The German economy has delivered less than expected over the last month. After all the necessary evaluations were revised, 2014 growth expectations were downgraded, as well as 2015's. Basically, the Russian embargo has played only a small role in the slowdown of the economy, but all in all trade with Russia encompasses only a small percentage of German foreign trade. Russia remains the 11th biggest destination for German exports (around 3 percent of the total) and said exports shrunk only 15 percent in the first half of the year.
The real deceleration has been caused by the swift and continuous regression of the demand in major European economies. German exports go for 40 percent of their value in other EU markets. France, Italy and the Netherlands remain major outlets for the German industry. The latter group has experienced slow growth and the German economic engine has started to slowly misfire. This does not seem to have pushed Chancellor Angela Merkel into changing her attitude regarding "austerity" policies that are supposed to "sanitize" other European economies. But something somehow has to be done, because the German economic strategy did not create growth, consequently slowing employment while time continues to get shorter and shorter.
With regards to the Turkish economy, even The Economist, which is not known for its blatant sympathy for Turkey and its government, has come up with the analysis that despite a relatively high inflation rate and current account deficit, growth will remain steady with no bottleneck in sight. This is mainly due to the reasonable level of major energy commodities. There is a very visible political problem there: the European Union should enhance its commercial and economic ties with Turkey, this is blatantly evident. Not just in the interest of the German economy - Turkey accounts for only a tiny part of German exports - but there is no other country whose economy and stability can become a growth engine for a huge region encompassing the Balkans, the Caucasus and the Middle East. Instead, Turkey is kept at arm's length during the Transatlantic Trade and Investment Agreement negotiations between the U.S. and the EU.
The energy transportation alternatives have acquired vital importance ever since the Ukraine crisis. All the alternative ways, excluding Russia, to transport gas and oil to the EU involve, either totally or to some degree, Turkey. This is true for the Azeri gas, this is true for the Iranian gas and oil, and this is truer for the Northern Iraq Kurdistan energy exports. But this is also very true for prospective Israeli gas and even more prospective Cypriot gas.
The trouble is that the energy chapter cannot be opened between the EU and Turkey because of… Southern Cyprus. This administration has proven time and again its deep commitment to Russian politics, still it can successfully block negotiations between Turkey and the EU, only to the advantage of Russia. This is very detrimental not only for the Turkish economy, but also for the EU Single Market, standing by its biggest economic power, Germany.
Is it really so difficult to see the big picture? Is a small, failed country blackmailing everyone in Europe, except Russia, blocking very important economic channels? That is the crude reality, and it is a lose-lose situation.