With the freshly announced intention by the United States to impose additional tariffs on imports from the European Union, Germany's export-oriented economy might experience yet another push to the edge of recession, especially given Berlin's intention to make the country tighten belts and allocate tens of billions of dollars to the new climate change action plan
BRUSSELS (Pakistan Point News / Sputnik - 04th October, 2019) With the freshly announced intention by the United States to impose additional tariffs on imports from the European Union, Germany's export-oriented economy might experience yet another push to the edge of recession, especially given Berlin's intention to make the country tighten belts and allocate tens of billions of Dollars to the new climate change action plan.Europe's largest economy has been shrinking since summer 2018. In the second quarter of 2019, Germany's gross domestic product (GDP) had contracted by 0.1 percent, following a record weak economic growth of 0.4 percent over the past 12 months. In economic terms, recession occurs after two consecutive quarters of negative economic growth.
On September 20, German Chancellor Angela Merkel unveiled a new plan for fighting climate change in Germany. Having admitted that the Bundesrepublik failed to meet its target of cutting carbon emissions by 40 percent by 2020, she announced a new goal of 50 percent by 2030. The plan would cost an estimated 54 billion Euros ($60 billion).
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The announcement was made as tens of thousands protested against perceived government inaction on the climate crisis outside the German parliament in Berlin.
Before the so-called Grand Coalition (GroKo) of Merkel's Christian-Democratic union party (CDU/CSU) and the Social Democrats (SPD) agreed to adopt the new plan, there had apparently been a severe intra-coalition disagreement on its terms. While according to Vice-Chancellor Olaf Scholz, the plan will be budget-friendly for Berlin and the money will come from a designated EU climate fund, to many this scheme seemed a concession of GroKo to large manufacturers in the car industry.
Another part of the plan will be funded on account of increased prices on gasoline, diesel, gas and mazut for drivers, increased tolls for trucks, as well as a new domestic pricing scheme to introduce fixed amounts of payments per ton of carbon emissions for the transport and construction sectors. It also envisages reduced sales tax on railroad tickets and increased tax on airplane tickets rates to encourage more people to travel by trains rather than planes.
For the Green party, the new plan of the Federal Government is not enough to meet Germany's international commitments for climate protection, specifically because it has no binding force and no compliance mechanisms.
"I am bitterly disappointed that the German government has failed in the humanitarian task of climate protection. Mrs Merkel shifts responsibility to the next government. The coalition is gambling away a historic opportunity. The government should have acted quickly, forcefully, and bindingly. What is on the table is slow, lax and non-binding. The CO2 price proposed by Merkel is a joke and comes too late. There should be a control effect, which rewards climate-friendly economic activity and punishes climate damaging activity. It is missing," the leader of the Greens, Annalena Baerbock, said at a press conference in late September.
According to the party, Germany cannot effectively go green solely by incentives; more systemic measures are needed to shift to renewables and ensure that the shift does not harm the economy, otherwise simply pumping funds into the industrial sector would end up causing a big economic loss.
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"Green Professor Daniel Fuhrhop from the University of Oldenburg demanded on tv [interview with N-TV broadcaster] that Germany blocks the construction of new buildings. In the eyes of this brilliant professor, building more houses is bad for the climate, just as much as driving a car, eating meat or flying on a plane, so you have to be ashamed if you do. This is absurd," Udo Hemmelgarn, member of the Bundestag from the right-wing Alternative for Germany (AfD) party, told Sputnik.
According to the lawmaker, by decelerating the construction of housing, which Germany is currently is in urgent need for, will most definitely contribute to deterioration of economic situation and cause loss of jobs.
"It is the job of government policy to ensure adequate and decent housing and living conditions. We have housing shortages and urgently need to build more living space. The building policies presented by the Greens is anti-social and irresponsible. Such demands reveal a deep-seated misanthropy. Everyone can imagine what will be left of their personal freedom if the demands of climate extremists continue to be met. Irresponsible climate change policy destroys jobs and accelerates recession," Hemmelgarn said in conversation with Sputnik.
The AfD is profoundly opposed to the Merkel's transport policies, particularly her government's decision to eliminate diesel cars in favor of electric car. In a documentary, called "Dieselmord im Okowahn" (Killing the diesel in the Ecofolly), the party called the multi-million fines on the German automotive companies madness.
"The money paid in this unexpected heavy fine would have been better used by companies. They are being deprived of liquidity that is urgently needed for research and investment in the future," Dirk Spaniel, the transport policy spokesman for the AFD fraction in the Bundestag, told Sputnik.
The funds, payed in fines, could be much better spent by the companies in a way to benefit the German economy in the face of a looming crisis, he said.
"In the innovation departments of the automotive and supplier groups, these billions would undoubtedly be in better hands than in the hands of politicians, only worried about spending. These political fines, especially in times of crisis, are detrimental to the competitiveness of companies and put their future viability into question, especially in the crisis period that looms on the horizon. It is important to counter the rampant ideological-political hysteria with researched facts and neutral education," Spaniel said.
In the meantime, the GroKo is slowly but steadily ceding political ground to the AfD and Greens, as evident in a series of recent elections and opinion polls. In state elections in Brandenburg in September, the SPD led with 26.2 percent of the vote, followed by the AfD with 23.5 percent and the CDU with 15.6 percent. In 2014, their results were 31.9 percent, 12.2 percent and 23 percent, respectively.
The right-wing tidal wave is especially a setback for the CDU leader, Annegret Kramp-Karrenbauer single-handedly chosen by Merkel as her successo because it significantly reduces her chances of becoming chancellor in the near future, considering that the victory in Brandenburg is traditionally tied to the Chancery position. As the new climate protection plan of the grand coalition was met with criticism by pretty much all parties concerned, including the environmentalists for whom it was initiated in the first place, the divorce between the CDU and SPD might occur even earlier than expected.
