War in Ukraine: Age of Constant Conflicts – Economy

When Chancellor Olaf Scholz (SPD) proclaimed a “turning point” shortly after the beginning of the war, few could imagine anything concrete. Weapons for Ukraine and the Bundeswehr, sanctions against Russia, these are the most obvious measures. But according to Claudia Major, an expert on security policy at the Politics and Science Foundation, that’s not enough. Germany must be prepared for a “permanent conflict” with Russia and its allies such as China, she said at the Munich Economic Debates of the Ifo Institute and Suddeutscher Zeitung. Because even if at some point the guns in Ukraine fall silent, the world will not return to the previous order.

In the short term, Europeans would have to learn to deal with the consequences of the war and the sanctions. These include, for example, rising energy prices and inflation. Even here, Major fears for the West’s unity “when the costs become more visible”. In the long term, however, the aim is to make the German economy more resilient, both internally and externally. For the conflicts and chaos would continue. “It won’t be over in a year or two.”

Internally, this means better protecting critical infrastructure from cyberattacks and takeovers by companies from hostile countries. Health and energy supply must be strengthened, the infrastructure modernized and the energy transition pushed ahead, Major demands. But the education system must also be adapted, for example in dealing with disinformation.

Externally, it is about a “reorientation of the supply chains”. So far, efficiency has had top priority in German economic relations. The cost considerations were flanked by the belief “that interdependence would prevent conflicts,” said Major. Russia destroyed this belief by attacking Ukraine, despite its close economic ties with the West. “Now it’s about political issues.” New concepts are in demand, such as “friendshoring”, the relocation of production and trade to friendly countries. “Reshoring”, i.e. bringing production back to Germany, is also given a boost.

When restructuring trade relations, however, not only ideological arguments should apply, but also security considerations. In concrete terms, this means diversifying trading partners, i.e. looking for several suppliers and buyers for each traded good. However, with its previous approach, Germany is reaching its limits in many emerging countries. In the past, Germany and the EU had often tied economic support to political conditions such as fighting corruption or democratic elections – quite unlike China. This makes Europe a “difficult partner” for non-democratic governments. Given the rivalry with China, it is now becoming increasingly common for countries to choose between the two blocs. Major said, “We’ll have to get used to that.”

Claudia Major is a political scientist and head of the Security Policy research group at the Stiftung Wissenschaft und Politik.

(Photo: Jürgen Heinrich/imago)

Finally, the researcher and political advisor called for continued economic and military support for Ukraine. The fact that Ukraine stands up to Russia is also in Germany’s security interest, because this is the only way the Russian ruler Vladimir Putin can be shown the limits. The best protection for the country are “operational, well-trained armed forces” so that it can defend itself. At some point, however, the previous military equipment from Soviet stocks was “shot to pieces”. Then Ukraine would be completely dependent on Western military technology. However, these deliveries of weapons create gaps in the Bundeswehr that the armaments industry must close, Major said. Weapons manufacturers should therefore adapt more closely to the needs of Ukraine.

And that means producing heavier and heavier weapons. Ukrainians should be able to “liberate” areas occupied by Russia, Major said. The development of the past few months shows a “learning curve” in the federal government. According to Major, it is therefore only a matter of time before Germany has a shooting partner of the type marten supplies and then “heavier equipment with other partners or after a US decision”.

So far, it has mostly been the USA that has set the tone when it comes to arms deliveries. But Europe cannot be assured of American attention to the conflict on its doorstep; the main focus of the US, according to Major, is its rivalry with China. Germany must therefore continue to press ahead with its own rearmament, achieve and maintain the NATO target of two percent defense spending in relation to gross domestic product. That would be around 75 billion euros a year. The special fund of 100 billion euros for purchases such as nuclear-capable fighter jets, helicopters and armed drones doesn’t seem so big anymore. Germany must finally realize that it plays a “key role” in Europe’s security, Major demanded. The chancellor’s “turning point” must get through people’s minds. Experience has shown that such a change in mentality takes about a generation. But: “We don’t have the time.”

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