What is the state of transatlantic relations today, in the context of the Ukrainian conflict and against the backdrop of a looming US-China confrontation? It is not easy to outline its contours and possible developments, firstly due to the complexity of the factors involved and secondly, even more so, because one of the relations’ two poles does not represent a unified entity. Whatever Europe may politically and symbolically stand for today, the European Union (EU) is not a state, so it cannot replace the political and military semi-sovereignty – since World War II – of Germany, its economic pillar. Rather, it stands as a transatlantic and intra-European battleground and, in the medium to long term, as one of the issues at stake in the more general crisis of the international order that opened with the financial crisis of 2008.
Be that as it may, in addressing this intricate knot, two elements must be kept in mind, which cannot be delved into further here. First, the US has so far managed to avoid an economic recession, following the expected post covid rebound, both thanks to heavy government subsidies to business (Bidenomics) and to energy exports to European countries (one of the dividends of the war in Ukraine). It is highly doubtful if this industrial policy can lead to an effective reindustrialization of the US and the return of an acceptable social compromise (the disintegration of which was Trumpism’s real cause). Instead, it is plausible that by intersecting with the economic-technological war on China this prefigures a new kind of “war economy.”1 Second, and consequently, the conflict with Moscow can only have a knock-on effect on the EU, since it is plausible that a “Europe without Russia leads to a Europe without China.”2
Ukrainian Trap
With the war in Ukraine, Washington cracked down on Russia, whose military aggression was in fact a reactive and defensive move. The military conflict, whatever the outcome on the ground, has undoubtedly marked a shift if not a turning point in transatlantic relations as well.
The question is, why does the US strike so hard against Moscow just as an anti-Chinese mobilisation is dramatically growing? Tactically, Washington may have “simply” seized the opportunity in the wake of NATO’s decades-long eastward expansion. But the strategic goal is long-standing: dual containment of Russia and Germany. Moscow, as an enemy or adversary, depending on the period, is to be kept out of Europe through its isolation; Berlin, as an “ally”, is to be kept under enough pressure through the continually ventilated, constructed, and provoked Russian threat. Halford Mackinder – whose geopolitical thinking is the alpha and omega of America’s strategic approach – has seen his caveat prevail: preventing a “Eurasian” alliance between Germany and Russia at all costs. This is all the more relevant today with the possible projection toward China, which may represent an existential threat to the world dominance of her majesty the Dollar.
In fact, thanks to the conflict, Washington has dealt a huge blow to EU energy policy by causing its near-disengagement from Russian supplies and by making trade and production interconnections with Moscow almost impossible for German (and, subordinately, Italian) industry. A combination that severely strains the European industrial fabric in favour of the US attempt to bring some of its relocated production back home.
In the meantime, however, in light of Ukraine's lacklustre performance on the battlefield, there is a move in Washington towards a military strategy that aims to consolidate the Ukrainian front on defensive lines while attempting to rebuild Kiev’s military potential, enabling it to strike Russian territory.3 The goal is a type of long-lasting guerrilla warfare that will degrade Russia’s military capabilities and internal resilience.4 This is where the program of “Europeanizing” the costs of the conflict fits in, which should allow Washington to devote itself more quietly to the East Asian quadrant. Such costs are no longer just financial, as until now, but directly military. Macron’s cocksure boutade about the need for European troops on Ukrainian soil may sound flimsy at the moment, but it signals a trend: Russia cannot be defeated without direct NATO engagement, as the Europeans must begin to understand.
EU, or not EU?
Thus the death knell for European aspirations for greater autonomy on the international stage seems to have sounded. The abrupt flattening of the European ruling classes to Washington's Ukrainian ukaze is explained by a series of quite strange factors. Internal quarrels congenital to the EU, well exploited by Eastern European countries, opportunistic users of European funding and free movement of labour-power; fragmentation of decision-making processes; French twists and turns, always with schadenfreude for any damage done to Berlin; the weakening of German leadership after Merkel’s departure. The Europeanization of an increasing number of processes, norms and institutions has not only failed to create competitive “European champions” in the global markets, but also ended up having perverse effects, weakening the state autonomy of Germany and France, entangling them in the network of Eastern European countries that are undaunted vassals of Washington.5 The European Commission itself is nothing more than a battleground between US interference – supported by significant sectors of the European political classes and bourgeoisie – and forces inclined, in theory, toward a greater autonomy hinged on the Franco-German axis. The latter, however, has suffered a severe blow having shown its inability to handle the Ukrainian problem, its economic fallout (with Germany in recession for the first time since 2009), as well as the difficult choices it poses in terms of the strategic posture toward Russia and, therefore, rearmament (favouring the European war industry or buying from the United States?), deterrence (French nuclear umbrella extended to Germany or US?), and political influence over Eastern Europe (hitherto included in the German economic sphere). The social passivity of the European populations has done the rest: the electoral rise of conservative and/or eurosceptic (better: euro-opportunist) political forces being the effect rather than the cause.
