The German government imposes war costs on the working class

If the German government has its way, the working class will pay the cost of its participation in the Ukrainian war and the biggest rearmament program since Hitler with mass poverty and the loss of hundreds of thousands of jobs.

PCK refinery in Schwedt (Photo: Ralf Roletschek/Roletschek.at)

Decades of social cuts, the enrichment of the financial oligarchy as well as the explosion of inflation and inhumane pandemic policies have already led to an unprecedented social crisis.

In its latest issue, The Spiegel poses the anxious question: “Is Germany going to the barricades?” “Food and fuel prices are rising, heating is becoming more expensive, the social crisis is reaching its climax,” the article said. “Low-income groups are particularly affected.” What is different is that “acute social need is increasingly catching up with new population groups. Not just those who go to the food bank. In the meantime, things are getting more complicated for people who have managed to make ends meet with their money so far: single parents, single wage earners, retirees, students.

The sanctions with which Germany and the EU are trying to ruin Russia economically are exacerbating this social crisis. They affect not only the Russian people, but also those of Germany and all of Europe. The consequences of sanctions are being dumped on the working class, while energy and armament companies are swimming in money and the danger of World War III grows.

The European Commission is finalizing a sixth sanctions package against Russia, which will see a complete ban on imports of crude oil and petroleum products from Russia by the end of the year. Only Hungary, Slovakia and the Czech Republic will be subject to longer deadlines. The embargo became possible because Germany gave the green light. A year ago, the EU still bought a quarter and Germany up to 35% of its oil imports from Russia.

The economic consequences of the embargo are devastating. Economists agree that this will further fuel inflation, which is already at 7.4%. Last March, when talks of a possible embargo pushed the price of oil to $140 a barrel, Gabriele Widmann, commodity expert at Dekabank, warned in an interview with the RTL/ntv television channel “In extreme cases, we may have to pay up to three euros per liter of fuel. Cheap energy from Russia is now a thing of the past, he said. Motorists should get used to diesel and petrol prices above €2 per liter in the long term.

However, the price increases are not just affecting gasoline, fuel oil and other petroleum products, which have already become horribly more expensive, hitting low- and middle-income households particularly hard. Since oil is also used as a raw material in the chemical, pharmaceutical and other industries and the price of energy determines the costs of transport and production in all sectors, prices there are also increasing. Food is becoming increasingly expensive due to rising fertilizer and transportation costs. Energy-intensive industries such as steel and glass production are threatened with collapse.

The east of the country, whose oil supply, dating back to the time of the former German Democratic Republic (GDR), is totally dependent on Russia, is particularly affected. The PCK refinery in Schwedt an der Oder, on the border with Poland, for example, is threatened with complete closure. This would directly destroy 1,200 jobs and indirectly thousands more in the structurally weak region of northeast Brandenburg.

The refinery began operations in the GDR in 1960, and from 1963 to the present has processed oil from the 3,000 kilometer long Druzhba (Friendship) pipeline, which goes to the Ural region. It is technically equipped to handle heavier Russian oil. Switching to other types of oil, which would have to be transported by ship from the Polish port of Szczecin, would be very expensive. Moreover, the majority owner of the refinery, the Russian oil company Rosneft, would probably not be interested in such investments.

The second East German refinery in Leuna (Saxony-Anhalt) is also used to process crude oil from the Druzhba pipeline. Each year, Schwedt and Leuna processed up to 12 million tonnes. However, at the Leuna refinery, which is owned by the French energy company TotalEnergies, a technical change is considered easier.

If both refineries cease production, all petroleum products would have to be imported from West Germany, which would make prices much more expensive and put many other jobs at risk. The East Brandenburg Chamber of Commerce and Industry warns that if the refinery in Schwedt no longer supplies raw materials for further processing, road construction, the chemical industry and plastics processing will be affected.

Brandenburg’s Economy Minister Jörg Steinbach (Social Democratic Party, SPD) said that Schwedt “supplies northern Germany, BER airport and parts of western Poland with diesel, in gasoline and paraffin. Without PCK, there would largely be a stalemate there. State Premier Dietmar Woidke (SPD) warned that a sudden oil embargo “would have catastrophic regional effects which we cannot in any way cushion in the short term”.

Deutsche Welle reported on the mood in the city: “I know from my friends who work in the factory that they are scared for their jobs,” the broadcaster quoted a young woman as saying.

