The Path "From Hindus to Germans" Will Pass Through Kyiv

Photo: The path "From Hindus to Germans" will pass through Kyiv. Source: Collage The Gaze.
Photo: The path "From Hindus to Germans" will pass through Kyiv. Source: Collage The Gaze.

Historically, Germany, as a former land empire, has traditionally gravitated toward similar entities, forming the Berlin-Moscow-Beijing geopolitical axis. In other words, it joined forces with the same land empires to confront the maritime imperial powers of Britain and the United States. After Francis Fukuyama's The End of History, which declared the victory of democracy, this idea resurfaced as a kind of reincarnation of the idea of the "Fourth Reich," with the difference that, unlike previous military attempts, this Reich was to become "economic."

This idea of creating a free trade zone from Lisbon to Vladivostok was pushed by Angela Merkel when she was chancellor. Today, as a result of Russia's aggression against Ukraine, the Berlin-Moscow-Beijing axis has been destroyed. Given India's plans to become a new driver of the global economy as an antagonist to China, a new axis may emerge in the near future: Berlin-Ankara-Delhi. It is quite possible that it will pass through Kyiv.

A Key Axis

Germany is not only the fourth largest economy in the world, second only to the global triad of the United States, China, and Japan, but also the first economy of the EU. This in itself should 100% determine Ukrainian economic policy, because Ukraine has decided to consolidate the vector of European integration. 

Germany's voice is key not only in the Brussels bureaucratic superstructure, but also on a more global level. If we consider the development of a common European market for goods, services, labor and capital, the parameters of the EU's economic and political project have in recent years acquired the distinct contours of an axial geopolitical project, with the role of the "axis countries" such as Germany, Austria, Italy strengthening and the weakening of the conventionally peripheral economies, which was manifested primarily in London's Brexit and the decline in France's international role. 

It is not difficult to see that the "axis" of countries formed in this way is structurally formative on the continent, and therefore it is in Berlin that the future agenda in the EU will be determined and whether or not a segment of the common European home will be allocated to Ukraine. 

The idea of axial economic dominance implies achieving the same goals with the help of economic instruments that Germany has unsuccessfully tried to achieve over the past hundred years using military mechanisms. 

It turns out that the construction of a German-centered Europe can only be achieved through investment and the free market. The new model of creating an "economic Reich" involves maximizing Germany's competitive position in the West, especially in the sector of economic friction with the UK and the US, as well as trade pressure on France. 

As for the east, the economic tone is becoming more delicate. Germany needs markets, sources of skilled labor, liquid assets for investment, and commodity platforms. 

Naturally, each of the above factors of economic expansion cannot be realized in its pure form. It is a matter of combining and varying their combination, with an emphasis on one or more priorities. 

For example, with regard to Central European countries, the bet has already been made: they are seen as investment targets and partly as markets and sources of labor, but the first factor is the key one. 

As for Ukraine, this "concept" has not yet been defined and the scales have not yet tipped in favor of the "Central European format." Ukraine is not yet in the focus of German investment policy and is not a priori a raw material platform capable of playing a significant role for the EU market. 

At the moment, the dominant factor is only the export of labor from Ukraine, but it is important to understand that Germany is well aware of Ukraine's economic importance and potential, but cannot clearly define what to do with all this "neighboring" potential.

This means that the format of Ukrainian-German trade relations is a soft clay that has not yet hardened, from which you can either mold a practical vase or leave it as a frozen, shapeless mass. 

Marshall Plan for Ukraine

In Ukraine, two key issues are often mentioned as hindering the inflow of investment: economic losses as a result of Russian aggression and the need to reintegrate the occupied territories. Moreover, either Israel or South Korea are mostly mentioned as examples of how to overcome these negatives. Although in this context, the example of Germany is no less important for Ukraine. It is not for nothing that the program of future systemic assistance to Ukraine by international donor countries is called the new "Marshall Plan."

As for the original Marshall Plan, which allowed Germany to emerge from the state of postwar devastation and quasi-state capitalism, it was launched in 1947. However, it is worth noting that the German economic miracle was not so much due to the Marshall Plan as to the economic reforms of Ludwig Ehrhardt, a prominent German economist and politician, author of the "welfare for all" theory, which was based on liberal reforms that eliminated the state's influence on the economy and transformed paternalistic Germans into individualistic entrepreneurs. According to Erhard, the state should provide only the basic conditions for economic growth: stable prices and a stable national currency exchange rate. 

