Morgenthau Rides Again: Why is Germany Deindustrialising?

Washington’s policy of sanctions against Russia is deindustrialising Europe. Philip Cunliffe asks why Germany is putting up with it.

In 1944, the US Treasury Secretary Henry Morgenthau, Jr. put forward a plan to deindustrialise Germany. The Morgenthau Plan, as it came to be known, was drawn up by post-war planners on the eve of Germany’s defeat in the Second World War. The aim of Morgenthau’s scheme was to alter the European balance of power by breaking Germany’s industrial military might for good. Morgenthau proposed splitting Germany up into separate states and removing all Germany’s industrial plant and equipment. As the carrying capacity of an agricultural nation is far less than that of an industrial one, part of the reason Morgenthau’s plan was eventually shelved was because it was later estimated that reducing Germany to an agricultural rump  would necessitate either killing or expelling 25 million Germans. 

In the event, Germany was divided, the western and eastern occupied zones transformed into separate German states for the duration of the Cold War, with large foreign forces stationed on their soil. Rather than eliminating German industry, it was instead contained: the industry of West Germany was integrated into the supranational Coal and Steel Community, which would form the basis of the future European Union. Deindustrialisation was pursued in East Germany, which was first stripped of industrial plant as reparations to Soviet Russia, and then deformed through integration into the Soviets’ Council for Mutual Economic Assistance. The Marshall Plan eventually substituted for the Morgenthau Plan, with the then Secretary of State George C. Marshall seeing the advantage of restoring Europe as a market for US exports. 

In place of any autonomous or popular constitutional process, West German independence was formally restored under the terms of the so-called Basic Law that was drafted under the supervision of the Allied occupiers. German industrial growth would revive in due course and Germany would eventually be reunited at the end of the Cold War. This happened, however, within the postwar framework of truncated national and popular sovereignty embedded in the rigid Basic Law, whose supreme overseer is a constitutional court rather than the country’s elected representatives. This model of constrained sovereignty would in turn become one of the pillars of a wider European integration process that would occur independent of democratic input or popular oversight. 

Today, in addition to the regime of truncated sovereignty embedded in the EU, it seems that American policy is drawing on the Morgenthau Plan rather than the Marshall Plan. What is more, this policy of deindustrialising Germany may be imposed on Europe as a whole via the monetary structures of the Eurozone, as Germany responds to US pressure by subsidising its ailing industries at the expense of European competitors. A deep recession looms as factories shutter across Europe, energy companies draw up plans for rationing, and ordinary citizens revert to using wood for fuel. Energy-intensive industries, including factories making metal, glass, paper, among other vital and basic commodities, are shutting down across the continent. The wave of factory closures is the result of the huge increase in energy prices provoked by the West’s sanctions on Russia over the invasion of Ukraine. Whereas the Morgenthau Plan was envisioned as part of the Allied victory over Nazi Germany, how might we account for the fact that a Morgenthau Plan Redux is being imposed on Germany not because it has suffered military defeat, but rather as the outcome of a US-led proxy war on Russia, a war that is inflicting more immediate damage on Germany than it is on Russia? 

The US theorist of geopolitics John J. Mearsheimer has railed against the irrationality of US foreign policy, which has effectively pushed Russia into an alliance with China in place of what he takes to be the more obvious route of building an alliance with Moscow against Beijing – an alliance that would have been a mirror-image of the policy pursued by Henry Kissinger during the Cold War. Wolfgang Streeck has countered Mearsheimer by arguing that the US benefits much more from dominating a richer Europe than it does from any putative alliance with a weak and declining Russia. Indeed, European policy seems to be entirely in the grip of Washington. Following the US command in responding to the Russian aggression, the notoriously austerity-minded Germans have finally been forced to raise their defence spending as per their NATO commitments. At the same time, the US has won a trade war with Europe: the German trade surplus, so long a thorn in the flesh of the US, has been eroded, as energy-intensive German industry crashes. Both were long-standing goals of the Obama administration, and both have now been achieved under the Biden administration, whose State Department is run by Obamanauts. To add insult to injury, the US imposed this policy at an April 2022 conference held at Rammstein, a major US military base on German soil. 

If Streeck is right to argue that it means more to the US to control European policy than it does to capture Russia for the anti-Chinese alliance, it raises the question of why the Americans are beggaring Europe in the process. This effect of the proxy war may yet cause the USA, acting in its own self-interest, to pull back from ruining Europe entirely. Even then, we would still need to account for the geopolitical irrationality of European states. Why have they allowed themselves to be remote-controlled by the US to the extent of trashing their national economies? 

On one level, the inability to act independently is consistent with the German model of constrained sovereignty. As Germany’s postwar history shows, the roots of this model run deep. However, this did not entirely neuter German independence in the past. After all, even the truncated West German state was able to pursue an independent foreign policy in the form of so-called Ostpolitik – balancing against the US through rapprochement with the Soviet bloc – under Chancellor Willi Brandt at the height of the Cold War. Today, even that political capacity seems to be gone. The inability of Germany’s contemporary political elite to articulate a German national interest separate from that of the US reflects the fact that Germany today is even more thoroughly embedded in US-dominated supranational networks, and therefore even more politically dependent, than Brandt’s smaller and weaker West Germany was. 

Germany today is a member-state rather than a nation-state – a state whose supranational integration overrides any vestigial commitments it has to its own citizens, with the result that the state treats its own population as if it were a foreign power. This was evident even before the Russian invasion of Ukraine in the German government’s decision to gouge its nuclear power generating capacity, thereby exacerbating German dependence on imported Russian gas. And it is evident today in the fact that Germany will now substitute US liquid natural gas imports for Russian gas, recreating the same energy dependency in a new form. The underlying problem is the same: a state that cannot act on behalf of its nation. The inability to articulate a national interest that would defend Germany’s mighty industrialists against those of the US – let alone shield ordinary German consumers from the self-inflicted wound of anti-Russian sanctions – shows a state and a political elite that is effectively unresponsive to its own people. That US foreign policy is decimating German industry and choking off Germany’s energy supply shows that the stakes are now much higher than the question of whether Germany can pursue a new Ostpolitik – the question is whether Germany can keep functioning as a modern industrial society. This requires nothing less than breaking out of the shackles of member-statehood, the shackles of both the EU and NATO,  and restoring Germany as a sovereign state. 

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