Mathew D. Rose: Hubris and Nemesis In Germany – Volkswagen, Refugees, and Football

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By Mathew D. Rose, a freelance journalist in Berlin

It was Nick Shaxson, a Brit, who brought me into the fold. I had been complaining that being a skilled forensic journalist is a fine thing, but facts only tell half the story. Reproducing reality, as far as we can get near it, is an exercise in understanding and interpreting. This is however not the sort of stuff that current commercial journalism wants. Myths are more in demand these days.

Nick however introduced me to Naked Capitalism and Yves, with the simple instruction: “If you want to do that sort of stuff, this is the place”. In my pieces for Naked Capitalism I have tried to make current affairs in Germany comprehensible for people outside of the country (in the meantime within Germany, as most of my pieces for Naked Capitalism are reproduced in a prominent German blog). There may have been moments where I was too polemic or emotional, but Yves has given me a free hand to develop my ideas, for which I am very grateful.

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Hubris, Nemesis and Germany

What do the recent Volkswagen scandal, the current refugee crisis in Europe and the Football World Championship of 2006 have in common? They are all excellent examples of an inherent German Hubris, excessive self-confidence resulting in the loss of contact with reality, usually ending in Nemesis, with dreadful consequences.

Most Germans are rightly proud of their nation’s engineering skills, especially in the automobile industry. The manufacturing of cars has become the backbone of the German economy: it is responsible for five percent of the nation’s jobs and the automotive industry is the leader in almost all economic categories in Germany: investment, exports, research and development, buyer of goods and services from other sectors to name just a few.

With their prestige and economic clout, car manufacturers in Germany have become a law unto themselves. They have easy access to the corridors of power. The automakers reward obsequience and service with munificence towards political parties and individual politicians. The German government has sidelined employees in its ministries critical of the car manufacturers and has become the chief booster for the industry at the EU, watering down environmental legislation unfavourable for the car makers and defeating or delaying the implementation of more stringent standards. It is of no surprise that the chief lobbyist of the car industry in Germany is a former transport minister of Chancellor Merkel’s Christian Democratic party and many of the industry’s lobbyists are drawn from the predominant Christian and Social Democratic parties. Two have been recently drafted in by Volkswagen and Daimler (Mercedes-Benz) from Chancellor Merkel’s close staff.

That the official emissions levels of German cars have nothing to do with reality is a well-known fact. Major European cities such as Paris are considering a ban on diesel-powered cars to fulfil the air quality guidelines set by the EU. In Germany the automobile club, ADAC, environmental groups and the International Council on Clean Transportation, an independent nonprofit organization, have been railing against the official figures concerning fuel consumption and emissions, conducting their own real driving condition tests for up to a decade. The official figures for emissions were not relatively close to reality. Although they could never prove it, these groups assumed that “defeat devices” were in use. Neither the German government nor the EU was interested in the truth. EU officials, experts and scientists received generous salaries from taxpayers to do nothing about the matter.

All the while Volkswagen propagated its myth of a high-performance, environmentally-friendly diesel motor at a competitive price – at the cost of our health. This was a blatant failure of its diesel engine development. Conforming with environmental standards, which would have required using Daimler’s technology, would have damaged Volkswagen’s engineering reputation and profits, at a time when the company was aiming to become the largest seller of cars in the world.

Germans are very fond of superlatives and being clever sort of chaps – much cleverer than the rest of us – and having the German government as their lobbyists, they simply broke the law. If some of us die a bit earlier due to air pollution, which has become one of the major causes of death in Europe, what sort of value does that have in comparison to the success of Volkswagen and Germany being “World Export Champion”?

One must assume that the competition, BMW and Daimler, had looked into Volkswagen’s “unique” diesel technology and discovered how they lied their way to success. One must ask why neither competitor blew the whistle enabling them to sell more of their own diesel powered cars? The answer probably lies in the fact that they are using similar technical legerdemain to achieve the proscribed standards.

There will be few and potentially no consequences for Volkswagen in Germany or the EU. Ms. Merkel will take care of that. Already the next Volkswagen myth is in the making: Just a handful of technicians knew about the defeat device and that in a company that has always prided itself in its engineering hands-on management. Yes, there will be enormous fines from the US. However what the German elite fears most is the possibility of German managers ending up in American jails. One must understand that managers – and high ranking politicians – are above the law in Germany. They are well and truly too big to jail. The few exceptions have unique reasons. The German justice system will be doing all in its power to prevent the extradition of Volkswagen employees.

Then there is the Willkommenskultur, which has morphed to a Not-So-Willkommenskultur. Following the public relations fiasco with regard to Greece, Ms Merkel sought to regain the moral high ground, declaring Germany’s willingness to take in all refugees from Syria who sought a place of safety.

