If we limit this claim to _just_ German manufacturing competitiveness (which is often synonymous with "European manufacturing" in the context of these discussions -- and I will assume this is true of your comment as well, given the nuclear energy remark), this really isn't true.
What changed my view on this was one of Adam Tooze's newsletters from last year.[1] The relevant points here are:
- Germany manufacturing is less gas-intensive than the global average.
- Energy costs only constitute a small and decreasing share of total industrial costs -- about 5.8% for the German manufacturing industry as a whole, and 3% for leading export sectors (namely the auto industry).
- Most German manufacturing -- and this is true of European manufacturing more broadly -- is primarily in high-margin, value-added sectors where quality, rather than cost, are the competitive factor.
Another important detail lost in the invocation of "cheap gas" is that Europe as a whole, and German in particular, has never had particularly "cheap gas." European natural gas prices have long been well above those in the US, and Germany's have been above the European average for the last 15 years or so.
I agree with both Tooze and the majority view that, notwithstanding the above points, Germany's post-war energy policy has been a catastrophe. It has certainly limited its manufacturing potential. But the effect of the Ukrainian war on its _already_ limited manufacturing sector, due to _already_ not-so-cheap energy, tends to be exaggerated.
Not sure if it's a win. The vast resources in Russia will now be channeled into China (and India). If you're an American strategist, a China with Russia's resources should be giving you serious jitters.
Eh not really. It’s a supreme oversimplification of global economics. If China starts buying more oil and gas from Russia then it stops buying as much from the Middle East. America is I believe now the largest producer of at least some oil and gas products. The market is global.
Also, while Russia is or would be happy to sell resources to China to fund the lifestyles of extremely wealthy dictators and murderers, Russia (the State) will always view China with some amount of healthy suspicion for geopolitical reasons.
The fear you’re alluding to came and went with Cold War and the destruction of the Soviet Empire.
This is all true, and yet ignores the price of production and transportation. Once the various Power Of Siberia pipelines are all complete, China may be getting gas cheaper than any price Europe can get.
As for Russia viewing China with suspicion... that's true of the West too, and yet it has been piping gas and oil to Germany since the 1960s.
> As for Russia viewing China with suspicion... that's true of the West too, and yet it has been piping gas and oil to Germany since the 1960s.
The point wasn’t that Russia doesn’t engage with other countries, it’s that Russia won’t engage too closely with China so there isn’t as much for American strategists to worry about there. Not to mention China is economically dependent on the U.S., EU, Japan, South Korea, Australia, and other western-aligned nations. Vacationing in Nice is way more fun than vacationing in Siberia. The Russian economy is an afterthought and that was before sanctions.
> This is all true, and yet ignores the price of production and transportation. Once the various Power Of Siberia pipelines are all complete, China may be getting gas cheaper than any price Europe can get.
Sure… but there’s a few things here:
1) alternative energy sources become more and more economically viable so they get built in Europe - oil/nat gas producers don’t want too much of this happening if they can avoid it
2) the market is global, so increase in purchases from Russia means decreases in purchases from other countries - if your demand is 100 barrels and you buy 50 from Saudi Arabia and 50 from Russia and then you buy 60 from Russia instead and buy 40 from Saudi Arabia the excess supply of 10 barrels has to get sold somewhere, and potentially at a lower price (remember when the spot price of oil went negative? [1])
3) OPEC (at least pre-war) has some “say” in setting the global price for oil
4) there are different types of oil for different uses so a new pipeline is just one piece of the supply puzzle
The dependence between China and the West works both ways, and yet look what is happening. Regardless of the reasoning why it should not, the direction is clear, and it won't be the first time that economies have been terribly damaged due to security concerns. We'll just have to leave this one to the history books.
Much of the rest you write is true, but once again we come to production and transportation costs. If the price of extraction and transportation drops below a profitable level over the long term, production will drop. If Russia can extract and transport gas at a lower energy cost than any other producer can do the same for Europe, Europe will have an increased disadvantage in manufacturing until sufficiently cheap alternatives are built. You're certainly aware of this, so I'm not even clear what we're debating here.
> The dependence between China and the West works both ways, and yet look what is happening.
Yes it does, but the economies of the West are so far and beyond Russia that China is not at least publicly taking a strong pro-Russia stance.
> Regardless of the reasoning why it should not, the direction is clear, and it won't be the first time that economies have been terribly damaged due to security concerns. We'll just have to leave this one to the history books.
I'm not exactly sure what you are talking about here. Would you care to elaborate? For example, I wouldn't say any direction is clear. History and humanity is far too crazy and unpredictable for that. But if I had to take a stab I'd say the direction that's clear here is that the West and its diplomatic resolve was far stronger than China or Russia anticipated, and China would prefer to stay in salvageable graces with the West than to meaningfully assist Russia - if anything it seeks to take advantage of Russia's weakened position.
> Much of the rest you write is true, but once again we come to production and transportation costs. If the price of extraction and transportation drops below a profitable level over the long term, production will drop. If Russia can extract and transport gas at a lower energy cost than any other producer can do the same for Europe, Europe will have an increased disadvantage in manufacturing until sufficiently cheap alternatives are built. You're certainly aware of this, so I'm not even clear what we're debating here.
