Sep 12, 2022

Germany’s Flawed Debate about its Russia Policy

The bitter debate about Germany’s policy mistakes toward Russia has been misguided and inadequate. Nine points for a much-needed adjustment.

Bild: Feierliche Eröffnung von Nord Stream 1
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Ever since Russia invaded Ukraine on February 24, 2022, there has been a heated debate about Germany’s policies toward Russia, past and present. This discussion has suffered from a number of defects. For one thing, those who warned early on about Russian aggression now assume that the Russia’s attack was the product of inevitable historical development. Depending on who is telling the story, the process began when President Vladimir Putin took office, or when Russia annexed Crimea, or when plans were laid for a new gas pipeline, Nord Stream 2. This supposed inevitability seems questionable, to say the least. The discussion around German policy is also a prime example of “hindsight bias,” whereby people, knowing what they know in the present, assume that different policies could or should have been adopted in the past. But in truth, many decisions now being called for, especially in Germany, simply could not have been made prior to the Russian war of aggression.

The whole debate seems surprisingly ahistorical and incomplete. The discussion does not cover the full spectrum of Western positions toward Russia, but rather concentrates almost exclusively on gas, more specifically Nord Stream 2. But this leaves out some crucial aspects. This article intends to shed light on the motives behind the actions of leading politicians at that time. It aims to readjust and broaden the debate, making nine points in particular, based on close observation of major players in German federal politics over the last 20 years. But let me emphasize two things. I am not presenting an overall historical treatment of German-Russian relations. Nor am I evaluating any specific policy, particularly not the rights and wrongs of decades of Russian gas supply.

1. Sanctions rather than Military Action

For decades, the policy of the Federal Republic of Germany has been shaped by a desire to draw the correct lessons from German history, above all the Nazi era. This has entailed a particular stance towards the armed forces, with the use of force as a political last resort considered taboo within World War II’s perpetrator nation. The chancellorships of Helmut Kohl, Gerhard Schroeder, and Angela Merkel saw a gradual expansion of the Bundeswehr’s sphere of action—in the Balkans, in Afghanistan, and in Mali. But in recent years the willingness to undertake foreign missions has again fallen away, thanks in part to a broad consensus between the government and opposition. Previously, Germany’s tactic of choice in disputes like the one with Russia was cash transfers; these days it is primarily economic sanctions. Uniquely, in the case of Ukraine, this has been supplemented with a limited supply of weapons.

Skepticism about overseas military missions is not a uniquely German phenomenon. Doubts about the usefulness and positive effects of such missions have increased at least since the Libyan civil war. The Libyan war was intensified by the fall of Muammar al-Gaddafi in 2011, a development which was itself made possible due to Western military intervention. This led to Iran, Russia, and Turkey ultimately being given a free hand in Syria, since no country was now willing to stage a decisive military intervention there, not even the United States. The hasty withdrawal from Afghanistan in 2021 was a demonstration to the world of the West's newfound weakness.

The problem with this reluctance to act overseas is that it entails a certain helplessness in the face of foreign policy actors like Russia, who are willing and able to use military force to achieve their own goals. The problem is largely brushed over in the debate about Russia’s war in Ukraine, since it would raise uncomfortable questions, not least because it plays a key role in Putin's calculations.

2. Deterrence Found Wanting

Against this backdrop, it is unsurprising that the question of Germany’s military weakness has hardly been present in policy reappraisals, above all on Russia policy. Until 2014, the armed forces (the Bundeswehr) were not a priority for Merkel’s governments. After Russia’s annexation of Crimea that year, the defense budget was slowly increased. During the 2021 election and the subsequent coalition agreement, the Social Democrats (SPD) and the Greens continued to reject NATO commitments to spend 2 percent of GDP on defense. Eventually Chancellor Olaf Scholz did change course, launching a €100 billion “special fund” to reequip the Bundeswehr. But he only did this on February 27, 2022, three days after the Russian invasion of Ukraine.

New spending does not change the fact that Europe’s strongest economy is militarily weak and will remain so for the foreseeable future. This severely restricts politicians’ options for action and also affects direct military aid for Ukraine from the German armed forces.

