Great Decisions 2011 Fall Updates: Germany's ascendancy
New economic data portends a potential setback in German economic strength. German GDP growth was a mere 0.1 percent in the second quarter, far below forecasts and well below first-quarter growth, which was a vigorous 1.3 percent. The potential repercussions of a slowdown are far-reaching: Germany’s economic powerhouse, which rebounded from the crisis that still haunts much of the continent, buoys the weaker eurozone members. In response to the news of Germany’s faltering growth, European stock markets took a dive. On August 24, Germany’s markets met with more bad news as the Ifo index of business confidence declined to the lowest level seen in over a year.
As Germany enjoys relatively low unemployment and is not considering austerity measures like its neighbors, there is serious debate about the country’s role in shouldering responsibility for the weaker links in the eurozone.
♦♦
On May 30, Merkel’s government announced plans to phase out all 17 of its nuclear reactors by 2022. Following the disaster at the Fukushima nuclear power plant in Japan, Germany experienced a backlash against its dependence on nuclear power, which currently supplies 23 percent of German electricity. Germany will have to shift to renewable energy sources, which currently only supply 13 percent of electricity. Previously, Merkel’s government had successfully pushed a plan that would have extended the life of German nuclear plants until 2036.
♦♦
Partnering with China and Russia, Germany has turned eastward, but not without some hiccups along the way. In July, Russia and Germany agreed to provide German expertise in modernizing Russia’s economy, in exchange for Russian permission for German companies to tap into Russian rare earth mineral deposits following the imposition of a quota by China, the world’s chief exporter of rare earth minerals.
Despite the strengthening of economic ties between the two countries, German public opinion dealt a decisive snub to Russian Prime Minister Vladimir Putin. Quadriga, a German organization that has honored political figures such as Mikhail Gorbachev, Shimon Peres, and Vaclav Havel, the first postcommunist president of the Czech Republic, with the Quadriga award, initially selected Putin as a “role model for Germany” and a recipient of the award this year. An outcry, however, arose from nearly all quarters: members of Germany’s parliament criticized the decision, citing Putin’s dismal human rights record and the treatment of political dissidents in Russia; a string of Quadriga’s former honorees and board members resigned or returned awards received in previous years; and Havel, a 2010 award recipient, announced that he would return his award in protest. On July 16, Quadriga announced that it would not be awarding any prizes for 2011, effectively rescinding Putin’s award—as well as those of the other three honorees for this year.
Note: The Great Decisions fall Updates were researched as of 8/25/2011.