End of the German idyll

Germany looked normal over the weekend as a genial Chancellor Olaf Scholz welcomed the Group of Seven leaders and their guests to the luxurious Schloss Elmau in the Bavarian Alps. But those appearances are deceiving. Germany is facing its gravest challenges since the foundation of the Federal Republic following World War II.

This is very sudden. As recently as 2020, almost the entire world agreed with the smug German self-assessment that Germany had the world’s most successful economic model, was embarking on the most ambitious—and largely successful—climate initiative in the world, and had perfected a values-based foreign policy that ensured German security and international popularity at extremely low cost.

None of this was true. The German economic model was based on unrealistic assumptions about world politics and is unlikely to survive the current turmoil. German energy policy is a chaotic mess, a shining example to the rest of the world of what not to do. Germany’s reputation for a values-based foreign policy has been severely dented by Berlin’s waffling over aid to Ukraine. And German security experts are coming to terms with a deeply unwelcome truth: Confronted with an aggressive Russia, Germany, like Europe generally, is utterly reliant on the U.S. for its security. At a time when American foreign policy increasingly prioritizes Asia and isolationist sentiment among both Republicans and Democrats appears to be rising, if Donald Trump returns to the White House in 2025, German security will depend on his goodwill. …

Modern Germany was above all an economic project. The collapse of the Third Reich left Germany morally devastated, physically wrecked and economically bankrupt. From the moment of its foundation in 1949, the country’s central goal was economic growth. That growth could repair the destruction of the war, promote Germany’s peaceful integration into Western Europe, blunt the appeal of communism, and build a national identity independent of the malignant fantasies of the Hitler era and the bombast of Wilhelm II. The hard work of the German people, the pragmatic policies of the political class, the skills and determination of German management, and the favorable international climate resulting from the development of the American-led world order took Germany to economic heights.

In recent years, the German economic miracle depended on a combination of industrial prowess, cheap energy from Russia, and access to global markets, particularly in China. Today every one of those pillars is under threat.