answer A: The politically correct answer attributes German prosperity to the hard work and ingenuity of its people. This is the rhetoric of government officials.

Answer B: The truthful answer sounds quite different. Our prosperity stems from three global superpowers in recent decades. Without a little help from our friends, there would be no such thing as the German "economic miracle".

Without our unique relationships with America, Russia and China, the economic prosperity of the past 40 years wouldn’t have happened.

Simply put, Mr. Economic Miracle Ludwig Erhard lit the fuse – and three global superpowers provided the fuel. Ulrich Sante, the diplomat and former German ambassador to Argentina and Singapore, calls them “the three pillars of our prosperity.”

1. Thank you, Uncle Sam. After 1950, Germany and the United States, championed the principles of free trade in numerous bilateral agreements and through the World Trade Organization (WTO) in Geneva. A rule-based order was established that made it possible to invest safely beyond borders.

McDonald’s and Coca-Cola came to Germany, later joined by Google, General Electric, Goldman Sachs and Microsoft. Conversely, Volkswagen, BMW, Siemens and Thyssenkrupp established their factories in the United States. From 2000 to 2022, $2.6 trillion of U.S. capital flew into Germany, and $5.4 trillion of German capital flew into the U.S.

2. Energy partnership with Russia: The form of government changed, but the supply relationship remained constant: first, the Soviet Union and then the Russian Federation provided affordable energy to Germany. At its peak in 2021, over 65% of our gas imports came from Russia

3. Export partnership with China: With the introduction of reform policies by Chinese Communist Party (CCP) leader Deng Xiaoping from 1979 to 1997, China emerged as a new and significant market for German exports. Since the 1970s, hardly any other country has purchased German industrial products as diligently and reliably. We were the suppliers of the new Asian economic power.

Between 2010 and 2022, Germany exported more than one trillion euros worth of goods to China. The big winners were the chemical industry and the mechanical and plant engineering industry. The German automotive industry, led by Volkswagen, also became a big player in China. At its peak, VW sold more than 40% of all its cars to the People’s Republic.

Why does this matter? Because these three partnerships are now crumbling before our eyes– with no replacement in sight.

The fact is, our old tricks are no longer effective.

Russian gas deliveries halted as Putin tightened the spigot in response to the Ukraine conflict. On December 5, 2022, sanctions were imposed by the West, which is why the flow of oil has also been interrupted since then. Plus, about 2 months earlier, the Nord Stream 2 gas pipeline exploded — as if to illuminate the controversial nature of the situation.

Global Power China: The new China no longer wants to be Germany’s workbench. It now sees itself as the world’s greatest export nation. For every EU container that arrives in China, 3.5 containers leave the People’s Republic, headed for Europe.

America First: Today, Democrats and Republicans in the United States rally behind this slogan. Tech companies are harvesting the data, Wall Street is attracting investment funds and the Inflation Reduction Act is going to catch investment from German companies. For Republicans and Democrats alike, Germany is no longer a “preferred partner.”

Conclusion: This epochal shift is not reflected in current German debates. Rather somewhat trivial topics tend to take center stage, such as: cannabis, heating pumps and basic income. Perhaps here we see the deeper cause of German dissatisfaction with democracy.

German author Kurt Tucholsky said it best:

• CSU (Christian Social Union) member Manfred Weber on migration and Europe's role in the Ukraine war.

• In his government statement, Chancellor Olaf Scholz (SPD) reaffirms Germany's and Europe's support for Ukraine. Harsh criticism comes from CDU (Christian Democratic Union) leader Friedrich Merz.

• Biontech faces a significant post-pandemic downturn.

Manfred Weber, leader of the European People’s Party (EPP) and member of the Christian Social Union (CSU), has been a member of the European Parliament since 2004. He emerged as the conservative frontrunner in the 2019 European elections. Despite his victory, he narrowly missed securing the presidency of the EU Commission. Under the authority of heads of state and government, Ursula von der Leyen was ultimately chosen to be the next EU Commission President.

In today‘s episode of the Pioneer Podcast, we discussed Europe’s role in the Ukraine conflict and migration with Weber.

He urged EU countries to finally adopt the long-debated migration package, which is due for parliamentary approval in April:

Recognizing the inevitability of migration in Europe’s labor market, Weber stressed the need to counter far-right narratives and promote legal immigration.

To listen to the entire conversation with Manfred Weber in German, tune into today’s episode of the Pioneer Podcast.

In his recent government address, Chancellor Olaf Scholz reiterated Germany's and Europe's unwavering support for Ukraine. His main objective was to dispel any perception of conceding defeat in the conflict or aligning with his party leader, who mentioned "freezing the war." Scholz emphasized, "Russia is not as strong as it seems," and insisted:

But there’s no consensus within the coalition. Last week, party leader Rolf Mützenich sparked outrage among the FDP (Free Democratic Party) and Greens by suggesting the possibility of “freezing” the conflict. Previously, the political parties of Germany had shown unity despite their differences, now it’s each party for itself.

This heated debate has created an opportunity for CDU leader Friedrich Merz.

After Scholz’s dismissal of the Taurus missile debate as “ridiculous,” Merz fired shots —stating that the only thing ridiculous was the state of the coalition itself. He accused the Chancellor of showing “cowardice” towards Putin.

The Chancellor faces a difficult balancing act - he needs to be perceived as peaceful without appearing weak.

With Washington’s commitment to supporting Ukraine in its fight against Russian aggression waning, political scientist Margarita Mathiopoulos and retired diplomat Volker Stanzel call for an independent European defense initiative - regardless of the outcome of the U.S. presidential election in November:

Biontech led the development of the COVID-19 vaccine. However, in post-pandemic days, the pharmaceutical company faced a significant downturn. In 2023, Biontech experienced a staggering 78% drop in revenues to €3.8 billion, while net income fell 90% to €930 million.

With pandemic demand fading, Biontech now faces the challenge of diversifying its product portfolio beyond COVID-19 vaccines. According to CFO Jens Holstein, the company intends to invest in its emerging pipeline and prepare for its first potential oncology product launches in 2024. The first cancer drug is expected to reach the market by 2026, with a total of ten approvals targeted by 2030.

Despite expectations of lower earnings, shareholders were disappointed by the magnitude of the decline. Moreover, the promised pipeline expansion and new drugs failed to inspire sufficient confidence, leading to a 6.4% drop in Biontech’s share value during the trading day.

In Eastern Greenland, local people depend on the sea for their livelihood. In Tasiilaq, the region's largest town with a population of 2,000, residents have developed a unique hunting strategy: they lure a minke whale close to shore during high tide and harvest it when the tide goes out.

This method of hunting is considered sustainable, as humans are not overfishing the minke whales in the North Atlantic. They leave the skeletons on the beach for the sea to reclaim with the tide.

Swedish photographer Alex Dawson captured this whale graveyard off the coast of Tasiilaq and was named Underwater Photographer of the Year 2024 for his work. The judges commented:

A total of 130 photographers were honored for specific images in various categories as part of the award. We have compiled a small selection for you:

Wishing you a wonderful start to your day. Stay informed. Stay with me.

Best wishes,