Idk either because I was mostly responding to your specific comment regarding American strategists "being concerned" as you noted. I noted that European countries can bring online alternative energy sources, and that the energy market is more global (oil and gas specifically) so China buying Russian gas wasn't as big of a deal to American strategists as you implied.
I'm not sure the relevancy here of production and transportation costs specifically and even more specifically without specific analysis. As I noted previously, there are different grades of oil, for example. Just because a pipeline comes online doesn't mean that all of a sudden China has cheap oil and nobody else does, particularly because all they are doing is replacing suppliers in some instances and not in other instances. In the case where they are replacing suppliers those suppliers either have to take production offline, or they have to sell elsewhere. If China's demand is 100 barrels and they get 50 from Russia and 50 from Saudi Arabia and then they now get 60 from Russia and 40 from Saudi Arabia, Saudi Arabia is still going to sell those 10 barrels (now available on the market) or lower supply to protect prices. Again this is also an oversimplification! Nobody has provided anything other than armchair economics.
You're trying to vastly simplify the global energy and oil and gas markets to make a point, but I'm largely rejecting that point for the reasons stated previously and also here.
China is getting those resources regardless. It's just a negotiation on price, which Russia is having to sell lower than normal. Which hurts Russia more than it benefits China.
I was talking about American strategy. Russia was and is a largely-neutralized regional great power, no longer any real threat to Western hegemonic power. China is a different matter.
China manufactures more than America, EU and Japan combined, and (IIRC) produces more STEM graduates than all of them too. Add Russia's resources on top, and even with the major demographic problems China faces, America has a challenger on its hands that's much bigger than the Soviet Union could ever aspire to be.
Strongly shoving Russia into China's orbit was just plain stupid. It looks like they were gambling on regime change; a bad gamble if ever I saw one.
Edit: all of this is ignoring India too. At some point India will catch up, and then the collective West potentially could end up third.
Of course. That was the plan and one of the reasons why the U.S. did not back down on Ukraine NATO membership in 2021, with the anticipated result (article is from before the war and there are plenty of other sources):
> Of course. That was the plan and one of the reasons why the U.S. did not back down on Ukraine NATO membership in 2021, with the anticipated result (article is from before the war and there are plenty of other sources):
The war started in 2014, the full invasion only started in 2022, so this makes no sense whatsoever.
Issued by the Heads of State and Government participating in the meeting of the North Atlantic Council in Bucharest on 3 April 2008
We, the Heads of State and Government of the member countries of the North Atlantic Alliance, met today to enlarge our Alliance and further strengthen our ability to confront the existing and emerging 21st century security threats. We reviewed the significant progress we have made in recent years to transform NATO, agreeing that this is a process that must continue. Recognising the enduring value of the transatlantic link and of NATO as the essential forum for security consultations between Europe and North America, we reaffirmed our solidarity and cohesion and our commitment to the common vision and shared democratic values embodied in the Washington Treaty. The principle of the indivisibility of Allied security is fundamental. A strong collective defence of our populations, territory and forces is the core purpose of our Alliance and remains our most important security task. We reiterate our faith in the purposes and principles of the United Nations Charter.
[...]
NATO welcomes Ukraine’s and Georgia’s Euro-Atlantic aspirations for membership in NATO. We agreed today that these countries will become members of NATO. Both nations have made valuable contributions to Alliance operations. We welcome the democratic reforms in Ukraine and Georgia and look forward to free and fair parliamentary elections in Georgia in May. MAP is the next step for Ukraine and Georgia on their direct way to membership. Today we make clear that we support these countries’ applications for MAP. Therefore we will now begin a period of intensive engagement with both at a high political level to address the questions still outstanding pertaining to their MAP applications. We have asked Foreign Ministers to make a first assessment of progress at their December 2008 meeting. Foreign Ministers have the authority to decide on the MAP applications of Ukraine and Georgia.
> I'll never understand why we recently pretend that we haven't been poking the bear.
I never understand why people like you think Russia has the right to decide what alliance countries get into, and why Russia has the right to unilaterally abandon and go against international agreements that they sign (like the Budapest memorandum).
In reality Ukraine had zero chance of NATO membership and it still doesn't until far into the future, Russias reasons for invading clearly have nothing to do with Ukraine unless you can show me the tanks rolling towards Finland and Sweden right now.
So please tell me why does Russia get to roll through Ukraine and rape and torture its citizens with impunity?.
> I never understand why people like you think Russia has the right to decide what alliance countries get into, and why Russia has the right to unilaterally abandon and go against international agreements that they sign
Except I do not. That presents a false dichotomy, and a remarkably simplistic one at that.
Nothing you wrote changes what I posted. I leave it to the reader to decide what to make of the 2008 text above, and the events that transpired afterwards.
The reality is without cheap energy (nat gas, nuke power), European manufacturing just can’t compete with other industrial economies.