Łukasz Dąbrowiecki, Polish journalist specializing in German politics, 2022 Polish-German Tadeusz Mazowiecki Journalist Prize nominee, joins Cross-Border Talks to discuss the future of German energy politics and German economy. We have a look at Angela Merkel’s legacy, which used to be hailed and appreciated in Berlin and abroad, and now looks more like a collection of unsolved problems and solutions that worked well only for a while. Łukasz traces back the origins of Energiewende politics and the wrong assumption that Russia might actually democratize, if it had strong business ties to Germany. We also have a look at the future of German industry, now deprived of Russian cheap gas, and Łukasz argues why forecasts of ‘deindustrialization’ or ‘demise of German economical power’ might be exaggerated and wrong. Our guest shares also his opinion on Olaf Scholz and his capacities to adapt policies to the most unpredictable crisis situations he had to face as the Chancellor.
Transcription of the video or audio is available below.
Małgorzata Kulbaczewska-Figat: Hello, everybody. This is another episode of Cross-Border Talks. I hope it is your favorite show on international relations. Today, our guest is an expert on Germany and energy, two questions that seem really disturbing nowadays for everybody living in Europe, Western or Eastern. Lukasz Dabrowiecki is a Polish journalist specializing in Germany and also a researcher who is now preparing his PhD on social and political factors that shape energy systems. So a very important, very interesting topic, and I will host this episode together with my friend Veronika Susova-Salminen, Czech Republic. Before we ask the first question, I just ask you to subscribe to the Cross-Border Talks channel so as not to miss any episode. Hello, Łukasz.
Łukasz Dąbrowiecki: Hello. Thank you for having me and I appreciate the invitation. Thank you.
Let’s go. Veronika, your first question.
Veronika Susova-Salminen: Hello, everybody.I would like to start with the first more general question. It is interesting also from the non-German point of view, and that is to have a look at the legacy of Angela Merkel as Chancellor of Germany. I noticed recently a few articles in Germany which were suddenly speaking about the legacy of Merkel in German politics in quite negative terms. Perhaps, though, I read the incorrect sources. It can be more complex. There was a discussion about the energy policy of Angela Merkel. So could you give us some view on the situation with this Angela Merkel legacy specifically? I would like to ask in the first question about her policy, energy policy called Energiewende, how it is seen now and how it is in general, German politics and of course, the society reacting to the new context, because context changes very much.
Yes, for a very long time, Angela Merkel had great support and also was viewed from other countries of Europe as a very stable, wise and forecasting politician, very calm, great leader for Europe in dangerous times. From the perspective of today’s political situation and energy situation, the view on politics of Angela Merkel changes very much. Germany was somehow informed by other countries that their energy policy is not going in the right direction. Angela Merkel did not change her mind – she still supports what she had done.
I must also underline that the Energiewende was not her idea. This is the idea which came up already in the end of seventies. The first report, which was called Energy of the Future Without Oil and Uranium appeared in 1980, produced by Eco Institute from Freiburg. And this idea was growing in the margins of the political scene. Back then, when the Green Party got to the Bundestag, to the German parliament in 1983, they had support of only about 5% of the electorate. This idea was going through the decades into the center of the political scene and the name of Angela Merkel was somehow bound with the notion because of her so-called U-turn in 2011 after the Fukushima disaster. Then, she stepped out and said that she had been supportive of nuclear energy, but in the new circumstances, she changed her mind and she started calling for closing up all the German nuclear power plants. It was just a few months after that CDU coalition and herself prolonged the time in which the nuclear power plants fleet would work in Germany; they would stay until half of the thirties. And so her name was somehow binded to the idea of the Energiewende. But the idea itself has been growing for a very long time.
The first introduction of the idea in the political sense was in 1990, already during the unification of Germany, where the so-called green sources or renewable sources were somehow privileged in the more and more free market of energy. They got some kind of boost and privilege in this. We have to remember as well that this energy market is a very complicated structure.The first government of SPD and Greens in half of the nineties, they made the first step towards going out of nuclear power, which then was somehow stopped and slowed by the CDU. Then Angela Merkel did it once again.