3. Germany’s Nord Stream 2 Complex

Nothing has shaped Germany’s Russia debate as much as the argument over the building of the Nord Stream 2 pipeline. Critics see German reliance on Russian pipeline gas, and Nord Stream in particular, as a symbol of the country’s short-sightedness and political naïveté. With hindsight, the companies involved in the project now think it was wrong to invest billions in the pipeline, which they had hoped would bring more Russian gas to Germany and Western Europe. However, despite the warnings, a greater dependence on Russia and Putin leveraging the gas supply have not really happened. Putin attacked Ukraine before the pipeline went into operation, turning the entire project into a billion-dollar financial black hole. Germany's current problems with gas supply lie elsewhere.

Schroeder’s SPD-Greens coalition, which held office from 1998 to 2005, had already sought to put German and Western European dependence on Russian gas on a broader basis by supporting the Nord Stream 1 pipeline. Even after 2005, with Chancellor Angela Merkel at the helm, German political and business leadership did not regard Russian sales as the greatest danger to German industrial strength. They were more concerned about the Ukrainian transit pipeline, given Ukraine’s dilapidated gas network and the corruption in its energy sector. The issue was not widely publicized, however, because of friendly relations with Ukraine.

The pipeline debate at this time was by no means “naïve,” although neither the German government nor its individual ministries paid much heed to warnings from the United States, Poland, Ukraine, and others. These warning voices were regarded as influenced by their own energy interests, in particular the fears of Eastern European nations of becoming too dependent on Russian energy. After the outbreak of Ukrainian-Russian gas disputes in 2005, it was Berlin that strongly advocated supplying Eastern European countries with gas from Western Europe (“reverse flow”) or with EU-financed liquified natural gas (LNG) terminals, partly using Russian gas. Working with the European Commission, the German government ensured that Ukraine retained its transit contracts. Decades of experience led them to presume that Moscow would not renege on agreed gas deliveries to Western Europe, even in the event of political conflict.

On several occasions, including after work began on the pipeline in 2018, Merkel made it clear that there were a number of non-negotiable conditions for Nord Stream 2 to operate. These included a contractual agreement that Ukraine would remain a transit country and Russia would not use natural gas supplies as a political weapon. These conditions were laid down in a US-German agreement of July 2021, which also served to avoid possible extraterritorial US sanctions. Precisely this agreement was the basis for abandoning Nord Stream 2. Indeed, it might be said that Nord Stream 2 is evidence that Merkel’s government knew very well who it was dealing with in Moscow. Moreover, it was pointed out to the US government that Washington was also buying billions of dollars of Russian oil every year, purchases it only stopped in March 2022, after the Russian attack on Ukraine.

Putin’s invasion of Ukraine completely undermined Berlin’s deal on pipeline operations. The war, Western sanctions, and subsequent Russian countermeasures—including demands for payment in rubles—have led to a reduction of Russian gas deliveries to the West below agreed amounts for the first time in decades, and now permanently. In Germany, early demands for a stop to all Russian gas imports have given way to fears of shortages of Russian gas during the winter. Neither of these things has anything to do with Nord Stream 2.

4. The Relationship of Politics and Business

Yet another problem, possibly a deeper one, is also missing from recent discussions on Russia: the relationship between politics and business in Germany. The longstanding policy of many German governments—above all the center-right Christian Democrats and the pro-business Free Democrats (FDP)—has favored a free market economic model that keeps a certain distance between politics and business. The rise of China changed this debate, since it became apparent that even authoritarian governments could enjoy economic success, if they had a long-term strategy. Repeated tightening of Germany’s foreign trade law suggests that the Merkel government realized, if only gradually, that democracies must be able to defend themselves. This realization went against their own market ideologies, as well as the interests of individual companies.

Interest groups within Western market economies were confronted with a Chinese policy of directed expansion. Beijing’s policy had been decades in the planning and was oriented toward security interests. The shift was already clear in 2015 when China imposed temporary restrictions on the export of rare earths. On natural gas, leading figures within Merkel’s governments nowadays admit that they were late in recognizing the strategic significance of the country’s end-to-end supply chain. In retrospect, the key element in a structure of risky dependency may have been a decision made by BASF in 2015. In exchange for rights in the Siberian gas fields, the chemical giant granted Gazprom control of its distribution company Wingas, which includes Germany’s largest gas storage facility at Rehden in the north of the country. Incidentally, the decision drew very little public criticism at the time.

5. The LNG Paradox

It is not true that the liquified natural gas option was not discussed or examined in the years prior to the Russian invasion. Rather, LNG was considered politically undesirable, shunned because of its associations with the US fracking industry and because of human rights violations in Gulf states, another set of possible LNG suppliers. Even those now criticizing German policy had similar priorities until they were changed by Russia’s attack on Ukraine.