“Closing the refinery would not only be terrible news for the people who work there, but for the whole town,” said the owner of a small grocery store. “We are talking about thousands of employees from the factory and from various suppliers, and many of them are my regular customers. If they leave to look for work elsewhere, I can close my shop.

The federal government has promised help, but it is absolutely unclear how it will happen. Schwedt is directly affected by the oil embargo, but not a day goes by without other indirectly affected companies announcing massive layoffs.

For example, detergent manufacturer Henkel (Persil, Schwarzkopf, Schauma, Pattex, etc.) announced 2,000 job cuts. The reason given was the increase in raw material prices by more than 20% and the withdrawal from Russia, where the company operated 11 production sites.

Far more devastating than the oil embargo would be a gas embargo against Russia, which Germany and the EU are also pursuing in the longer term. It is also possible that Russia will react to the oil embargo by turning off the gas tap on its own initiative.

The Leibniz Institute for Economic Research Halle (IWH) has calculated the consequences of an immediate shutdown of Russian gas supplies. According to this, the economy would contract by 2% in 2023, the net domestic product would fall by 200 billion euros, which would correspond to the loss of 2.7 million jobs.

The German government and the EU justify the oil embargo by saying that “Putin’s war chest” should not be financed. But that hides the real reasons.

The official narrative that NATO defends freedom and democracy in Ukraine against an imperialist aggressor is false and misleading. In reality, he is waging a proxy war in which the Ukrainian population is used as cannon fodder.

The Russian attack on Ukraine is reactionary and must be rejected. But it was systematically provoked by NATO – through the wars in Yugoslavia, Iraq, Afghanistan, Libya and Syria, which were contrary to international law and with which the United States wanted to ensure its world domination, and through the systematic advance of the strongest and most aggressive military alliance forces in the world towards Russia.

NATO has not only provoked the war, it is doing everything to prevent a ceasefire and a negotiated peace. He floods the country with weapons and supports the Ukrainian army with advisers and intelligence. Its goal is the complete defeat of Russia and a regime change in Moscow to gain unhindered access to the country’s vast landmass and precious raw materials. Geostrategically, the war against Russia serves to prepare for a war against China, which the United States and the major European powers consider their main economic and political rival.

Economically, the consequences of the oil embargo for Russia are rather minor. Although many Western traders stopped buying oil from Russia in April, the country shipped more oil than usual. India, which urgently needs it, has bought large quantities. Thanks to the high price on the world market, Russia was even able to give discounts without incurring losses. Although the EU wants to ban tankers flying the flag of an EU member state from carrying Russian oil, this will have little effect.

The real reason for the oil embargo is that Germany wants to untangle and reorganize its global economic relations, as the former editor of the financial daily put it HandelsblattGabor Steinart, said it – to make a world war “manageable”.

“Anyone who wants to make world war manageable must first unbundle world trade,” Steinart stressed in his Pioneer Briefing. “Economic independence is more important than more billions for the Bundeswehr (Armed Forces). Thus, it is not only the soldiers and their military equipment that must be gathered in an offensive formation, but also the economic resources.

Since the 1970s, Germany and the Soviet Union – and from 1991, Russia – have maintained a so-called privileged partnership, centered on energy relations. Germany began to break with this as early as 2014, when together with the United States it backed the right-wing coup in Kyiv. Today, as in 1914 and 1941, it again uses military force to pursue its imperialist interests in the East.

To do this, the German ruling class must also declare war on the working class, which must bear the costs and burdens of militarism, while the arms and energy companies and other profiteers enrich themselves from the war and high energy prices.

Shell announced record profits on Thursday. The oil giant earned $9.13 billion in the first quarter of 2022, up 43% from the same period last year. BP posted a quarterly profit of $6.2 billion, up 138% from $2.6 billion a year earlier. BP CEO Bernard Looney called the energy market a “slot machine”. Exxon Mobil, Chevron and TotalEnergies also announced multi-billion profits. Their shares rose an average of 58% last year.

Only the defense industry has done better. Shares of German arms company Rheinmetall have risen 150% since the start of the year.

It’s time to put an end to this madness. The struggles against wage theft, social cuts and war must be united in a powerful movement of the international working class fighting to overthrow capitalism and build a socialist society.

James R. Rhodes