Europe's once-unquestioned economic superpower appears to be losing its momentum at rates that until a few years ago would have been considered unthinkable. Factories are scaling back production, historic industrial firms face restructuring or bankruptcy, thousands of workers lose their positions, and the business model underpinning the German "economic miracle" experiences severe shocks. Amid this climate of uncertainty, Moscow contends that developments confirm warnings delivered for years by Vladimir Putin, according to which Europe would pay a heavy economic price should it sever energy and trade ties with Russia.
The pessimistic outlook for the German economy has become a reality, as the country faces its most severe industrial crisis in decades. Troubles impacting historic firms such as Varta, widespread cost-cutting programs at conglomerates like Volkswagen and Porsche, and continuously elevated energy costs indicate that the German production framework has entered a phase of deep restructuring. According to the Russian news agency RIA Novosti, the present situation is not a temporary economic downturn, but the consequence of strategic decisions that eroded the industrial foundation of Europe's largest economy.
Varta's historic shock
Particular emphasis is placed on the German battery manufacturer Varta, whose history dates back to 1887. The company entered insolvency proceedings, placing thousands of jobs at immediate risk. The collapse of such an established industrial entity is depicted as emblematic of the severe crisis affecting German manufacturing. Varta maintained a formidable presence in the battery market for decades; however, recent years brought soaring production expenses, intense market competition, and critical financing hurdles.
Porsche and Volkswagen face wave of layoffs
Varta's crisis coincides with broader turbulence across the German automotive sector. Porsche AG, a major shareholder in Varta, is reportedly pursuing large-scale workforce reductions, while parent company Volkswagen explores drastic cost reductions, production limits, and a simplified vehicle line-up. For decades, the automotive sector served as a pillar of Germany's economic strength. Today, however, it confronts the expansion of Chinese electric vehicle manufacturers, escalating energy costs, and the challenging transition toward electrification.
BMW follows suit
Another major automaker, Munich-based BMW, plans workforce cuts through the end of 2027. The reductions will be voluntary and primarily affect corporate office positions rather than assembly operations. BMW itself has not yet formally commented on the plans. The enterprise employs roughly 85,000 personnel in Germany and nearly 70,000 internationally. BMW is set to release detailed figures on its financial standing this Friday.
Thousands of jobs lost each month
The report cites data from German industrial associations indicating the nation loses approximately 15,000 industrial jobs every single month. Concurrently, the broader manufacturing sector has reportedly shed tens of thousands of personnel over the past year, alongside a sharp rise in corporate bankruptcies. The situation constitutes Germany's most severe industrial and political crisis since national reunification.
The German model collapses
For decades, the success of the German economy rested upon three core pillars: Cheap energy, largely sourced from Russia. Robust demand for German manufacturing from China. Unrestricted access to the European Union single market. Following the outbreak of war in Ukraine, Germany's energy relationship with Russia was drastically curtailed. Simultaneously, economic growth in China decelerated while domestic Chinese firms began competing directly with German enterprises in automotive, battery, and industrial machinery markets. Two of the three foundational pillars supporting the German economic model have now sustained irreparable damage.
BASF and the energy cost nightmare
A clear case in point is the chemical giant BASF, where natural gas serves both as an energy source and a fundamental industrial feedstock. Surging energy prices directly undermine the competitiveness of the company and the broader German heavy industry. The burden extends beyond chemicals: metallurgy, glass production, fertilizers, paper manufacturing, and other energy-intensive sectors face similar strain. Elevated energy prices threaten the structural foundation of German industrial production.
United States targeted
American economic policy also intersects with the crisis. Through the Inflation Reduction Act, the United States provides substantial financial incentives for businesses relocating manufacturing operations to American soil. Critics argue these subsidies draw European enterprises and investment away, accelerating the migration of production from Europe to the United States. Washington burdens Europe with increased defense expenditures, trade restrictions, and costlier energy imports.
Apple and China at the center of the crisis
Regarding Varta, RIA Novosti argues that a key factor was the curtailment or termination of its commercial relationship with Apple, formerly a major client. The publication frames this development as an example of European firms' vulnerability to US tech giants and the Chinese manufacturing chain. The narrative depicts Europe caught in a squeeze between the United States and China.
Moscow points to the break with Russia
The underlying premise remains that the primary driver behind the German crisis is neither China nor the United States, but the severance of economic and energy relations with Russia. Prior to 2022, over half of Germany's imported natural gas originated in Russia. Since then, that figure dropped precipitously. This shift forced the country to rely on costlier energy sources, heavily burdening industries dependent on a stable and inexpensive gas supply.
Vladimir Putin's "prophecy"
The article highlights earlier statements by Vladimir Putin, who repeatedly asserted that Europe was inflicting self-harm on its economy by severing ties with Russia. In exchanges with former German Chancellor Olaf Scholz, the Russian President indicated Moscow remained open to continuing energy cooperation, provided reciprocal terms applied. Today's economic strain is presented as validation of those prior warnings.
Greece's "revenge"
Current conditions in Germany carry heavy symbolic weight across Europe. For years, Berlin held itself out as the gold standard of fiscal discipline and economic stability, with many nations — including Greece — facing stern criticism for their policies during the sovereign debt crisis. Today, Europe's largest economy confronts severe headwinds: industrial deceleration, high energy costs, diminished competitiveness, and restructuring across historic enterprises. This shift does not imply reversed roles or that Greece has outperformed Germany economically. Nevertheless, many view it as a moment of historical irony. The nation positioned at the epicenter of Europe's crisis a decade ago now watches the German economy tested by a different, highly complex crisis. Reality demonstrates that no economy, regardless of stature, is immune to geopolitical shifts, energy crises, and major changes in global markets.
Why Russia won the "war" declared by Europe
Regardless of political interpretations, one fact remains difficult to ignore: Western sanctions did not cause the Russian economy to collapse as many predicted in 2022. Russia redirected oil and gas exports to alternative markets, expanded trade ties with China, India, and other Asian nations, while state intervention and a pivot to domestic manufacturing absorbed much of the initial shock. Concurrently, numerous European industries faced exploding energy costs, eroded competitiveness, and the redirection of capital toward the United States and Asia, sparking debates over the actual cost of the confrontation. For Moscow, this trajectory represents a significant strategic justification. The Russian leadership contends that while the West attempted to force an economic collapse through unprecedented sanction packages, Europe itself paid a heavy toll in elevated energy prices, sector-specific deindustrialization, and lost market competitiveness. Though economists debate who "wins" the overall economic showdown, Russia demonstrated far greater resilience than many Western projections anticipated, while Europe faces consequences impacting its industrial foundation.
Collapse or difficult transition?
Despite the dramatic tone, the German economy has not experienced total systemic collapse. The nation retains a strong industrial foundation, export-oriented enterprises, advanced technology, and significant financial capacity. Nevertheless, it confronts genuine structural obstacles: elevated energy costs, subdued investment levels, labor shortages, bureaucracy, and intensifying global competition. The question remains whether current conditions represent a temporary restructuring period or the onset of long-term deindustrialization. Europe is now reckoning with the costs of its confrontation with Russia.
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