“Olaf Scholz, Vice-Chancellor and Federal Minister of Finance, Germany, Plenary Session, Berlin, 8 July 2018” by oscepa
In the build up to Russia’s invasion of Ukraine, Western nations were clear on where they stood on the issue. Between funneling weapons into Ukraine to threatening severe economic sanctions, many EU and NATO members vowed to punish Russia. One country that has been largely absent from this strong and clear response is Germany, who seeks to mitigate the domestic risks that punishing Russia entails. This self-interested position risks harming EU unity at a time when it’s needed most.
Putin’s decision to invade Ukraine follows weeks of Western countries attempts to diplomatically avoid a war in Europe. This included German Prime Minister Scholz who last week stressed the negative consequences Russia would face if it invaded. However, the Prime Minister’s harsh rhetoric was relatively new, and follows weeks of ambiguity on how Germany would respond to Russian aggression in Eastern Europe. Over the past two months, the German government has refused to send military aid to Ukraine and has been recalcitrant to committing to a harsh sanction policy against Russia.
Now, as Russian troops fight to occupy Ukraine, Germany has changed its position. But why was Germany so slow to respond? There are arguably two main reasons for this response: fragile domestic politics and the economic linkages between Germany and Russia. These issues have put Germany in a bind over whether it should prioritize its national wellbeing or that of Europe as a whole. A problem that does not bode well for the future of the Union.
Problems at Home
Germany’s domestic politics are playing a big role in the country’s posture toward Russia. Less than two months into his inauguration, Prime Minister Olaf Scholz presides over a fragile coalition of three parties with big differences over foreign policy, especially in regards to Russia. The Christian Democrats (CDU) position is well known. Guided for 16 years by Angela Merkel, the CDU knows when to push for dialogue with Russia and when to go on the offensive. For the Greens, respect of human rights takes precedence over economic interests, while many in Scholz’s center-left SPD have a history of sympathy toward Russia, evidenced by former SPD Chancellor Schröder ascending to the board of Russia energy giant Gazprom. Aligning these differences is no easy task for a coalition government that is already struggling to meet its economic and public health targets in light of the Omicron wave. The difficulty of the task is compounded by the economic repercussions responding to Russia would have on the German economy.
Germany possesses the tools to economically punish Russia for its belligerent foreign policy. Yet, politicians in Berlin have illustrated a certain ambiguity in their willingness to penalize the Russian economy. At multilateral meetings, German officials have called for prudence on sanctions, and have been reluctant to cut Russia from SWIFT, the international banking payment program.
A likely reason for this foot-dragging is the negative impact an anti-Russian sanction regime would have on the German economy, especially as it applies to Germany’s energy market. For weeks, Germany was ambiguous over whether it would respond to Russia’s actions by halting Nord-Stream 2. Its recent decision to do so, comes after months of repeated warnings from US officials on German overreliance on Russian energy. While canceling the pipeline is intended to target Russian companies, it will impose a cost on German consumers who still face the last weeks of a cold winter.
The energy sector is just one of Germany’s linkages to Russia, the country exports roughly $30 billion worth of goods, making it the largest European exporter to Russia. Imposing sanctions will have a negative effect on German manufacturing, services, and households that are still trying to recover from the pandemic slump.
The Impact on the EU
The political and economic factors preventing a strong German response underscore the reality that the country seeks to mitigate the domestic risks associated with implementing a strong anti-Russia policy. This position presents challenges to the unity of the EU.
Germany’s economic prosperity and influence within the Union attributes to it an air of pseudo-leadership in Europe, making its lack of a strong response to Russia a source of frustration for other EU members. Eastern EU member states like Latvia and Poland are feeling the heat of Russian military activity, and many are taking note of Germany’s reticence. This fracture line is important as it reduces Germany’s influence in countries that are falling out of step with the EU on other, non security, related issues.
Take Poland as an example, where domestic judicial reforms have been rejected by the EU. These reforms, which are seen as anti-democratic, are preventing Poland from receiving billions from the EU’s recovery fund. Germany has previously played a role in healing rule of law issues between EU member states. But with Poland feeling slighted by Germany’s weak response to Russia, it’s hard to imagine German officials having the political capital to convince those in Warsaw to scrap the controversial judicial reforms.
Hungary offers another example. President Victor Orban recently traveled to Moscow to discuss increasing Russian gas imports into Hungary. When asked about the Ukraine issue, Orban provided nothing in the way of a condemnation of Russia’s actions. Any future EU attempts to economically decouple Hungary from Russia will invariably result in whataboutism. Given the current trajectory, it’s not unreasonable to assume Hungary may claim it was merely following a path set by Germany.
Forecast
In sum, Germany’s actions are risking its, and the EU’s, ability to maintain order within the Union. The EU must cooperate to face other upcoming challenges. Eurozone states will have to deal with issues of inflation as high spending and high commodity prices continue. The exodus of Ukrainians fleeing conflict will put a strain on countries’ social safety nets. All the while, cross border challenges like climate change and COVID continue to demand difficult policy decisions.
Germany’s strong economy and track record for effective governance make it best poised to develop the EU defense program and tackle new and evolving risks. Taking the lead on a European response to the Ukrainian crisis, given its influence within the Union, could provide Germany with the political capital to lead the EU to face future threats. However, it appears Germany’s inaction today could compromise the EU’s joint action tomorrow.
