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29 January 2023

Germany, isolated once more

Olaf Scholz has finally yielded to pressure to send Leopard 2 battle tanks to Ukraine. But don’t think for a moment that he is changed position. He is doing the minimum he needs to. He signals loud and clear that he is the reluctant partner in the western alliance. I expect to see same pattern when we will discuss the next round of tank deliveries.

I hear people arguing that Scholz is surreptitiously supporting Russia while pretending to support Ukraine. We can never be sure what is going on in Scholz' head. We do not know whether he is lying, follows a hidden agenda, or whether he is simply weak and inconsistent. Assuming the worst is a reasonable reaction when actions and words do not match. What we do know for sure is that he an unreliable ally.

From a German domestic perspective the unfolding events present themselves differently. The German media acknowledge that he has a communication problem, but they don’t write much about Germany’s diplomatic isolation. The country has a long history of fence-sitting in international conflicts, dating back to the cold war. This is not just a political preference. It is a business model. Scholz and his SPD are the main representatives of what I call the Neo-Mercantilist model - one that seeks to maximise export surpluses. Neo-Mercantilism also defines your foreign policy. Angela Merkel was the quintessential representative of the Neo-Mercantilist period. Her political masterstroke was to resign just when it ended.

Scholz, who also stands in the same tradition, is not so lucky. Many German companies have made strategic investments in Russia, and built personal relationships and friendships with Russians. I have been told that German chief executives are leaning heavily on Scholz, and are pushing for a peace agreement between Russia and Ukraine at any price. The last thing they want is for Ukraine to win the war with the help of German weapons. They would be only happy with a dirty deal that resets German-Russian relations to the status quo ante, and that lends them with lucrative commercial deals to rebuild Ukraine. In time-honoured tradition, they want to business with both sides, as they did in the past. The problem for them is that the German government is not powerful enough to decide the outcome of the war.

I once called the German-Russian relationship the most strategic relationship in the whole of Europe - more strategic than any bilateral relationship inside the EU, including that between Germany and France. German-Russian relations have a very long history. Culturally, Berlin feels closer to Moscow than to London or Paris. The only deep political friendship Gerhard Schröder, the former German chancellor, ever struck was with Vladimir Putin. Their families went on holiday together. Relations were less personal under Angela Merkel, but commercial ties deepened during her long period in office not least through the two Nord Stream gas pipelines and many bilateral commercial deals. The St. Petersburg economic forum was a Davos-style annual calendar event for the German and Russian business and policy elites.

All that ended when Russia invaded Ukraine last February. In response, Scholz cancelled the Nord Stream 2 pipeline and promised a change or era in German security policy. But he did not deliver. Over the course of the last year there were increasing reports that his office vetoed arms deliveries to Ukraine. The whole Nord Stream 2 saga has driven a wedge between Germany and eastern Europe, which is much more eager to help Ukraine. I have never seen the bilateral relations as bad as they are now.

The US is also irritated by Germany’s clumsy diplomacy. On top of this, Scholz also managed to fall out with France, Germany’s most important ally in the EU. The latter is possible the most serious.

A year ago, Scholz committed an extra pot of €100bn to defence spending to make up for under-investment in the previous decade. Emmanuel Macron mistakenly assumed that this spending would help fund joint European defence projects. This was not so. Scholz decided to buy Israel’s Arrow 3 missiles for a European air defence system and US Lockheed F-35 fighter jets. Merkel agreed with Macron’s idea of European strategic autonomy from the US although she never spent any political capital on this idea. Scholz does not even pretend to be interested.

I would describe Macron’s current attitude towards Germany as one of incomprehension. This is not the Germany he thought he knew. I often find that the French and Germans tend to have an idealised vision of each other. Last Sunday, France and Germany celebrated the 60th anniversary of the Élysée Treaty, a bilateral friendship pact. Everybody came together, but political reality could not be more different than those self-congratulatory images from the event. It is, of course possible that Scholz is eventually succeeded by someone ready to invest in the relationship with France, and with eastern Europe. But by then, Macron may no longer be in office. It is unsurprising that he is rediscovering the Franco-British relationship, and the Franco-Spanish relationship as anti-dotes.

The consequence of the Franco-German diplomatic fallout is a strengthening of nation-state politics everywhere in Europe. If France, too, turn nationalist, it would benefit Marine Le Pen. Her hostility towards the EU is matched only by her hostility towards Germany. If she were to succeed Macron as president, it is not hard to conceive of a political alliance between right-wing governments in Europe that define themselves in their opposition to Germany.

For Germany, and the EU, this would be the next geopolitical disaster, another one they didn’t see coming. The legacy of Scholz' first year in office is a series of broken promises and fractured relationships.

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