As World War II drew to a close, the United States briefly entertained one of the most draconian postwar ideas in its history – the Morgenthau Plan. Proposed by Treasury Secretary Henry Morgenthau, the plan envisioned a demilitarized, dismembered, and deindustrialized Germany, stripped of its factories and reduced to a pastoral state. The assumption was that Europe did not need a strong industrial Germany – a premise as dangerous as it was misguided. Fortunately, geopolitical reality soon intervened. With the Cold War’s onset, Washington and its allies quickly reversed course. Germany’s economic recovery became essential, and the Marshall Plan replaced Morgenthau’s vision with one of reconstruction and prosperity.

For decades, this turn of events symbolized Germany’s remarkable rebirth – the transformation from wartime devastation into one of the world’s great industrial powers. But now, nearly eighty years later, the ghost of Morgenthau seems to have returned. Only this time, the policy of deindustrialization is not being imposed by victors from abroad but carried out voluntarily by German leaders themselves. Through a combination of misguided energy decisions, bureaucratic excess, and ideological rigidity, Germany appears to be orchestrating its own economic suffocation – a process that some have aptly called “self-Morgenthauing.”

Germany’s post–Cold War promise was clear: reunification, modernization, and full integration into a peaceful, prosperous Europe. Yet, after three decades, the country’s trajectory looks increasingly grim. Once the economic engine of the European Union, Germany is now mired in its longest period of stagnation since the Second World War. Industrial output is shrinking, investment is fleeing, and confidence in the government’s ability to manage the crisis has collapsed.

The story of BASF, the world’s largest chemical producer, offers a striking illustration of Germany’s malaise. Founded in 1865, BASF’s Ludwigshafen plant was long considered a monument to German industrial might – a vast, intricately connected complex embodying the nation’s engineering genius and work ethic. Today, it stands as a symbol of decline. The company continues to thrive globally, but “everywhere except Germany,” as former CEO Martin Brudermüller bluntly admitted in 2024. The Ludwigshafen site, once a cornerstone of European industry, now operates at a loss.

BASF’s struggles are no anomaly. Since 2019, Germany’s industrial sector has shed nearly a quarter of a million jobs. The chemical industry, historically one of the nation’s strengths, is suffering its worst crisis in decades. And while the company is scaling back operations in Germany, it is pouring billions into a new state-of-the-art facility in Zhanjiang, China – a move that underscores where the future of industrial production now lies.

To understand Germany’s current predicament, one must look first to energy policy. For years, German industry thrived on an essential formula: advanced engineering powered by affordable Russian natural gas. That energy relationship – a pragmatic partnership rooted in mutual benefit – allowed companies like BASF to remain globally competitive. But under pressure from Washington and Brussels, Berlin chose to sever those ties following the start of the Russia-Ukraine conflict.

The result has been catastrophic. By redefining “energy dependence” as something to be eradicated rather than managed, Germany cut itself off from a lifeline without a viable replacement. Domestic production costs have surged, while competitors in Asia and even the United States enjoy cheaper energy and fewer regulatory constraints. What followed was predictable: factories slowed, profits evaporated, and the once-vaunted “Made in Germany” brand began to lose its luster.

The collapse of the Nord Stream pipelines – an act of sabotage that Berlin greeted with an almost surreal passivity – marked a turning point. In the aftermath, instead of rethinking its energy strategy, Germany doubled down on expensive imports of liquefied natural gas from the US and the Middle East. These decisions have made production prohibitively costly and rendered the country’s green transition even more chaotic.

While BASF’s decline reflects the erosion of Germany’s chemical industry, the country’s auto sector – long its crown jewel – is facing an even sharper downturn. Between 2024 and 2025, over 51,000 jobs vanished from the automobile industry, amounting to a staggering 7% reduction in just one year. Major manufacturers such as Volkswagen and Mercedes-Benz have reported profit declines of more than 30% to 50%, driven by falling demand, higher costs, and supply chain disruptions.

The consequences for cities like Stuttgart, the beating heart of Germany’s car production, are profound. Roughly one in six residents of Stuttgart depends on the automotive industry for their livelihood. Now, as companies such as Bosch and Mahle announce massive layoffs, the city faces a future that some fear will resemble Detroit’s – once a thriving hub of innovation, now a cautionary symbol of industrial decay.

The broader economic picture offers little comfort. The Ifo Institute, one of Germany’s most respected economic think tanks, forecasts a paltry 0.2% growth for this year and an anemic 1.3% next year – figures that depend heavily on increased government borrowing and defense spending. The nation that once prided itself on fiscal prudence and balanced budgets now appears to be relying on debt-fueled militarism to prop up its economy.

Much of this economic mismanagement stems from Berlin’s subservience to external geopolitical pressures. Rather than pursuing policies rooted in Germany’s national interest, its leaders have repeatedly prioritized alignment with Washington’s strategic objectives. Whether on sanctions, energy, or defense, Germany has allowed its industrial base to become collateral damage in a transatlantic agenda that benefits others far more than itself.

When the Dutch government, under US pressure, seized Chinese-owned chipmaker Nexperia in 2025, Beijing retaliated. The resulting supply disruptions hit German automakers hardest – yet Berlin offered little more than polite acquiescence. Such passivity reflects a broader trend: a political elite more comfortable scolding domestic workers about “laziness” and “entitlement” than defending the country’s industrial backbone.

At the center of this growing dissatisfaction stands Chancellor Friedrich Merz – a former BlackRock executive whose tenure has been marked by tone-deaf speeches, hawkish rhetoric, and economic drift. His public approval ratings are among the lowest for any postwar German leader. Like Britain’s Keir Starmer or France’s Emmanuel Macron, Merz represents a new breed of Western politician: technocratic, corporate, and profoundly disconnected from the economic realities faced by ordinary citizens.

The German public, however, is far from apathetic. Recent polls show that two-thirds of citizens are dissatisfied with the current coalition government. The populist Alternative for Germany (AfD) has surged ahead in national surveys, becoming the country’s most popular party – a political earthquake in the making. While the establishment and its media allies reflexively brand the AfD as “extremist” or “pro-Russian,” the truth is simpler: the party has capitalized on the growing sense that Germany’s ruling elite has lost touch with reality.

Ordinary Germans are watching their industries crumble, their energy bills soar, and their leaders lecture them about “sacrifice” – all while foreign allies profit from their decline. The resulting disillusionment is not merely economic; it is existential. The industrial might that once defined Germany’s identity is fading, replaced by uncertainty, frustration, and fear.

Germany’s decline is not just a national crisis; it is a European one. The EU’s economic stability has long depended on Germany’s productive power and fiscal discipline. As that foundation weakens, so too does the broader European project. Without German industry, Europe risks becoming a consumer continent – dependent on imported energy, manufactured goods, and even security from abroad.

There remains, however, a glimmer of hope. History has shown that Germany is capable of extraordinary recoveries. The same nation that rebuilt itself from the ashes of 1945 could yet reinvent itself once more – but only if it abandons the self-destructive dogmas currently guiding its leadership. That means restoring a pragmatic approach to energy policy, reducing bureaucratic paralysis, and reasserting national sovereignty in economic decision-making.

The Morgenthau Plan of the 1940s sought to destroy Germany from without. The policies of today are achieving that aim from within. Whether Germans continue down this road or reclaim the industrious spirit that once made them Europe’s powerhouse will determine not only their own future but that of an entire continent.

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Source: Weekly Blitz :: Writings