Until recently, Germany was still considered the “engine of Europe”, with a robust and powerful industrial sector, mainly in the automotive and steel industries. Today, both sectors are under pressure due to high energy costs. This has led the government to seek ways to subsidise energy costs to save its industry. However, everything suggests that the process of deindustrialization has begun an irreversible spiral.
The figures do not lie about Germany’s disastrous economic situation. The country is in its second consecutive year of economic recession, with a negative GDP of 0.9% in 2023 and 0.5% in 2024. The crisis is intensified by Trump’s tariff war against his Western allies. Trump unilaterally imposed tariffs of up to 50% on European steel and aluminum.
The European Union responded by replicating similar tariff policies and discussing imposing tariffs on steel imports to strengthen its domestic industry. However, far from responding to the United States, these tariffs target China, declared by Europe as another significant adversary. In the media, we read expressions such as ‘unfair competition’ or ‘dumpling prices’ that the “evil” Chinese impose on the ‘poor’ Europeans. Germany’s aggressiveness towards China contrasts with the submissive acceptance of every new decision emanating from Washington, depending on the “naked Emperor”, Donald Trump’s mood.
On the other hand, the German automotive industry must contend with high energy costs and growing competition from Chinese companies, particularly in electromobility. Volkswagen has announced plans to reduce its workforce by around 35,000 by 2030; while Mercedes and BMW sales plummeted 46% in the first nine months of 2025 as compared to the previous year. The crisis in this once robust sector highlights the need for a change in Germany’s industrial policy.
The framework is already provided by the European Union, using a potential Russian invasion of its territory as a justification. The way out of this crisis, as offered by European rulers, is an increase in defense spending, or hyper-militarism. Says a European Union website:
“In 2024, Member States’ defence spending amounted to €343 billion, an increase for the tenth consecutive year. Spending is expected to increase to €381 billion in 2025. In 2024, Member States’ defence spending increased by 19% compared to the previous year and by 37% compared to 2021.”
With these figures before our eyes, it is not surprising that the boom in the defense industry offset the crisis in the “civilian” industrial sectors. The weakness of the automotive industry today favours the military industry, whose orders and contracts, as well as its stock market shares, continue to rise. Even parts of the automotive sector are reorienting themselves towards defence. As one prominent German politician pointed out, ‘Arms companies need skilled personnel. And when workers are laid off in sectors that are currently in decline, companies have the opportunity to absorb these workers.’
But this arms race is also evident in the cradle of Western militarism, namely, the United States. Already, voices point to another worrying scenario for Germany, in which German defence companies seek legal advice to relocate to the United States. The US military budget allows it to buy weaponry at much higher prices. With this possible scenario, many German companies are likely to leave Europe simply because the United States buys at higher prices.
In Europe, this rampant militarism goes hand in hand with the weakening of the welfare state. Promises by German politicians that increasing military spending does not mean dismantling the welfare state are ignored. Several sectors, such as culture and education, are already suffering budget cuts. In August 2025, German Chancellor Friedrich Merz pointed out that the welfare state was too expensive. Meanwhile, new ‘military aid’ packages are announced for the kleptocratic Ukrainian elite.
Some authors refer to this phenomenon as ‘Keynesian militarism’, characterized by strong state interventionism to redirect investment funds towards the military sector, promising new jobs and improvements in infrastructure. But last century’s Keynesianism assumed a robust welfare state, which is being systematically weakened by the new government’s austerity policies.
This crisis concerns Germany’s willing submission to US power. One prime example is the explosion of the Nord Stream gas pipeline in September 2022, which connected Germany with Russia. That same month, President Joe Biden publicly announced that the United States would ensure the gas pipeline would not exist in the future, while German Chancellor Olaf Scholz, stood beside him smiling foolishly. Seymour Hersh’s investigations of this sabotage suggested a joint operation between Ukraine and the United States. But in Europe, and especially Germany, there is a veil of silence surrounding this issue. Such displays of submission by German politicians to the United States lead Emmanuel Todd and others to claim that Germany is behaving like another colony of the empire.
Less well known to Europeans is the fact that the decoupling of Germany and Russia was a strategy planned by Washington long before the war. This was evident in a document published by the RAND Corporation in 2019. It has always been the strategic objective of the United States to weaken Russia by decoupling it from Europe. The result has been the slow destruction of the German economy because of the decoupling of cheap Russian gas. The political and financial elites in Washington achieved this, thanks to the Atlanticist-trained politicians who today occupy the pinnacle of power in Europe.
Far from seeking responsibility for failed policies and re-establishing diplomatic relations with Russia to save the damaged industry, Western political elites rush headlong into a war-mongering frenzy. This explains the level of propaganda already unleashed within the European information machinery. ‘Explanations’ of the significant problems facing German industry are combined with propaganda to convince the average citizen that „others“ are to blame for Europe’s economic decline; and that these ‘others’ (China, Russia, Iran, BRICS) are an existential threat to the wonderful civilising project of the West.
Undoubtedly, the crisis in the German industry, particularly in sectors such as steel and automotive, is multifaceted and intensified by intense competition from China. But this, like it or not, is nothing more than the result of globalisation imposed by the West on the entire world. Today, China leads the global South’s efforts to develop, but without the ideological dictates of the West to enter the sphere of Western-led „civilization“. Germany seems to have chosen the losing side in a much larger geopolitical contest. With all these threats, warmongering, lies, and genocide marking Western geopolitics, who will trust any word coming out of Western leaders? Europe has already lost this „hybrid“ war and is paying for it with growing insignificance.
The European political elite has long since stopped making policies based on the interests of its citizens. Its agenda follows a script emanating directly from Washington and pro-NATO think tanks. The result is outlined in the Grand Rearmament Plan Readiness 2030, aiming to achieve military spending of 5% of GDP for all NATO countries. In this way, Europe continues to demonstrate its blind obedience to the ‘empire of chaos’ (as Pepe Escobar calls it), regardless of who occupies the White House.
It is to be assumed that these fatal policies will affect the electoral behaviour of Europeans. A population dissatisfied with its leaders’ poor performance will tend to vote for the far right in response. For the critical voices of the right, this conflict of interest is expressed in the opposition between ‘globalists’ and ‘sovereignists’. For the left, this arms race results in a massive transfer of wealth from the public sector to the arms industry, marking an opposition between financial capital and the people. European governments are rapidly shifting to the right following a public policy to protect borders and handle migrants as scapegoats. Once in power, the European ultra-right will have no qualms about aligning itself with the military industrial complex and NATO to continue on this suicidal path. In fact, history teaches us about the complicity of capital and fascism in times of crisis. In such times fraught with militarism and genocide, we should not be surprised when, in this nihilistic Europe, fascism silently returns with new faces, methods, and discourses.
