Wednesday, 4 February 2026

Germany faces a litany of woes

Ukraine war did one good thing for the German nation.  It exposed the woes bedevilling a country that once upon a time was a power to be emulated. Kaiser Wilhelm and Adolf Hitler may be wrong leaders in history but they made Germany a powerful nation to be feared and respected. Let me list the major woes faced by Germany today:

First and foremost, Germany continues to carry the notion that she is twice found guilty by the victorious powers after the end of both World Wars and mandated to carry the collective guilt and pay war reparations for her victims. This is not going away, for that matter both America led west and Russia as Soviet Union thence and Federated Republic now harp on the theme constantly nagging Germany about her past. Be that as it may, there are many other woes that were wrought about in the post-war Germany by political leaders. Let me explain:

1. Hesitancy Syndrome. This is a classic personae cited by William Shakespeare in his play Hamlet: To be or not to be that is the question. This hesitancy runs in every sphere of the German political & economic life. Overall, German political and economic elite evades making the plunge be it in opposing the Ukraine war or taking decision in the national interest.

2. in a made to belief scenario  the elites and the cabal acting together got stuck to NATO as a saviour even though the  Lord Hastings Ismay, the First Secretary General of NATO, reported to have said that NATO is "to keep the Russians out, the Americans in, and the Germans down". What is more, almost all German Chancellors sub-contracted security to America and the Alliance. Indigenous defence architecture is yet to be born despite brave talks from present Chancellor Friedrich Merz.

3. After seven decades, Germany has ended up with a stagnant economy where twin edged geoeconomics strategy of manufacturing sector oriented towards export dependency has exposed her to vulnerability from rising powers such as China, Russia and India. Overall trade has dropped 13% in the case of China alone. Exports to non-EU countries in Asia & Africa have also dipped substantially.

4. Demography is the most complex woe for this Aryan nation. On the one hand there is an aging population leading to labour shortage for young and talented men & women. On the other is large scale immigration that was permitted earlier swelled the labour market for semi-skilled jobs. Techno skilled labour is hard to come by. Recent statement by Chancellor Friedrich Merz that if he has to raise a German army he has to get more immigrants especially Muslims,  has raised alarm not only as regards to the security aspect but also on the cohesiveness of German society.

5. Domestic political instability has cast a lingering shadow when it comes to the point of making brave political & economic decisions. In-fighting within the government run by the Union-SPD coalition rising along with outside challenge posed by the resurgent AfD Party whose co-chairperson Alice Weidel was on record accusing Ukraine President Volodymyr Zelenskyy as the primary accused for the Nord Stream blast. This had opened the Pandora Box. Moreover, Chancellor Merz is caught in a cleft stick. Neither can he endorse it nor deny it.

The bottom line is Germany is in a tight situation facing these woes. But there is light at the end of the tunnel. “Navigating strategy amid Geoeconomics” is the only salvation. That means face the woes bravely now or never!

 

Cheers!

 

Muthu Ashraff Rajulu

Strategy Adviser

Mobile: + 94 777 265677

E-mail: cosmicgems@gmail.com

Blog:   Strategy Adviser

 

 


 


Monday, 2 February 2026

Why Germany should repatriate her gold from USA?

In the post WWII scenario, the then West Germany decided to convert her trade surplus with USA into gold and store in the vault of US Federal Reserve at New York. This was mandated at that time as a part of Bretton Woods formula to ensure US capitalism stays in the lead.  Does this hold now?

It is pretty clear now that neither US Dollar nor the US led international financial system would be stable in the coming years. America is retreating, so is the rules based order proclaimed by USA and followed slavishly by the vassals in Europe.

At one point Germany held most of her reserves in gold outside her shores. The reason was to facilitate liquidity in international trade as well as for safe keeping.  After the end of Cold War resulting in the unification of the then East Germany there was no reason to keep the entire gold reserves in foreign banks. Subsequently a repatriation program was undertaken thereby more than 50% got stored at the Bundesbank in Frankfurt.

Still, in order to improve trade facilitation and liquidity, gold reserves were continued to be held in three foreign financial centres namely US Federal Reserve Bank in New York, Bank of England in London and the Banque de France in Paris.  Approximately 35% of the gold reserves that are held outside Germany are stored in USA alone with a book value of 1,236 tonnes of gold, valued at over €100.

Whereas both London & Paris are deemed suitable locations for gold reserves concerns are being expressed loud and clear as regards to reserves held in USA. One reason is, US is no longer the largest trading partner of Germany which position now goes to China. By the end of 2025 China has emerged as lead partner with two way trade exceeding USD 190 Billion. Besides, German companies up ticked their investment in China, of late.

Erratic behaviour of Donald Trump has become by and large the major irritant in cross Atlantic relations, especially between Germany and USA. As far as liquidity and safety are concerned America is fast becoming a risky destination to hold gold reserves.

Navigating strategy amid geoeconomics dictate that Germany transfers her gold reserves stored in New York to Beijing to capitalize on easy access of gold storing and trading. By the way, Germany has significant trade deficit in China trade and holding gold reserves in Chines bank would be an ideal solution in ensuring smooth transactions.

More than anything else, Shanghai Gold Exchange in China offers gold purchases in Yuan as well as Euro and other currencies. Unlike in the case of US banks, China offers guarantee in purchase, sale, storage and repatriation of gold in short notice.

 

Cheers!

 

Muthu Ashraff Rajulu

Strategy Adviser

Mobile: + 94 777 265677

E-mail: cosmicgems@gmail.com

Blog:   Strategy Adviser

 

 


 

Germany faces a litany of woes

Ukraine war did one good thing for the German nation.   It exposed the woes bedevilling a country that once upon a time was a power to be ...