This does not detract from the fact that, beyond the veneer of anti-Russian unanimity between the two sides of the Atlantic, the games are yet underway, especially should Moscow achieve acceptable military success on the ground. We will then see how far Washington can pull the strings with its European allies. A harbinger of consequences then is the loss of American soft power in a significant portion of European societies, which immediately taste in their own pockets the costs of their governments’ Atlanticist subservience. It has never happened to this extent so far: Biden making us miss Trump! But under what conditions could these cracks become real contradictions?
The German issue?
In particular, the games appear to be still be wide open in Berlin. Outwardly, as well as inwardly, the pro-Atlantic order (against the Putinverstehers and expressions of solidarity with the Palestinians) reigns solidly for the moment. And yet significant criticism from sectors of the industrial bourgeoisie about the asymmetrical economic costs of the war has emerged in the past two years. The social framework is beginning to be strained by economic deterioration and uncertainty about the future, as recent mobilizations have shown, and traditional political arrangements are breaking down, with neo-populist tendencies, right and left, reacting to the shattered illusion of a prosperity insulated from global disruptions.6 It is certainly clear that the current German ruling class is unable to provide geopolitical substance to its European and global economic clout except in terms of “organised passivity”7 vis-à-vis Anglo-US diktats (with a substantial segment of the political class and domestic public opinion having internalised US-UK command). Hence the deaf reluctance, which the Scholz government has had to retract again and again, to NATO pressure for greater financial and military involvement in Ukraine (most recently, the refusal to supply Taurus missiles, at least so far, and Scholz’s veto of Von der Leyen “The American” as NATO candidate). Hence the self-imposed silence on the blatant “friendly” sabotage of the Nord Stream pipeline. Hence the strict media control on the domestic front, aimed at avoiding possible accusations of disloyalty to Atlanticism. In short, the heralded Zeitenwende does not so far seem to have amounted to a decisive and definitive anti-Russian bellicose turn. But at the same time the scope for compromises à la Merkel have dramatically narrowed.
On the economic front, the steps are also becoming critical. While in general the economy of the EU countries after 2008 trudged behind that of the US – weighed down by the sovereign debt crisis – the German economy alone managed to strengthen itself by centralising around itself European value chains even more, resulting in significant trade surpluses (in the range of 5 percent of GDP until 2022) with both EU countries8 and the United States. But this would not have been possible without the increasingly close relations with China and the flows of cheap energy from Russia.
In terms of trade, the US remains the largest importer of German goods, a third larger than China,9 and the main EU trade partner, particularly in services. But China comes right behind with more than 15 percent of the EU’s total trade.10 It is the leading source of imports to Germany11 and the EU.12 Within the Union, the privileged relationship between Beijing and Berlin has consolidated in both directions, accounting for more than a quarter of total EU trade, with BMW, Mercedes and Volkswagen selling nearly 50 percent of their vehicles in the Chinese market. Beijing is Germany’s top trading partner (imports + exports) and, more importantly, the market with better growth prospects, US sanctions permitting.
In terms of foreign direct investment (FDI), the United States still leads the way in the EU, as in the world, in both flows (e.g. higher than German flows in France itself last year, with Holland, Luxembourg and Ireland as bases for expansion to other countries13) and stocks.14 The revenue of US multinationals in Europe – about four times the entire trade – offsets Washington's trade deficit.15 Not to mention the superiority of US firms in terms of R&D spending, high-tech branches (see Europe’s lag on digital and armaments) and especially in access to financial liquidity and political support. Germany, for its part, has greatly increased its international orientation in this field as well, particularly since the 2008 crisis. In absolute terms, its FDI abroad amounted to less than half of US FDI, but with an upward trend until 2022 (in contrast to FDI to Germany, about half of the former, which fell in 2023 to its lowest level in two decades).16 This trend is even more pronounced in German FDI to the US itself (which represents a third of German FDI abroad, and although manufacturing is not in the foreground it is more than double the reciprocal investment of the US in Germany).17
Again, the point is that in this renewed activism Germany cannot give up and is not giving up on China, as opposed to the lesser US activism.18 The data speaks for itself: although German direct investment in China was worth about 7 percent of its total FDI in 2020 (as opposed to 34 percent in the EU countries and 27 percent in the US), in 2022 this grew by more than 50 percent year-over-year, and in 2023 by another 4 percent; just as there was an overall decline both in the rest of the West’s19 investment in China and German investment in the rest of the world.20 Thus, China has risen to the second largest stock of German overseas investment, after the United States21 – but it is now more important for the automotive sector22 – and with a proportionately higher and growing share of profits.23 Moreover, China can serve as a platform for exports to the rest of East Asia, the most dynamic economic zone in the world. It is true that China’s ascendancy of the value chain in machinery manufacturing will create a competitor for German industry; but, in theory, a collaboration in the field of electric transportation cannot be ruled out (or else Big Tech’s control will extend via digital platforms and networks to the German automotive industry, “forcing” it to go green).
