To avoid Germany’s mistakes with Russia, companies reliant on China are shopping for second source.
Photo by Remy Gieling on Unsplash.
Whatever Vladimir Putin’s painful struggles in Ukraine and at home, of which he is most deserving, the European Union is facing a tough winter.
Even as the chill winds of fall shake leaves from the trees, the German government in particular is trembling at what might be in store for the nation this winter. Russia has now completely cut Germany off from the essential energy supplies it was counting on from the Nord Stream 1 pipeline, as global leaders feared would happen.
It is a worst-case scenario for working-class Germans heading into winter; most are chopping down trees for firewood and insulating inner “warm rooms”- just like their ancient ancestors did thousands of years ago.
This abrupt slide into archaic poverty has EU and German authorities running scared. As well they might. Sooner or later, voters will get to express their displeasure at the ballot box. Facing an unprecedented energy crisis like the one Germany is entering, and with it the entire European Union, elected officials in a democracy are perhaps right to fear their political careers may not survive.
Cue a wailing chorus of lamentations, recriminations, finger-pointing and “if onlys”.
If only the German government hadn’t put so many essential economic eggs in Russia’s basket. If only Germany had hedged it bets on such a vital supply point.
Energy over-dependence on Russia was, is, and remains a major national security threat to Germany. This stark realization has come too late to avert an energy crisis this winter. But the change has come.
German authorities and companies are now furiously exploring the alternatives they will certainly be using to replace Russian energy exports, even if Putin leaves Ukraine tomorrow, defeated and humiliated.
But all those alternatives- from other sources of fossil fuels to renewables- are all years away; in the case of renewables, many years away.
The time to diversify Germany’s energy holdings, of course, was five years ago. The next best time would have been ten years ago.
It was always obvious Putin planned on annexing Ukraine by force at some point. As any Ukrainian could have told the EU in no uncertain terms, Putin had already been engaging in a clandestine war against Ukraine for over a decade when he finally marched on Kiev in February.
Hacking, election interference, undermining Ukrainian political parties, agencies and entities, propaganda; why would Russia bother softening Ukraine up for a full-scale military attack unless he planned to eventually launch a full-scale military attack?
World leaders can perhaps be forgiven for not recognizing Covid19 for what it was…to Vladimir Putin. For Putin, the pandemic was the perfect, unmissable opportunity for which he had long been waiting. When the chance arose, he carried out the next step of his war against Ukraine.
Since it was the step which could not be hidden, denied or obscured in any way, Putin needed plenty of cover. Covid19 provided that cover.
Putin’s geopolitical rivals, and indeed any nation which might have proved overly resistant to his annexation of Ukraine, had just severely weakened their nations and economies, plus wearied their populations with over two years of unprecedented shut-downs, mandates, closures and quarantines.
Failing to anticipate the hold Russia would have over Germany in the event it invaded Ukraine was a catastrophic error. It will be years before the German economy recovers.
With all this in the rear-view mirror, world leaders, corporations and other international entities are considering carefully their portfolios and looking to diversify.
There is another elephant in the geopolitical room; another shoe waiting to drop which is likely to disrupt global supply lines, decimate manufacturing centers, cause massive shortages, and ignite a global energy crisis to make Germany’s pale in comparison.
The Chinese Communist Party plans at some point in the near future to invade Taiwan.
All the same writing is on the wall: Information warfare strategies, propaganda, hacking, election interference, misinformation campaigns, intellectual capture, corporate malfeasance and economic sabotage.
What Vladimir Putin was doing to Ukraine prior to invading, the CCP is doing to Taiwan and more.
To ignore this prospect, which is almost certainly likely to happen sooner or later, would be to set nations grown overly dependent on Chinese manufacturing and imports on a path to disaster.
Global leaders and the heads of wealthy multinational corporations aren’t ignorant of this prospect. Rather than waiting until it’s too late, some companies and countries are acting proactively.
The “China Plus One” strategy is a method by which corporations intend to diversify their manufacturing and operational centers as not to be overly dependent on China for everything.
Seduced by its plentiful cheap labor, vast natural resources, huge market, and lax regulatory and labor laws, U.S. companies, like other companies around the world, have already put too many economic eggs in the CCP’s basket.
With the level of hold it currently has over some of the world’s wealthiest and most powerful corporations and nations, the Chinese Communist Party could certainly use that leverage against Taiwan.
With this terrifying prospect in mind, companies like Apple are exploring other options. They aren’t abandoning their operations in China, nor their hopes for continued profits.
But they are exploring alternatives. Just in case. Countries like Vietnam are already seeing the economic benefits of this shift.
Had Germany done five years ago what these prognosticators are now doing, the country would not be facing one of the worst man-made energy shortages in modern history.
Hopefully, it isn’t already too late.
(contributing writer, Brooke Bell)