Is Third Way good for Germany?

Emmanuel Macron is making right noises after a long lull. He points out three facts: cheap Russian gas is over; free security by US is out; China trade costs one billion Euro daily. Is Germany listening? My take is Germany must plot Third Way before Macron does.

Third Way explained

It was the Indian Foreign Minister S. Jaishankar who coined the term “Third Way" to function as an independent state unattached to a specific group of countries but work with every other state in the globe, assuredly being outside the domination of one or more superpowers.

Non-Aligned Movement

There is some credence in suggesting this type of novelty. India being the founder member of the Non-Aligned Movement from its inception in 1961 formally rejected siding with the then two power Blocs viz: America led capitalist nations and Soviet led socialist nations.  The concept of non-alignment died a natural death with the collapse of the Soviet Union resulting in the emergence of USA as a solo superpower which adopted International rules based order as the functional mechanism to administer global political and financial relationship and transactions, of course backed by US military hegemony. Regrettably, the rules are set by America and America alone without any concurrence from Europe or elsewhere!

BRICS

German analysts are right on the role of BRICS. It is a kind of voluntary grouping with a clear sense of direction towards the same ideals espoused by Non-Aligned Movement but with an urge to protect their geoeconomics power base. Yet, many of their institutions are still green horn. For example, BRICS Development Bank as a counter to IMF/WB/IBS trio is still in its embryonic state. Even though BRICS is in existence since 2001 and with today’s count of 11 full members and 10 partners, it is struggling to get even BRICS Pay off the ground. In sum, BRICS lack a central power that can bind and unify the flock. Of course, they boast of consensus, there again it fails to implement decisions in a unified manner. Despite the fact that BRICS has more than 40% of the global population there is still no form of assertiveness for protecting their geoeconomics power system.

Germany geoeconomics model

It was based on the angle of leveraging input cost to output revenue. This model required three pillars: cheap oil/gas along with an assortment of raw materials such as steel, fertilizer etc. along with a guardian angel in the form of America providing security guarantee. The third one and crucially important is the availability of large consumer nations such as America and/or China underwriting the buying of products coming out of German farms and factories.

In real life none of these are assured. In monetary terms a single German farm or industrial product cannot withstand completion from Eastern Europe or from the Afro-Asian tiger economies. 

The road ahead

Far-Right and Far-Left parties are expected to make a dent in the Centrist led Bundestag in the next Federal Election. One way to minimise this jeopardy is for the CDU/CSU & SPD Coalition to adopt the Third Way as a political and geoeconomics policy.

Navigating strategy amid geoeconomics urges Germany to assess the feasibility of Germany going for Third Way to improve her prospects.

 

Cheers!

 

Muthu Ashraff

Strategy Adviser

Mobile: + 94 777 265677

E-mail: cosmicgems@gmail.com

Blog:   Strategy Adviser

 

 

 

SPD can comeback, it only needs a reformer

On and off, reformers appeared in the horizon of Germany. The Fuhrer is one. Ludwig Erhard is next. Gerhard Schroder is third and the most revered. Today SPD is in doldrums. It can make a great comeback. Required: A reformer of the likes of Schroder.

Let me give a bird’s eye view of what Gerhard Schroder achieved.

Domestic Economy

He alone gave peace with prosperity especially aligning with Russia and the rest of progressives of the world. He understood that domestic economics and geoeconomics should be aligned. Domestically, he did the following, ushering in economic upturn where people had money to spend. Here are few snippets:

Tax Reform 2000 brought in several goodies when ceiling of income tax was reduced from 51% to 42%. First time tax payers got a steep concession from 25% to 15%. Basic allowances increased to allow more tax free money in the hands of salaried workers. Corporate income tax reduced from 40% to 25%. As an incentivising measure unemployment insurance contribution was brought down 6.5% to 3%.

Geoeconomics

Geoeconomics push brought out a long term understanding with Russia in supplying cheap gas. He was instrumental in establishing Nord Stream pipeline that became the chief propeller of gas supply to power both domestic and industrial needs.

No wonder that his tenure as Federal Chancellor during 1998 to 2005 is fondly remembered by both corporates and individuals.

SPD Today

A junior partner in the Friedrich Merz led CDU/CSU & SPD coalition which is almost a dead man walking. Remaining in this coalition is very much detrimental to the prospects for SPD in the next Federal Election. If such an election held today, SPD would garner around 16% of votes cast and no more. In fact, in the last Federal Election held in 2025 the party got 16.4% of votes.