Today, Germany's economic model can be described as "social liberalism," which implies, on the one hand, maximum economic freedoms and the liberation of the spirit of entrepreneurship, and, on the other hand, a powerful social security system guaranteed by the state. 

The concept of a social market economy was first formulated, paradoxically, in the difficult postwar years by the German economist Alfred Müller-Armack, who was always in the shadow of the famous Erhard. 

As it turned out, even in difficult times, it is possible to successfully formulate "mix" ideas, which are a mixture of market and state mechanisms of influence on the free market. According to the Müller-Armac concept, neither the state nor private business should have a monopoly on global decision-making, and in their ultimate goal, they should all serve ordinary people and their interests. 

This theory is the antithesis of the Laissez-faire doctrine, in which the role of the state is minimized (perfectly described in Ayn Rand's book Atlas Shrugged). 

The basic principles of the German social-market economy model can be identified: the pursuit of full employment; social justice; protection of free competition by limiting monopolies; all possible support for continuous economic growth; trade promotion; and a stable national currency. 

But in practice, the main systemic element of this model is the existence of a consensus between the state, business and employees on the redistribution of national income. It is the presence/absence of this consensus that explains the wealth/poverty of different countries and the level of their shadow economy. 

That is, Ukraine does not have to "catch up" with Poland. It is enough to restore the consensus between the state, business, and the population. As for the reintegration of territories, Germany has a tremendous experience of economic integration of the GDR, which was successfully completed as a result of Chancellor Gerhard Schroeder's reforms. 

He chose the latter between increased taxation and the neoliberal model. At the moment, the German economic model relies on high levels of labor productivity and developed infrastructure, the domestic market and exports, and the only problem that may arise is a labor shortage.

The German Labor Gap 

The latter factor may form a serious migration risk agenda for Ukraine, as the opening of nearly several million labor vacancies in Germany, as predicted by the German government, will create a more significant level of competition in the labor market than has been the case so far. 

Unlike Poland, the German economy is able to offer about 2-3 thousand euros per month even for non-prestigious jobs. The creation of a labor gap in Germany will lead to labor migration from Central European countries (Poland, Bulgaria, Romania, Hungary, Slovakia, and the Balkans). Most of these countries are part of the overall European labor market. According to the law of dominoes, the movement of such a significant part of labor resources to the west will cause an "outflow" of human capital in the east, primarily in Ukraine.

A New Berlin-Kyiv-Delhi Axis

Minimizing these risks is only possible if Ukraine is included in the investment puzzle of the German economy, when German companies open their production facilities in Ukraine, taking advantage of, for example, affordable electricity prices. Then Ukrainians will work for German companies and stay at home. And taxes from their salaries will go to the Ukrainian budget.

And being part of the new Berlin-Delhi geopolitical axis in terms of the movement of goods will allow Kyiv to gain significant transit and logistical advantages.

What could be the mechanism of such strategizing?

India is already ahead of China in terms of population, and the 21st century will see the convergence of the country's share of the world's population and its share of the global economy.

In addition, India is the world's largest democracy, which means that all the safeguards against investing Western technologies in its economy, unlike China, will be removed.

India is likely to become the largest investment project of the EU and the US, capitalized at several trillion dollars by 2050. To do this, India will need to open up its economy and use its human capital to build an export-oriented model, as China has done in the past.

The only question that arises is the logistics corridors that will connect India with the key axis country of Europe, Germany. Berlin's trade reorientation from Russia and China to India will require building an alternative to the New Silk Road.

This project has already been called the "Spice Route". The G20 summit worked out its future contours. It could be a sea route through the Persian Gulf countries and Israel with access to the Mediterranean Sea.

But it is also possible that this route will be a combined sea route and railroad to Turkey. Then the way to Ukraine opens up in the form of a key distribution hub of the Spice Route.

Of course, this requires solving the security factor.

But in the long run, the Berlin-Kyiv-Delhi axis could become a key link between Western countries and the Global South.



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