Answering the Mail
/How much attention do you feel Russia deserves in considerations about the EU's future? Russia seems at once a divisive factor, with regard to energy policy, and a unifying factor, due to shared suspicion. Until the EU can come up with a common energy policy, Russia is able to divide and rule in this regard. Germany and Russia are linked directly now via Nordstream. I wonder how this will play out in future with regard to Britain and US antipathy towards Russia and Germany's compromised position.
Questions regarding the 'Great Game' are always intriguing, but in thinking about the great game, we often fall into a trap of arguing today's solutions in terms of the problems of the past. Normally we equate this argument with generals who seek to solve problems of past wars without taking into consideration that either technology or tactics have changed. Witness France and its Maginot Line, or the United States playing at 'shock and awe' in Vietnam. Simply did not work. By the same token, we simply cannot view the present economic or political situation in terms of past analogies. So when viewing the nature of Germany's relationship with Russia on energy dependency, perhaps we should take in the following:
1). Realism would argue that we have to view the relationship between Germany and Russia in terms of their respective national interests. While the relationship has been a bit testy in the past, we must now consider that both administrations, led by Merkel and Putin, are here for some time. So to my mind, we should see some stability and a bit of long-term planning beginning to emerge.
2). Although Merkel's political mentor was Helmut Kohl, and although Helmut Kohl regarded a 'United Europe' with a 'United Germany' at its heart, of the utmost importance, I believe that Merkel will now place German interests above EU interests should they diverge.
3). To my mind we are seeing the beginnings of a fundamental sea change within international politics. Two issues, one political and one economic, should be considered: a). Iran is making all the right noises about coming in from the Cold. If this new direction becomes a reality, then consider that the United States and Iran may once again become friends. Immediately, Iran, and to a lesser extent Iraq, will begin exporting a lot more oil. And (b). At the same time, fracking for natural gas in most of the world is becoming a reality and the United States, far from being a net importer of energy, will now become a net exporter of energy. When these two issues are combined, the net effect will be a huge drop in energy prices. I expect the price of oil to drop to $60.00 per barrel. Perhaps OPEC will be able to limit the damage to $80.00 per barrel, but in any event, the drop in energy prices will act as a huge tax break over the OECD countries and we can expect exponential growth once again. Even Italy, with its myriad political problems, may pull through.
4). If I may return to point (2), the current view of Europe is that the European Union is of paramount importance, and that Germany would never play outside the Union. But consider this. This summer, a German mandarin asked me why London became and remains the financial capital of the world. Is it because Britain is a nation of shopkeepers? Or perhaps because the Brits like bacon bits? No the answer is far more mundane. London can talk to the Chinese and the Americans on the same day. The Americans cannot do this and it places New York at a distinct disadvantage. If we move from the financial to the production structure, then we are moving into the realm of global trade. The German mandarin argued that Germany now found itself in a unique position because of high-speed rail. The time taken to deliver goods by sea from Shanghai to Hamburg is 31 days. From Shanghai to New York around 34 days. Can you imagine the effect of a delivery time by rail from Shanghai to Hamburg of 34 hours, with onward shipping to New York in a few days?
The effect would be astounding and it would make Berlin the new capital of the world. Germany would become the world's trading hub and the peripheral states of the European Union would be just that; the peripheral states of the European Union, with little to no importance to Germany. On the contrary, Russia and the old states of the Soviet Union would become far more important as they develop the new Silk Road between China and the world. The change in economic emphasis would mean that Russia would no longer be the core supplier of Germany's energy, rather it would be a core partner in a new deal based on infrastructure. Also economic growth created by new direct investments steel, locomotives and rolling stock would be enormous. Thus, I am arguing that the relationship between Germany and Russia would be fundamentally different.
To conclude, we have to ask ourselves why the United States has opened negotiations with the European Union on a far-reaching free trade agreement. Are we set to witness a new economic reality shortly?
