Germany sabotaged its own success

Once Europe’s economic engine, Germany’s ideologically driven energy and immigration decisions set it on a path of decline

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Germany has long been Europe’s economic engine and its GDP is still third-largest in the world, behind the U.S. and China and just ahead of Japan and India. But because of serious economic and social policy failures, Germany is now a nation in decline.

Let’s begin with economic policy. Reliable, affordable energy is key to any country’s economic well-being. In 2002, Germany’s 11 nuclear plants generated more than a third of its electricity, with coal and oil supplying the rest.

Since then, Germany has made huge investments in solar and offshore wind power with the intention of phasing out fossil fuels. Its long-term plan, driven by an irrational anti-nuclear power campaign by environmental zealots, was to generate enough power from wind and solar to allow the shutdown of all nuclear plants by 2036.

Then came the 2011 nuclear disaster in Fukushima, Japan. Although it was triggered by tidal waves from an offshore earthquake, not a nuclear accident, the unwarranted fear sparked by the disaster accelerated the shutdown of Germany’s safe and reliable nuclear plants.

Within six months, eight nuclear plants were closed, leaving Germany with little choice but to import Russian natural gas for power generation. The Nord Stream natural gas pipeline, completed in 2012, in effect replaced secure nuclear power with dependence on a pipeline controlled by Vladimir Putin.

Had Germany kept its nuclear plants, a Price Waterhouse report concluded last year, fully 94 per cent of its power generation would now be emissions-free and the average price of its electricity would be 23 per cent lower.

High energy prices have made German industry less competitive in the face of surging global competition. Chinese automakers such as BYD and NIO have entered European markets with innovative, affordable products, eroding profitability and market share for Volkswagen, Audi, BMW and Mercedes-Benz. Auto production in Germany declined 25 per cent between 2017 and 2023, according to auto industry data.

Economic decline, however, is only part of the damage caused by Germany’s policy choices.

The socio-political picture is even more dismal. During the 2015 Syrian civil war, large numbers of displaced Muslim asylum seekers made their way through the Balkans and into Europe. They came in huge, unruly waves, instilling fear in local citizens. Greece, Poland, Hungary and Belarus forcibly prevented entry. Germany was the exception, taking in 76,000 Syrians in July 2015 and 170,000 in August, after which chancellor Angela Merkel made her famous “wir schaffen das” (we can do it) declaration, further opening the floodgates.

By the end of 2015, Germany had taken in 1.2 million Muslim refugees, creating profound social and economic challenges for the country. Even as these challenges became apparent, Germany continued to accept hundreds of thousands of Islamic migrants. In 2023, it accepted 300,000 asylum seekers, 80 per cent of whom were Muslim.

The consequences of this approach are no longer abstract. Germans are now paying a terrible price in the form of Islamic terrorism. In February 2024, a 24-year-old Muslim man was arrested in Munich after a car-ramming attack that injured 39 people, two very seriously.

That attack, part of a pattern of Islamist-motivated attacks and plots over the past decade, has forced the government to take action against Islamic extremism. In November, it banned a group called Muslim Interaktiv that had called for Germany to become an Islamic caliphate where “Islamic law should take precedence over German law in regulating life in the Muslim community, including the treatment of women.”

Germany also strengthened controls on mosque funding from countries like Saudi Arabia and Qatar that have encouraged radicalization. As Ahmad Mansour, an outspoken critic of Islamic extremism, has said: “Muslim Interaktiv is part of an Islamist network that carries out intimidation campaigns, specifically to indoctrinate young people with Islamist ideology. That indoctrination includes antisemitism.”

The integration of the huge waves of migrants is an enormous challenge. Immigration offices, schools, language instructors, social service providers and employment offices have been overwhelmed. Meanwhile, like other European countries, Germany is committing demographic suicide. The average fertility rate in the European Union is 1.4, well under replacement. Fertility rates for Muslim women, in countries that track groups separately, are up to twice as high.

This is the lamentable story of how eco-ideologically driven energy supply decisions and ruinous immigration policies have brought the economic and social destruction of postwar Europe’s greatest success story. May the lessons Germany finally seems to be learning help guard other nations from the same sad fate.

Gwyn Morgan is a retired business leader who has been a director of five global corporations.