Guest article by Gabor Steingart
The US supports Ukraine like no other country in the world. But the help is not completely selfless. Because even Joe Biden has nothing to give away. The US President relies on “arming on credit”. Germany, on the other hand, must hope that the war will end soon.
The one with one
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All failure is always an organizational failure. So if the new Secretary of Defense Boris Pistorius now takes up his duties, he should quickly correct a wrong decision made by his CDU predecessor Thomas de Maizière: the abolition of the planning staff.
This planning staff was the ministry’s internal think tank. The team, which ultimately consisted of around 30 people, reported directly to the minister and was the geostrategic brain of German defense policy. The abolition of this department in 2012 – for reasons that are still unknown today – was tantamount to a brain amputation.
This newly established planning staff should immediately deal with the power shifts within the NATO states that the Ukraine war and the Western reaction to it have triggered. It is highly politically incorrect, but all the more worthwhile to look at the US in particular. Because in the shadow of the war, a shift in power and prosperity took place here that is more than painful for Germany:
Profiteer No. 1: The US defense industry
Since the beginning of the war, the US has provided Ukraine with over $50 billion in military, financial and humanitarian assistance. Significantly more than any other country.
But: The sentence of former President Calvin Coolidge applies across the centuries: “After all, the chief business of the American people is business.”
In May 2022, the Senate passed a law authorizing the American government to quickly and unbureaucratically lend military equipment to Ukraine – the “Ukraine Democracy Defense Lend-Lease Act of 2022”. The approximately 23 billion US dollars in military support are not wasted.
It states that “any loan or lease of defense equipment to the Government of Ukraine […] [der] Return, Refund and Refund [unterliegen]“.
“Arming on credit” of Ukraine
‘Arming on credit’, for that is what it is, was invented during World War II when Winston Churchill found himself unable to defend Britain alone. The government has now remembered the procedure at the time of selling weapons against promissory notes.
Coincidence or not, the US also has a material interest in the government in Kyiv remaining afloat. In late September 2022, the Financial Times reported that the US was urging EU countries to accelerate pledged financial assistance to Ukraine and set up a “regular mechanism” for financial assistance. It is still unclear whether EU funds should and may also be used for military repayments to the USA.
The fact is, the US is strict on these matters. Great Britain stuttered off its installments from the Lend-Lease debt until 2006, when the World War was already 61 years over.
US defense companies wanted by investors
Then as now, such programs are primarily used by the American armaments companies, without the domestic taxpayer being held accountable. The stock exchange listings of Lockheed Martin and Northrop Grumman reflect the euphoria of the investors, especially since in the future the replacement purchases will have to go through the American manufacturers.
The increase in all western military budgets also benefits the Americans. Olaf Scholz has also offered 100 billion.
An analysis by Foreign Policy magazine found that the United States nearly doubled the number of approved arms sales to NATO allies in 2022 compared to 2021 – from $15.5 billion to $28 billion. This is how war becomes business.
Profiteer No. 2: The US energy companies
The economic sanctions – trade restrictions, asset freezes, bans on payment systems or the export ban on oil – have isolated Russia. This will irrevocably disrupt the previous German-Russian trade for a very long time. The American energy companies offer themselves as helpers in an emergency.
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They hardly fall asleep laughing: LNG imports from America increased by 260 percent in 2022 compared to the previous year. The American liquid gas replaces the Russian pipeline gas from Nord Stream 1 and Co.
American oil is also suddenly in demand: According to the data provider OilX, around 500 American oil tankers have sailed to Europe since February 2022 and have contributed to US crude oil exports reaching a record high last year. Between December 2021 and December 2022, US export numbers increased by 52 percent.
Profiteer No. 3: The US government
The American administration has an interest in permanently weakening system rival Russia and basically removing it from the game of the great powers. It can do so safely for its own country and the lives of its own soldiers. This is one of the reasons why Washington has no interest in a quick peace agreement in Ukraine, as outlined by 99-year-old Henry Kissinger in Davos yesterday.
Joe Biden wants regime change in Moscow. He made that clear in a speech in front of the Warsaw City Palace. His foreign minister has also made it clear that they want to take away Russia’s war capability.
In the medium term, Europe’s focus of uncertainty will also benefit the American capital market, which is perceived by investors as a safe haven. Capital outflows from Europe in the first months of the war were considerable. Yesterday, after the stock market closed, BASF reported a loss in the billions, which was mainly caused by the write-downs of the Russian business, which has since ended.
Germany has a strategic interest in the conflict being ended quickly
The Europeans, and Germany in particular, have an overriding strategic interest in the conflict being ended as quickly as possible, or at least frozen, and in no case expanding towards the Western European metropolises. The stronger and more intense a war rages in Europe, the more pessimistic the investment conditions are, both in the real economy and on the capital markets in London, Paris and Frankfurt.
Conclusion: The trading partner Russia is de facto exchanged for the trading partner America. The Americans are thus also consolidating their negotiating position for talks on future free trade agreements and the China strategy.
If the planning staff still existed in the Defense Ministry, it would write down the following paradox for the minister in the Executive Summary: Russia is at war with Ukraine – and America is winning.
Gabor Steingart is one of the best-known journalists in the country. He publishes the newsletter The Pioneer Briefing. The podcast of the same name is Germany’s leading daily podcast for politics and business. Steingart has been working with his editorial team on the ship “The Pioneer One” since May 2020. Before founding Media Pioneer, Steingart was, among other things, Chairman of the Management Board of the Handelsblatt Media Group. You can subscribe to his free newsletter subscribe here.