The German economy slides into crisis because it was not able to reduce its dependence on Russian energy supplies in time. The whole country could get into trouble and question the sanctions against Russia. That doesn’t have to be the case, US economists believe. In a hotly debated essay, they propose an “Economic NATO” that primarily helps Germany.
The catastrophe seems inevitable: either Germany goes along with the sanctions against Vladimir Putin’s regime, accepts being cut off from Russian energy supplies – and ruins its economy. Alternatively, Germany would back out, make a deal with the Kremlin clique and help prolong the war in Ukraine by paying for Russian energy supplies. A third way is not in sight. Or is it?
Three US academics – Matthew Klein, founder of the economic research service Overshoot, Jordan Schneider, an analyst at the US think tank Rhodium, and David Talbot, a former economic adviser to the US Department of Commerce – now have one in a widely acclaimed article in the US journal Foreign Policy outlined a third way for the West, with which the economic war against Russia could still be won. It reads: We need an economic defense alliance, an “economic NATO”. Just as NATO is a military alliance in which everyone stands up for the other unconditionally, there must be an economic alliance in which all members support each other.
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The country is now going through an economic crisis worse than anything since the collapse of the Soviet Union.” The alliance against Russia has opened up an economic and financial battlefield because it has good reasons not to enter the military battlefield. “To dominate this new arena, allies should establish permanent mechanisms to improve coordination during the current crisis – but also in future ones,” says the essay, which was first published in March and has been important ever since being discussed in the US.
That can also happen – above all, and this is the central point of the scientists’ argument, “because the allies do not see themselves as a cohesive bloc”. The anti-Putin alliance should therefore set up a mechanism to pool its considerable resources for strategic purposes. There is no existing institution that encompasses the full range of allies deployed against Russia, or that has the necessary administrative and technical capabilities. Therefore, a kind of economic NATO must be founded, whose central instrument the US authors have already given a name: “Freedom Fund”.
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The authors see clearly: there is no way to tighten the screws on the Putin regime without reducing the profits of Italian fashion houses, French winemakers, Belgian diamond dealers, British lawyers, US aircraft manufacturers, German car manufacturers and Austrian bankers. Some of the allies may find it prohibitive to bear this cost for an extended period of time. Overall, however, the allies have more than enough money to compensate everyone for the loss of the Russian market, or even if in doubt, the Chinese market. “Spreading the pain across many countries through a supranational freedom fund would minimize the financial constraints on allies.”
If the proposal were already implemented in the current situation, it would mean that Germany, together with countries like Italy and Austria, would be the biggest beneficiary of such an instrument. Exploding energy prices, high inflation, material shortages everywhere are currently hitting these countries particularly hard as a direct result of the war and the sanctions. Accordingly, the willingness to sacrifice one’s own economic strength for the war is decreasing from day to day. However, it may not be easy to explain why rich countries need to be supported. But it would definitely be better than paying Russia half a billion euros a day for gas and thus continuing to finance the war with all its suffering.
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