Moreover, even in 2021 LNG was not considered an economically attractive option, since it was more expensive than cheap pipeline gas. In 2018, Merkel spoke about co-financing an LNG terminal on the North Sea coast to the tune of €500 million. In 2017, Olaf Scholz, then the mayor of Hamburg, advocated for building an LNG terminal in Brunsbüttel, although his interest had more to do with fueling ship’s engines in the port of Hamburg than with providing heating for all of Germany.

But German energy companies like E.ON repeatedly rejected the plans, because LNG cost significantly more than pipeline gas, and buying from Russia was regarded as very safe by all parties. In addition, LNG landing terminals elsewhere in the EU already had considerable capacity, which at that time was only partly utilized.

Some Eastern European countries, including Poland and Lithuania, already have LNG terminals while Germany still does not. But the reason they do is because the European Union massively subsidized terminals in those countries after Russia’s annexation of Crimea in 2014 and the ensuing tensions. In other words, these developments were also subsidized indirectly by Germany. Given the availability of Russian, German, Norwegian, and Dutch natural gas, European Union law made state aid for terminals in a rich country like Germany far more difficult. It was only allowed in the case of acute external emergency. Huge government subsidies for LNG terminals in Germany have only become possible because of the Russian attack on Ukraine and the natural gas crisis that has followed in its wake.

6. The Search for Alternatives

In hindsight, everyone agrees mistakes were made in German energy policy. Who is to blame for that depends on the politics of whoever is speaking. There is no question that expanding renewables more quickly would have helped to reduce dependencies. But Germany would still have needed to import natural gas as a transitional fuel, given the country’s simultaneous phase-out of nuclear and coal-generated power.

The reason why large industrialized countries like Germany (not to mention Italy) consume a high proportion of Russian gas is not just because pipeline gas is cheaper. Replacements also had to be found for domestic and Dutch gas production, which was coming to an end. Fracking in Germany was seen as a political non-starter, thanks to deep-seated environmental concerns. There were numerous failed attempts to find alternative suppliers of gas. Contrary to what some critics claim, the increased proportion of Russian gas that Germany consumed in recent years was in no way a deliberate policy. Rather, it resulted from failed attempts at diversification.

During her time as chancellor, Angela Merkel made a series of official visits to resource-rich nations, including the Gulf states, Azerbaijan, Algeria, Egypt, and Angola. North Africa was seen above all as offering an alternative to Russian supply. Libya, for example, was a reliable supplier of gas, until it descended into civil war. Likewise, it was hoped that a nuclear deal with Iran would see it begin to pump gas to Europe via a pipeline through Turkey. But those political hopes, especially regarding Iran and Algeria, have since crumbled away.

There remains a basic lack of understanding in Germany about what producer countries need and will demand. While Germany is reluctant to invest in new gas fields on climate grounds, favored African partners like Senegal are calling for more investment in just that area. The net result is a reduction in the number of possible supplier countries. This number falls still further when German firms, unlike companies from other countries, prefer to forgo long-term contracts because of Germany’s intention to phase out natural gas in the medium term.

It was only the Russian invasion that changed the perspective of the political actors, creating new room for political maneuver. All of a sudden, investing in gas fields or buying LNG from the United States and Qatar were the lesser evils when compared to buying Russian gas. Opinion has changed, even in Berlin, even among the Greens. However, within the new Russia policy debate, it is not acknowledged that Germany is yet again solving its problems by throwing money at them. The fact is: Berlin is buying itself out of its dependence on Russian gas by outbidding others in the competition for LNG deposits on world markets. This is how these deposits are redirected toward Europe, causing supply problems elsewhere in the world, and driving an upward spiral of world energy prices.

7. Eastern Europe and Solidarity

German policy debates about its foreign and European policies are characterized by a desire for self-abnegation and self-flagellation. Criticism from outside the country is eagerly taken up as proof that German policy is wrong. One impressive example was the near-unanimous criticism articulated by Germany’s foreign policy experts when the Merkel government abstained on Western intervention in Libya at the UN Security Council in 2011. Germany will be isolated, was the experts’ confidently prediction. In fact, this never materialized. Instead, Libya sank into civil war and ceased to be a supplier of oil and natural gas to Europe.