What was the alternative for Germany? The worldwide famous alternative is renewables plus… it is usually said silently: plus earth gas. So the natural gas – and the natural gas was coming from Russia, from the Russian Federation. It was the whole plan: we exclude nuclear first, we exclude coal, hard coal, and then we exclude lignite, or brown coal. This plan is still in action. Coal should be excluded in 2038. It. Everybody asks questions: why coal is the last one when it is the most dangerous for the climate, while nuclear was the first.
The idea was to exclude those resources, and to put in the renewables, wind and solar supported by the natural gas, called a bridge source of energy. But actually, nobody could explain: bridge to what? What is the final aim? Because if we think technologically, 100% of renewables is actually impossible at the current technological stage. The question was, for how long does this natural gas will work and and toward what aim we are going to.
Now the whole criticism comes out, that the whole idea was to somehow work hand in hand with Russians. As a result, through the German door, Europe is being colonized by the Russian Federation or Russian resources. From this point of view, the outcome of this policy is also the war in Ukraine. The legacy of Angela Merkel looks very, very murky then.
You actually nicely made it over to my next question, because I actually wanted to ask exactly this question about Merkel’s legacy related to the so-called Russia policy. You already mentioned the problem with gas. Now it is called dependency, before it was called more as a cooperation, cooperation with Russia in order to buy from Russia, make Russia dependent basically on the money from Europe or from Germany. And on the other hand, to make make Germany and Europe dependent on the Russian gas. This seems to be now in total ruins. It’s not working anymore. And again, the criticism goes to Merkel – her policy was wrong. On the other hand, we have to say, as you said, that both energy and the Russian policy of Germany was longer than Merkel. She just took over the ideas which were before. And we have to admit, too, that the final break and crisis with Russia happened after she left office, not during her tenure, which is interesting – the thing started to really escalate when Merkel left. So how to evaluate her policy? Was it completely wrong, were the assumptions were completely wrong? Do they Germans believe now that it was a complete disaster or is the approach more nuanced?
There is this notion of Wandel durch Handel – a change through trade. It was somehow a copy of what was the policy of the United States toward China. The idea was that if we open our markets, if we start to collaborate on the economical level, then our partner, which we see as undemocratic, will change the rules. There was this whole long standing ideathat liberalism brings democracy. As we saw, it failed toward China. It also failed towards Russia. In Germany, there is also this notion: Russlandversteher. So the people who understand Russia. In the Eastern Europe, usually we see it as a label for some part of the leftist scene in Germany, which is not true. I mean, there are some leftists which somehow still mistake today’s Moscow with some kind of revolutionary force from 1917, which is, of course, not true. But there is also this part of, I would say, German industrial complex. I mean, people who were in trade and people who would understand Russia better would be also perceived as people who could swiftly collaborate with partners in Russia because they understand them. If you understand your partner, you can somehow obtain more credibility and more profits for both sides. And this notion of Russlandversteher did not function as a bad name until lately actually. So you could meet people who were proud of understanding Russia and now it appears that this understanding also completely failed.
It appeared that people who would think that Russia under Putin can change were absolutely wrong. They were wrong from the very beginning, from the Chechen wars and then attacks, invasions on other countries during the Putin regime. As you said, the whole policy and the whole idea of collaboration, the whole idea of Wandel durch Handel collapsed. Germany is now in a very interesting moment of seeking and trying to find new ways to go around things. It is a very interesting moment for the whole Europe, too.
So let us talk a bit more about Europe. Germany’s position in the European Union was based on successful economics. Now, when the economy of Germany is facing a really murky future, then the question arises what Germany’s role in the European Union? Olaf Scholz has already proclaimed a couple of ambitious plans of union reform, including the new system of voting of the state members of the European Union. But the question is: will Germany keep political influence to see these ideas progressing? And also, at this moment, I wanted to ask if Merkel’s policy was erroneous, given there was a failure in the long term, then what can be the replacement? What are the ideas in the German establishment?
We must remember Germany is the fourth largest economy of the world. It’s an unprecedented force in Europe after Brexit. They have no partners here on the continent. Economically, they are the strongest and the rest of Europe has to deal with this.