It is no coincidence then that Scholz has flown twice to Beijing since February 2022, most recently this April with a large retinue of managers from big business. The Global Times, China’s official source on international affairs, recalled in its commentary the words of the director of the Schiller Institut: “It would be suicidal for Germany to follow up on derisking demands.”24
Derisking is the sugar-coated label with which the president of the European Commission has dubbed the Biden administration’s anti-Chinese decoupling.25 Taking Chinese FDI in Europe in the electric vehicle sector as its motivation, the Commission is launching a series of documents and first measures with a protectionist tenor in the name of “technological sovereignty” and “economic security.”26 To date, however, the attempt to introduce controls on all foreign investment in China from Europe as well, under pressure from the United States (those on chips, e.g. the Dutch ASML, are already active), has failed due to opposition from German industry.27 We will see more on this front, as well as for the arms industry.28
Viewpoints
In short, what appears to the proponents of Atlanticism to be a stable economic (and thus geopolitical) interdependence between the United States and Europe, pitted against the Eurasian sirens, actually conceals strong power asymmetries and competitive rivalries that are potentially harbingers of major clashes – including on the financial and currency fronts (see the Eurocrisis of the 2010s, largely brought about by the US financial offensive).29 In particular, German industry – while intertwined with the US market for both investment and exports – cannot give up its increasingly dense ties with the Chinese market. At the same time, the double-windowed East-West situation that it has enjoyed so far is closing. The shadow of anti-Chinese decoupling is stretching over Europe, inexorably.
Yankee capitalism remains the world market’s heart, a position it acquired following two world wars. Since then, it has only been able to halt, at most temporarily reverse, the relative slowdown of its accumulation by offloading the costs of crises and recoveries on rival state actors (enemies and “friends”) in different ways in different contexts: on Western European countries in the 1970s (dollar-gold decoupling and oil war), then on the Soviet Union (in the arms race of the second Cold War), then on Japan in the 1980s and 90s (imposed yen revaluation), and again on Europe in the aftermath of 2008. This is the function of US “super-imperialism.”30 It is now the turn of China, a country outside the imperialist camp whose accumulation has become essential to the stability of world capitalism. But the contradiction for Washington is between the need to pump surplus value out of this country (and the entire globe) and the risks of fragmentation to the world-system. And an eventual de-globalization, whatever form it may take, will also have to pass through the rekindling of internal rivalries within the West, and within the EU itself, something that can already be seen on the horizon.31 On the latter front, the novelty is that Washington now needs to contest or limit even the spaces previously left to (subordinate) European imperialisms, with no prospect of a short-term revival of accumulation for the benefit of “everyone” that could obviate the worsening conditions of the Western working classes.
Within Europe, the opposing forces are at an impasse, even when concerning those subjects and classes that would have the least interest in the course of war imposed by Washington. Along with the factors mentioned here, the European fear – not only that of the bourgeois sectors but also of the populations themselves, albeit only partly conscious – that without the NATO umbrella, and thus the toll to be paid to Washington, the Western privilege of widespread prosperity would hardly hold against the aspirations of the global South. But it is an increasingly heavy toll in terms of military spending, rising public debts and corresponding cuts in services, inflation and, not least, prospects for war.
Unless the situation spirals out of control – which cannot be ruled out – this situation can only be unblocked by the emergence of social mobilisation within some of the most significant European countries. The Ukrainian war, by setting the bar of damage to be forfeited higher and higher, could help trigger a reaction with, most likely, neo-populist (hence interclassist) and, hopefully, more anti-American traits. This would be even more the case in the event of a Kiev meltdown: a consequent political crisis within the current, “unreformable” European ruling classes would affect both the relationship with Washington and with the working classes as well as the very stability of the EU. We would, in that event, be well beyond the inconclusive euro/no-euro debates of a few years ago – focused on the responsibilities of Germany alone but blind to the strategies of the Anglosphere, which are far more decisive for the fate of the euro – and a little closer to the underlying nodes of the current world situation.
Crucial among these is the distance between the “reformist” message in favour of a different international order coming from the Global South, on the one hand, and the eclipse of trade union and political reformism in the West, on the other. An eclipse that is anything but contingent. At the same time, the possibilities of class conflict will turn out to be increasingly intertwined with world geopolitical events within the framework of the trend toward war imposed by a West in crisis. One thing seems certain: unless the Western countries and in particular the United States – the strong link in the imperialist chain – encounter serious economic difficulties and geopolitical setbacks, no meaningful class conflict can restart there. But in what forms, with what steps and possibilities of evolution it will be able to give itself is a question that at the moment cannot be sufficiently addressed.
Raffaele Sciortino is an independent researcher whose books include Obama nella crisi globale, 2010; Eurocrisi, Eurobond, lotta sul debito, 2011; Un passaggio oltre il bipolarismo. Il rapprochement sino-americano 1969-72, 2012 and I dieci anni che sconvolsero il mondo. Crisi globale e geopolitica dei neopopulismi, 2019. He recently published The US–China Rift and Its Impact on Globalisation (Brill, 2024) and his other English-language articles include "Pandemic Crisis And Phase Changes", "Neopopulism As A Problem: Between Geopolitics And Class Struggle", "Neopopulism As Geopolitics" (Interview with Nick Dyer-Witheford), and (with Emiliana Armano) "In memory of Romano Alquati". The article above, translated by Luhuna Carvalho, was written for Su La Testa in May 2024 and first appeared on sinistrainrete.info