SPD Tomorrow

Mecklenburg State election saw SPD poised at 35.8% and came second while Berlin State gave only 12.1% being fourth in the pecking order. The Party’s Youth Wing (JUSOS) is up in arms seeking to settle its score with Lars Klingbell who remains as most unpopular co-head despite the fact he is the Vice Chancellor of Germany and also Federal Minister of Finance.  Bärbel Bas assumed co-head position in 2025 and yet to prove her mettle even in her cabinet position as Federal Minister of Labour and Social Affairs. The only sparkling star in the top ranks of SPD is Boris Pistorius who also serve in the cabinet as defence Minister.

Strategy advice

Regional momentum registered convincingly in the Mecklenburg state election must be capitalized in order to sweep oncoming elections in other states before contesting at Federal level.

A Reform Agenda must be crafted that blends both domestic economic recovery and reinstalling geoeconomics status. Can Boris Pistorius rise to the occasion?

Navigating strategy amid geoeconomics concur with Boris Pistorius if he gets counsel from Gerhard Schroder and be the reformer German needs today.

 

Cheers!

 

Muthu Ashraff

Strategy Adviser

Mobile: + 94 777 265677

E-mail: cosmicgems@gmail.com

Blog:   Strategy Adviser

 

 

 

Is green transition boon or bane for German fertilizer?

The jury is out on the dilemma known as Green Transition, whose German title “Energiewende” meaning-energy turnaround- is still the subject of intense debate in the geoeconomics circle. As a policy measure it is intended to do good. But things are getting awry.

Brief explanation of Energiewende is not out of place. The core idea is based on shifting from fossil fuel (nuclear power also included) to green energy or renewable energy system. The goals are as follows:

1. Net Zero Emission by year2045

2. Electricity consumption from green/renewable source be at-least 80% by 2030

3. Coal as energy source be phased out by 2038

Facts & analysis

All these loftier goals are good for only obtaining electricity for both domestic consumption along with lighting and powering factory infra-structure. When it comes to the question of producing fertilizer, it is not a boon but a bane.

For example, production of nitrogen fertilizer relies heavily on the Haber-Bosch process, where large amount of natural gas is required as feedstock and energy source. Hence, the dependence on natural gas, for instance, cannot be over simplified. At present, only 75% of the required fertilizer for German farming is provided via domestic industrial giants. Chief amongst these are:

1. K+S Aktiengesellschaft: Being Germany’s largest producer of ammonia and urea-based nitrogen fertilizers located in Kassel, it is considered as global hegemon in potash, magnesium, and sulphur products

2. SKW Stickstoffwerke Piesteritz GmbH: Being the largest producer of ammonia and urea-based nitrogen fertilizers in Germany located in Wittenberg. It has a separate arm for producing de-fossilized "green" fertilizers

3. Compo Expert GmbH: Located in Münster, this international company specializes in high-quality specialty fertilizers and bio-stimulants for horticulture, turf covering and other agriculture.

All three above and many others who are engaged in domestic fertilizer production realize that the future for fossil-fuel based fertilizer within Germany is bleak, due mainly to Energiewende policy mandated by the Federal Government agencies tasked to bring out the “Green Transition” quickly.

Threats perceived

Heavy penalties would be imposed by these Federal agencies on the recalcitrant factories who fail to transition to using renewable energy source as well as green ammonia made on the basis of green hydrogen, which is produced with electrolysis using renewable electricity. In any case, generating  renewable electricity is more expensive in Germany.

Options available

There are only two options available for the affected factories. Either liquidate the company or relocate elsewhere in Europe, say Spain.

Geoeconomics Risk

1. Right now sourcing fossil fuel and natural gas is wrought with high geoeconomics risk. Closure of Hormuz Strait and blocking of Red Sea Navigation adds more cost in terms of transport and marine insurance not to forget about the high prices quoted for the fuel itself

2. Existing supply chain issues involving imports of fertilizers such as potash, phosphate, and sulphur from Mid-East would be further exacerbated when German fertilizer firms relocate their production facilities elsewhere in Europe.

Strategy Advice

The Federal Government must re-examine the structure and deadlines regarding Energiewende goals while the companies in fertilizer industry have to shelve their plans for energy transmission and relocate outside of Germany.

Navigating strategy amid geoeconomics recommend both governments and fertilizer companies to re-assess Energiewende ASAP. 

 

Cheers!

 

Muthu Ashraff

Strategy Adviser

Mobile: + 94 777 265677

E-mail: cosmicgems@gmail.com

Blog:   Strategy Adviser