Germany, I would say, always wanted to see itself as a leader of Europe, but was not grown up enough for this task, I would say. The whole energy policy serves as a good example that the horizon of political thinking in Germany is just too narrow. However, I wouldn’t say that an anti-German policy, which we can now see, for example, in Warsaw, will lead us to any good place. I would say that only the cooperation inside and helping Germany to become a more responsible and far-sighted leader could work during the energy crisis. However, we also saw competition between countries. Instead of cooperation on energy level, we saw competition between countries who, like Germany, started to, for example, nationalize energy companies. So we are going back on those terms. We are going back to the times where instead of collaboration, Europe was competing and we know how it ended. We have to go back to the cooperation, not to the competition in the European or in the world energy markets.
Everybody is talking about the energy crisis also in Germany. But I would not say it is the case. Germany has a very strong economy. Last week, the government decided to take another piece of debt to 100 billion to put a price cap on energy prices. At. The country has a great, I would say, firepower in economic terms to buy energy sources from all over the world. Which also has bad consequences to other countries, non-European countries, which are just weaker on the global energy market. So this huge power which represents the German economy is also disrupting the situation outside of Europe. Another thing we have to remember is that Germany has the Paris Agreement, so the agreement of cutting down the carbon emissions, inscribed into the state law. And it will be very hard to achieve because of last month’s government decision that more than 20 gigawatts of formerly closed coal mines also are going back on line if they will be needed during the winter. And it was announced by the Green vice-Chancellor. Vice-Chancellor Robert Habeck, announced that the coal power plants, coal mines are going back to use. So I would not forecast that there will be a huge energy energy crisis in Germany. I would not say there will be any blackouts. I think they will manage to gather enough energy resources for everybody.
But it causes different kinds of problems. It causes problems for the Paris Agreement and for cutting down emissions. It causes problems in the external energy markets for the weaker countries. And of course, it causes the problem of growing competition between European countries instead of cooperation. How could we resolve the problem? Of course, I would say that we would have to go back to the foundations, to the very idea of the European Union. We have to remember the one basic Commonwealth of the European Union was Euratom. That was one of the foundations of Europe – collaboration between countries.
A nuclear German nuclear fleet would be a rational step toward fighting the climate crisis and energy crisis. As we know, three German nuclear reactors were supposed to keep working until the end of the year. And now the minister, the vice chancellor, has decided or actually announced that two of them will still be in use until April next year as a backup. So we had this advantage of having very powerful energy resources still online. But what then? That would need another great Copernican revolution in the German government, which is mainly anti-nuclear. Both SPD and Green Party are anti-nuclear. Liberals too, but they would be more likely to give a green light for nuclear energy. But we still don’t know what will happen after. I mean, what will be the energy policy for 2024? There is no going back to business as usual with Russia. How will Germany tailor its energy policy? We still don’t know what will be the pillars of the energy system.
I must say that I am glad that you are more optimistic about the prospects of Germany managing the current crisis. I did some research and I read some articles and some statements from different representatives of German industry, and their opinions about the prospects were not so delightful. Not so optimistic. They were pointing out that the current crisis is really abating, especially for the smaller firms, meaning firms with less than 1000 employees. They were claiming that the energy consumption of the German industry for until now, until September, fell by 21%. But the reason is that the production went down also. Many firms are putting down their production because of the prices. This is one of the risks which I would like to ask you, because the prices of energy are high. It’s not just that you get the energy in Germany. No doubt the German has enough force, diplomatic and enough big position to bring gas from Qatar or America or whatever. No doubt about this! But the price level is such that these firms are not dealing with it or they have huge difficulties. And I’m asking this because I read in several articles and several statements that if the situation is not held under control, Germany will face a threat of deindustrialization, and this, of course, will have not only European but global consequences. As Central Europeans, we are really concerned about this because as everybody of us – Czech Republic, Poland, Slovakia, Hungary, Slovenia, but also Romania and the Balkans, we all are very much dependent and interconnected with the German industry. All these countries became the German so-called Central European industrial base. So what about this prospect? There is economic pressure, there is competition not in Europe but globally. The producers of steel in Indonesia will be successful now because the prices of final products will be cheaper than the German ones and they will lose on the global market and so on. So this can really change the global position of Germany. And finally, I would point out that the German success is based on the fact that it integrated other export and strong industrial countries and the current stage of globalization. All this can be ruined now. So what are your thoughts about this other risk? Is it too much blight or too much emphasized?
