Once, the US wanted the country deindustrialized but ultimately decided against it – now, Berlin’s incompetent authorities are wrecking it themselves
Toward the end of World War II in Europe, the US government pondered a plan to not only demilitarize but also disintegrate and deindustrialize postwar Germany.
Named after its main proponent, Secretary of the Treasury Henry Morgenthau, the Morgenthau Plan proceeded from the insane assumption that “it is a fallacy that Europe needs a strong industrial Germany.” If it had been implemented, the remains of defeated Germany would have been deliberately turned into a post-industrial wasteland.
But then the Cold War happened, everyone, East and West, wanted their Germans making modern things in factories again, and so it was Marshall Plan in and Morgenthau Plan out. Lucky Germans.
Now the US-Soviet Cold War has been over for a third of a century already. You’d think that for the Germans – finally free of the odd obligation to kill each other on behalf of Washington and Moscow in case of World War Three and (sort of) happily re-united – Morgenthau’s dark fantasies would just be a tale of bad times long gone-by.
But there you would underestimate the often badly overlooked German gift for eccentricity. In reality, post-Cold War Germany’s governments have set out on a resolute course of self-Morgenthauing economic auto-asphyxiation, adapting and obstinately clinging to policies that look as if they had been deliberately devised to deindustrialize and wreck their own country.
How can this be? For starters consider the case of global chemistry giant BASF: “What’s happening to Germany you’ll see first at BASF,”some say. And they have a point. Until recently, the German-headquartered company was considered the “crown jewel” of the country’s industry. Now, Germany is “mired in its longest period of stagnation since the Second World War” – says not Moscow’s RT but London’s FT – and BASF exemplifies much of what went so very, very badly wrong.
Like much of German business in general, the country’s traditionally powerful and vital chemical industry “is stuck in the greatest crisis” since, at least, the early 1990s. Since 2019, German industry as a whole has shed a total of almost a quarter-million jobs.
Regarding BASF – originally founded in 1865 smack in the middle of modern Germany’s Time of Founders (“Gründerzeit”) as the “Badische Anilin- und Sodafabrik” – it is true that it is still the largest chemical industry company in the world with subsidiaries in over 80 countries and 112,000 employees. But in Germany, at its original production site in the city of Ludwigshafen – for now still the largest such facility worldwide – it has been enduring billions in losses for years. As a whole, BASF’s business at home, in Germany, is contributing nothing to the company’s profits, at best.
An up-to-date “mirror image” of the company’s trademark full-integration or composite production concept (“Verbund”) originally pioneered in Ludwigshafen, BASF Zhanjiang is the greatest single investment in the company’s history. In short, Germany’s chemical giant is cloning and optimizing its historic core – not elsewhere in Germany, not in Europe, and not in the US either, but in China. While Brudermüller, an outspoken man, has been warning of Germany’s comprehensive deindustrialization. And though no one will admit it, it is easy to guess what will happen to the dated, ever less competitive original in Ludwigshafen.
The open secret of success of BASF’s Ludwigshafen flagship was two-fold: German science and engineering, management, and work ethic played a key role, but so did inexpensive gas from Russia, used as energy source and raw material. Both the German and the Russian inputs were indispensable. Ludwigshafen’s success, as much of the German economy, was a direct result of successful German-Russian, mutually beneficial cooperation. No longer.
The EU and Berlin’s – both, ironically, run by Germans – self-destructive policy of re-defining mutual benefits as oh-so-horrible “dependence” to be replaced with some real dependence on the incredibly reliable US and cutting themselves off from Russian natural gas is the decisive factor in Ludwigshafen’s ongoing decline. There are other problems as well, but without this suicidal strategy, longstanding issues – such as, for instance bureaucracy, a mishandled “green transition,” and US tariff warfare – could be resolved or, at least, managed. Yet without inexpensive energy and raw materials, the decline is irreversible. Indeed, by now, BASF is warning of scenarios in which Ludwigshafen will soon stop its gradual descent, but not with recovery. Instead a total crash may loom. The cause? A massive potential gas shortage.
None of the above is exceptional in today’s Germany. Of course, economic sectors and individual companies have their specific features. But what matters is how much BASF’s fate represents that of Germany’s economy as a whole. Except the latter is usually worse, often much worse, as in lethal.
If you are one of the many Germans busy developing and assembling cars, your chances of employment survival have been even worse: in that sector, a whopping 51,000 or 7% of jobs were axed in just one year – and there’s no end in sight. Profits have been cratering: by over 50% between January and June at Mercedes-Benz, by over a third in the second quarter of 2025 at VW.
And that was before some very stable geniuses in Washington made the Dutch government steal – that’s the correct term – Chinese-owned chip maker Nexperia. Inevitably, China is retaliating. Unlike Germany, it’s not run by strange people who take things such as, say, a terrorist attack by “allies” on vital infrastructure with an obsequious grin and a bow. Nexperia is duly out of action and German car companies are among the worst hit by the resulting supply shortages: Hildegard Müller, the head of their national association, has warned of “significant production restrictions, depending on circumstances even full interruptions.” Slow claps for you again, great master trade war strategists of the West.
Zoom out again, and the picture remains dismal: The reputable Ifo Institute predicts microscopic growth of 0.2% for this year. Next year, they guess, things may look up a little, with 1.3% growth. But even if that actually happens – downward revisions have happened only recently – it is going to be due to the government’s reckless militarist-Keynesian debt-and-spending splurge.
Berlin’s current “elite” may be masochists, delighting in taking rough treatment and insults from the US, Ukraine, and even Poland. But Germans as a whole are, of course, less bizarre. By now two thirds are dissatisfied with the coalition in power. If their national misery has a face it is that of its leader, chancellor Friedrich Merz, an ex-BlackRock cadre who charmingly combines tone-deaf, offensive pep talks implying the nation consists of lazy lay-abouts with rants about Russia, drones, and, of course, the AfD, now also accused of being in cahoots with – drumroll – Moscow.
And that is a sign of national health. In a country whose rulers are systematically running its economy into the ground via an obviously demented policy of self-crippling, popular discontent stands for hope. Perhaps, at long last, enough Germans will soon have had enough.