Nonetheless we see the same kind of harsh snap judgments today. Opinion on Eastern European countries has changed with startling abruptness. Just a year ago, Poland was mainly seen as a problematic EU partner, driven by an ideologically-minded conservative and nationalist government led by the Law and Justice (PiS) party. Discourse was dominated by condemnation of Warsaw’s controversial treatment of its judiciary and media, as well as criticism of the anti-German resentment deliberately stirred up by some PiS politicians.

All this has changed radically since the Russian invasion of Ukraine. In Eastern Europe, fear of Russia dominates all policy discussions, quite understandably so given their geographical situation. But Eastern European nationalists who warned of Russian aggression are now seen as far-sighted prophets in Germany, wheeled out as key witnesses against Berlin’s supposedly failed policies. Discussion of this kind, however, tends to focus on gas, not on long-standing Polish warnings about Germany’s military weakness. And what is completely ignored are the domestic political motives that also underlie Polish criticism of Germany, as they do in all countries.

8. Realpolitik and Gray Areas

Since the end of the Soviet Union, there has been much debate over the direction in which the now-independent former Soviet republics were headed. Both NATO and the EU decided for eastward enlargement, incorporating the Baltic states and several former Eastern Bloc countries. The EU also launched its Neighborhood Policy for states with no foreseeable prospects of accession, including Belarus, Ukraine, Moldova, and the three Caucasus nations. The reluctance to admit these countries centered on geographical distance, unresolved territorial conflicts—in the case of Moldova, Armenia, and Azerbaijan—and populations divided over orientation toward the West or Russia, as in Ukraine.

In 2008, US President George W. Bush pressed for the swift accession of Ukraine and Georgia to NATO, but was blocked by Angela Merkel. (She was joined in doing so by many other European leaders, incidentally.) At that time, the basic consensus assessment was that there could be and would be no defense of countries like Georgia and Ukraine in the event of conflict. This view may now be open to criticism, and some may have repressed any memory of it, given the horror and outrage at the killings in Ukraine. But then as now, there was broad cross-party understanding—at least informally—that the West would not go to war with Russia, a nuclear power, over “gray zone” states like Ukraine. And Putin was very well aware of that. People in Germany do not care to speak about this Realpolitik position. But it was the position supported by the same political forces that are now calling for undivided solidarity with Ukraine. And the border of the NATO alliance remains the decisive one in conceiving of defense against Russian aggression.

9. The Story of Post-2014 Naïveté

There is a possible objection to all the above: “What about 2014?” After Moscow’s annexation of the Crimean Peninsula—Ukrainian territory—there should have been no more illusions about Putin in Germany. In fact, there were few illusions to lose, at least as regards the main political players in Germany. After she took office in 2005, Angela Merkel exhibited great skepticism toward Putin; she is a native of East Germany, where he served for many years as a KGB officer. Putin’s return to the Russian presidency in 2012 put paid to any hope for reform in Russia. For the main political players in Berlin—including among the Social Democrats—the question now was how to deal with an increasingly authoritarian regime in Moscow, but one whose cooperation was needed on issues from climate protection to Iran. In 2014, the German chancellor openly accused Putin of lying to her about the occupation and annexation of Crimea.

The Ukraine crisis of 2013-14 is now subject to considerable distortion, as far as figures like Merkel or German President Frank-Walter Steinmeier, who served as foreign minister at the time, are concerned. Both Merkel and Steinmeier were firmly committed to the Minsk agreement between Ukraine and Russia, regarding it as an attempt to at least prevent any further escalation. This was necessary given the political turmoil in Ukraine and the weakness of the Ukrainian armed forces at that time. They preferred freezing the conflict in eastern Ukraine over an all-out war that would result in tens of thousands of casualties; it was this assessment that prompted their insistence on the Minsk agreement and the Normandy Format talks, which brought together Russia, Ukraine, France, and Germany, in the years that followed. Russia’s annexation of Crimea was not legitimized, nor was the secession of Ukraine’s eastern provinces. What remains entirely overlooked is that, at this time, Germany was a leading advocate for EU sanctions against Moscow, alongside various Eastern European states. With hindsight, critics complain that limited sanctions did not act as a significant deterrent to Putin; even if that is the case, it was probably impossible to achieve more within the European Union as it was then. Even the six-monthly extension of sanctions required a significant political effort every time.        

Andreas Rinke is chief correspondent for Reuters news agency in Berlin.

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