I would say: nobody knows. We know that Olaf Scholz was already changing his mind on economic policies. We remember him as a finance minister, when he was very conservative and strict on the debt. And he was following, I would say, this third way of pink social Democrats. During the coronavirus crisis, he changed his mind. He preferred the stabilization program. He gave a great influx of money for small and middle companies. And that’s why Germany actually went through the coronavirus crisis very well. The unemployment was very low and the country was economically stable.
The second thing is we have to remember that Germany already, before any of those crises, had the highest prices for energy in Europe after Denmark. But the industry had different prices. Industry was excluded from the actual market mechanism. They were protected from the outcomes of Energiewende actually, because the Germans had to pay additional fees and were actually financing this huge development of wind and solar. We have to be grateful somehow that they financed the whole development because the technology can be used nowadays thanks to this. But we already know that some, like companies like Uniper, were nationalized. We know that there will be a price cap on the energy prices. We will see how it will develop, because we see governmental decisions which would have been unthinkable two or three years ago. I mean, if anybody would tell us that European countries will be nationalising energy companies and we will be putting the cap on energy prices, we would say we usually had a neoliberal policy and it’s like counter neoliberal policy. And we will see where it will lead.
It is a tool which you can use in different ways. And we will see who finally will be profiting from it. But. I think they are preparing some kind of buffer not to be struck hard by the crisis. And of course, the industrial sector usually is not pleased with such policies and they will always say that they will lose competition and they should need more support and so on. But I think we are going in an interesting direction. The proposition of giving a pool of energy, which will be very low priced and then somehow if you use your limit energy limit, you have to pay more like market prices. This is also a very interesting mechanism. As far as I know it was until now exercised only in some states of the United States in the seventies and also in Italy. But the idea of staging or growing energy prices measured by the use of energy is interesting. Tthe person or the company which uses more energy would have to pay more. It’s interesting, I would say, from the left perspective as well.
When Olaf Schulz and his party were winning the elections. A lot of leftists indeed looked at Germany with hope. They thought that if the strongest economy in the European Union was now ruled by left-wing people, then perhaps Germany could become a kind of laboratory of pro-social solutions or pro-social ideas that could be then implemented everywhere on the continent. And what you are talking about with this idea of a pool of energy is indeed very interesting from the left wing point of view. We also had the experiment with the 9 Euro tickets during holidays. So perhaps indeed something is going on. But I need to ask the question from a bit of a different angle now. One, the crisis is nevertheless coming to Germany too, because the prices are getting higher and energy prices for ordinary people are also getting higher. Should we expect more social tensions in Germany? Should we expect more protests or more activity of social organizations such as labour unions? Or would the government be skillful enough to prevent these tensions with able politics? I know you are not keen on forecasting, but perhaps could you share your ideas in this sort?
Again, we cannot be sure what will be the outcome of the policies which are created as we speak. We don’t know how they will work and how the people will react. Of course, it’s the season for the right wing. I mean, like in Italy and other countries, also in Germany, we can see that. The situation where we have growing prices and inflation is the moment when the right wingers can, you know, fish in the dark waters. How they will be organized and how people will really react, what if there is a real loss of jobs – we will see it in the coming months. However, when jobs are concerned, I need to say that during the coronavirus, people were actually surprised and struck by how the German economy came through the whole crisis in a good shape. So I will not forecast anything.
The problem can appear next year. Now there is still a kind of hope – people think: ‘we are changing the policies, we are trying to gather energy sources’. Then, winter comes. So we will be having a reality check and everything depends on this. Then, the next year, I would say will be the real playing field of the social movements and political movements when they will have arguments in their hands, being able to assess: have the new policies worked or not.
I think our talk is coming to an end. I thank you very much, Łukasz, for your interesting ideas and comments about the energy crisis in Germany and politics in Germany. I must say, as a Czech, that seeing your analysis of the German situation, I’m a bit calmer on one hand. On the other hand, I am not calm when I see what is going on with the Czech government with the energy crisis. In my country, we see all the demonstrations and protests because the government has no guts. So which is interesting because if the Czech Republic fails, I think Germany will not be very happy. But we will see.
I hope that this optimistic prognosis of yours will be valid because, of course, this perspective, which we can see around, we are not looking very good. And I wish everybody a nice day or evening – whenever they listen. I would remind everybody that we have several channels through which you can listen and see our interviews of Cross-Border Talks. I also thank Malgorzata for being with me and moderating this episode, and I wish everybody a good day.