While this is a praiseworthy decision, Merkel left one important element out of her calculation: the German people. Many, probably the majority, are not pleased. Realising her miscalculation, the chancellor tried to pressure Eastern European countries to close their borders as well as accept refugees like the Germans, so that her decision would appear to be a sort of EU initiative. Having just seen how the German government had dragooned the Greeks, East European leaders like Hungary’s Viktor Orban knew they would be stuck with the refugees and had no desire to pay the bill for Ms Merkel’s gesture of humanitarianism. In the perverse version of the game of hot potato, Ms Merkel was clearly going to end up with the refugees when the music stopped.

It is not as if Germany cannot cope with a “flood” of refugees. It is a wealthy nation with an excellent infrastructure. Of course there will initially be logistical problems. There always are in a crisis or during a natural disaster. The Germans are however excellent administrators and will get things under control rather quickly. The situation is of course not being helped by years of austerity, which has eroded many state services. Add to this Wofgang Schauble’s dogmatic insistence that the costs of the refugee crisis cannot ruin his balanced budget resulting in a deficit. Apparently there is such thing as a free lunch.

The greatest difficulty, however, is the latent but inherent racist ideology that has been an integral part of Angela Merkel’s Christian Democratic Party and its sister party the Bavarian Christian Social Union. Now Merkel is currently trying to fulfill two roles simultaneously: the German chancellor who demonstrated Germany’s new found humanitarian quality and welcomed the refugees and the German “Iron Chancellor” who demonstrated that she could stop the hordes of foreigner from flooding in.

To solve this conundrum Ms Merkel is currently courting Turkey’s up and coming dictator Recep Erdogan, while the EU is offering him billions of Euros and loads of concessions to close his border for refugees. Merkel has even made an unexpected journey to Turkey to appear with Erdogan, who is facing election in a couple of weeks. There she declared: “I believe that Turkey will have a fair and free election,” and that in a country in the midst of a civil war, while the offices of opposition parties being ransacked and the media is being massively intimidated by the state.

Even Greece has amazingly received offers of German financial aid, of course with the condition of sealing its borders for refugees and terminating its herculean humanitarian effort of assisting 500,000 refugees this year, despite its current financial crisis. Thus Merkel can claim to have opened Germany’s gates for Syrian refugees, at the same time making sure that none make it that far. That, like the disgraceful handling of Greece, appears to be the sort of leadership that Germany is offering Europe.

Last but not least, there have been some long overdue questions raised concerning how Germany won its 2006 bid for the Football World Cup. The decision to award the tournament to Germany had occurred under extremely suspicious conditions, as a decisive official from New Zealand simply disappeared shortly before he was to cast the deciding vote, giving Germany the edge. As we all know, since the days of Adidas founder Host Dassler, who corrupted both the International Olympic Committee and the World Football Federation (FIFA), the right to host the Olympic games of the football world cup has been won by purchasing the votes of sport functionaries. For the Germans, the only exception was of course the 2006 Football World Cup, as Germans do not do things like bribing officials. Corruption is, in their opinion, something that is rampant in developing nations or southern Europe, but not in Germany.

Now Jens Weinrich, one of Europe’s great investigative sport journalists, has uncovered what appears to be a €6.7 million slush fund, most likely used by German football officials to bribe FIFA officials to vote for their bid. The money was apparently lent to them by a former Adidas chief executive. As the millions were to be paid back, the money apparently had to be laundered, as the bidding committee was required to publish its financial dealings. To cover up this major expenditure the German bid committee transferred exactly the sum of €6.7 million to FIFA to finance the traditional show at the opening ceremony. This transaction, however, was mysteriously cancelled. The German bid committee never asked for their money back. Yet FIFA however then transferred €6.7 million to the former Adidas manager. While the German football federation is threatening to sue Weinrich, his publisher, the news magazine Spiegel, and others, there has been no explanation of why the bid committee had never requested a repayment of €6.7 million from FIFA for an opening ceremony that never took place.

The next moment of nemesis could be the German economy. Germany’s economy, which has thrived by exporting much more than it imports, may soon be caught up in the worldwide economic slowdown. What use are exports if no one can buy them? If one looks at Germany’s most important trade partners outside of the EU, most of them are experiencing serious economic slowdowns (China, Russia, Turkey, Japan, Korea, United Arab Emirates, Brazil, and Mexico). Considering that the rest of the EU has adopted Germany’s strategy of exporting their economic crises, it is likely that the EU, especially Germany, will be next in the row of falling domino tiles. Then we shall see what years of austerity have really brought Europe.