In a recent speech at a university in Prague, the German Chancellor outlined his vision of an expanded EU, but at a time of unstable economics, the idea could backfire.
German Chancellor Olaf Scholz wants more members to join the European Union’s eastern flank, but first, he has called for reforms in the 27-nation bloc to overhaul its basic decision-making process on issues such as foreign policy and taxation.
His vision would see nine more countries join the European Union (EU) at a time when the current union is being threatened by a long war in Ukraine and relations with Russia torn to smithereens.
Also, a major worry for Scholz is Germany’s waning authority in Europe. There are fissures that, if not carefully managed, could see severance of a few countries from the EU.
Hungary, Italy, and Spain have already loudly voiced their concerns on matters surrounding support for the Ukraine war, energy sharing, and relations with Russia, in no particular order.
New members would shore up Germany’s position as the main authority in Europe but would also sign up for Europe’s fading vision on internal and foreign policy.
Scholz’s idea is being seen as self-serving. Developments at a recent EU energy commission meeting sent a clear message to Germany that this winter, countries like Italy and Greece, and Spain, to an extent, might reluctantly share their gas with Germany, which means cutting industrial output in their own countries. But this sort of altruistic gesture might not be found next winter.
Germany is desperate to secure a new energy deal with anyone bar Russia, but long-term energy deals are difficult to negotiate and often take years to sign.
That’s why bringing in new members to the EU would also bring in their resources; most of these countries are fairly economically weak and would be happy to sell their assets to Germany's industry and its burgeoning energy needs.
Scholz is eyeing Western Balkan countries, Ukraine, neighbouring Moldova, and even Georgia to help serve Germany’s energy needs.
He’s called for a “true internal energy market that supplies Europe with hydro-power from the north, wind from the coasts, and solar energy from the south.”
Skilled worker shortage
A recent survey by the Institute for Economic Research in Germany found that nearly 50 percent of companies surveyed said they were short of skilled workers. This figure has gone up from the last time the survey was conducted in April.
The sectors most affected are hospitality, retail, construction, and warehousing. Scholz’s idea of bringing in EU workers would fill the void and help calm down anti-migration voices within the country.
Many of Germany’s hospitals, particularly in rural areas, are in dire need of nurses and doctors, and its booming IT sector is deficient in fresh recruits.
Funded by the German Chamber of Commerce and Industry, a project titled ‘Hand in Hand for International Talent’ has been working since 2020 to bring IT professionals to Germany from countries like India, Brazil, and Vietnam.
But Germany has another problem, visibly foreign workforces have long faced serious challenges settling in Germany – and lack of want is not the reason. Germany’s overall view of foreign workforces is negative; just ask the Turks, who, after many generations, still feel they don’t belong here.
So bringing in European workforces could help calm that storm and allow Germany to march on.
But there is a problem with Scholz’s vision. It doesn't take into account the scar left by the Covid pandemic or the weeping wound of the Ukraine war and the impending Eurozone recession.
Why Scholz's vision will fail
He’s betting too much on all European governments walking to Germany’s tune. The Spanish, the Italians, and the Greeks weren’t too impressed recently when Germany asked them to cut gas consumption so that it could have some more.
If this year’s energy crisis rolls over into next winter and the winter of 2024, Germany will have a very difficult time convincing its current European partners to ignore domestic energy needs and help out the Germans.
The proposed EU members are also watching and will make correct stipulations before entering any contracts to power Germany’s industry which has long profited from cheap Russian gas.
According to industry insiders, Germany bought Russian gas at preferential rates and sold it further to EU members at nearly four times the price. So as per Scholz’s vision, when Germany goes to Italy and Greece for their solar power, he should expect to pay high rates.
Successive German governments haven’t been known for ‘thinking on their feet’, their generally slow conservative outlook means Berlin hasn’t yet realised the changes it needs to make to its long-term strategy with regards to the EU, economy, and internal social cohesion.
Bringing in poorer eastern European neighbours for their human and energy capital is one thing, but when their economies begin to fail in the impending Eurozone recession, Germany and France will have a longer list of economically dependent EU members than before.
Also, losing the tag of the ‘export world champion’ due to reduced global demand for German goods means some of its companies might start to close down.
High energy prices also risk a wave of insolvencies across Germany, consequently raising unemployment rates. What will the newly imported workforces do when there are enough unemployed in Germany already?
This gives rise to social tensions, ‘German jobs for German people’ is a well-worn phrase of the German far-right. How would Scholz justify bringing in new workers from abroad?
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