Geoeconomics and German-Russian Relations

A special review of German foreign policy. Is it driven solely by economic interests? To what extent do values contribute to the debate? What are the implications for Germany's eastern neighbor, Russia?

Background and Framing the Shift

For Germany the United States are indispensable, yet Russia irremovable.

This quote from Egon Bahr, chief of staff of former German chancellor Willy Brandt and mastermind behind Ostpolitik, says a great deal about German-Russian and German-American relations. In Germany, Russia, and the Rise of Geo-Economics, Stephen Szabo demonstrates how Berlin maneuvers between Moscow and Washington. He contends the German export-led economy is vested in mutual dependencies with its trading partners. Hans Kundnani’s framework of geoeconomics is then applied to determine the implications for German foreign policy towards Russia. Szabo argues that geoeconomics is an economic form of realism, similar to that of political realism, which puts the national economic interest as the ultimate value in a state’s foreign policy. Kundnani argues that geoeconomic powers have five features:

  1. A definition of national interest in economic terms.
  2. A shift from multilateralism to selective multilateralism.
  3. A predominant role of business and especially export-oriented business in the shaping of foreign policy.
  4. The elevation of economic interests over human rights, democracy promotion, and other noneconomic interests.
  5. The use of economic power to impose national preferences on others.

Germany matches all of the above criteria according to Szabo, except for the fifth.  The country therefore serves as an example for other emerging powers such as Brazil, India, Indonesia, Singapore, which are gaining global influence through economic prowess.


For Berlin, National Interests are Synonymous with Economic Interests

Connecting the geoeconomic framework with Michael Sandel’s argument that market economies progress towards societies characterized by market values characterizes German foreign policy. A nonjudgmental approach to foreign policy supports market-based policy. This limits debate and encourages dry, technocratic policy discourse. Szabo argues that Germany, with its postmodern and post-national identity, is the frontrunner in a continuum towards an international system willing to replace moral values with economic interests. This theory can be understood in the tradition of Fukuyama’s concept of a post-ideological age, as laid out in The End of History.


Vested Interests Infiltrating the National Debate

Germany is leading this development because its economic conditions, ideological position, and geographic reality place it precisely at the East-West fault line. The country therefore serves as a central battleground between Russian and Western interests. Vladimir Putin uses a colorful network, comprised of former chancellor Gerhard Schröder, German heads of industry, and former East German Stasi agents like Matthias Warnig to represent Russia’s economic interests in Germany.

German private sector interests are represented through institutions such as the Ostausschuss, the Eastern Council of the Federation of German Industry (BDI), and the German-Russian Forum. Szabo identifies these institutions and networks as redefining Germany’s foreign policy towards private sector interests, prevailing over an ideological approach to Russia. By contrast, German allies such as Poland and the United States still maintain ideologically driven foreign policies and are estranged by Germany’s approach.


Building Engagement on Cold War Successes

According to Szabo there are two predominant German approaches to Russia, one represented by the Social Democrats, and another by the Christian Democrats. The Social Democratic Party (SPD) has forged a remarkable alliance with the German private sector. Both champion the idea of “Wandel durch Handel” (change through trade), borrowed from the slogan of Willy Brandt’s Ostpolitik “Wandel durch Annäherung” (change through rapprochement). The underlying logic of this approach is that continued dialogue and mutual economic investment strengthens political elements in favor of rule of law and open society. 

Social democrats believe that this in turn leads to an opening up of society and eventually greater democratic reform. Szabo points out that “Germans tend to believe that the reason the Cold War ended peacefully and Germany was reunified was due to détente and engagement with the other side.” They point to Willy Brandt’s détente policy formed prior to the 1970 Treaty of Moscow which later facilitated Gorbachev’s Glasnost and Perestroika policies. Valentin Falin, a Soviet diplomatic veteran and former USSR ambassador to Germany, even said: "Without Ostpolitik, no Gorbachev." Kohl subsequently realized German reunification, secured the withdrawal of Soviet troops from German soil, and supported the creation of the NATO-Russian Council to give Moscow a voice in the organization’s enlargement process.


“Values Faction”

The Social Democrat narrative is challenged by Merkel’s Christian Democrats, the Greens, and NGOs perceived as the “human rights and values faction.” Politicians like Marieluise Beck (Greens), the parliamentary coordinator for German-Russian relations, and the late Andreas Schockenhoff (CDU) represent vocal Russia skeptics within this grouping.

Szabo takes issue with both approaches. He describes the change through trade policy as nicely meshing with German political culture and interests as a geoeconomic power. The Siemens corruption scandal however shows how some aspects of German businesses’ commitment to promoting civil society are opportunistic: Siemens Russia paid $3 million in bribes for transportation projects in 2005 and 2006 and was subsequently sanctioned by the World Bank for corruption. However, Szabo underestimates the ideological conviction of German social democrats towards Ostpolitik. It is tempting to dismiss the concept as strictly economically driven using the example of former Chancellor Gerhard Schröder. However, this is too strong a generalization—Schröder’s business deals have provoked serious criticism within his own party.

Szabo meanwhile describes the human rights and values faction as either too weak or ineffectual: verbal commitments are little more than a paper tiger. Szabo also summarizes Germany’s noninterventionist approach, the Merkel Doctrine, as ambivalent. It says that troops shall only be sent to conflict zones in emergency situations. Instead “partner countries” are to be supplied with weapons so that they can defend themselves. Szabo correctly describes this aspect of foreign policy as contradictory to traditional West German foreign policy and as being driven by the arms industry. Today, Germany is the world’s third largest arms exporter.

However, the Social Democratic Vice Chancellor and Minister of Economics Sigmar Gabriel recently stated that he will end this. Private sector and labor union employment interests are of secondary importance when it comes to arms exports, Gabriel insists. When analyzing the noninterventionist Merkel Doctrine it becomes evident that it only partly supports the geoeconomic foreign policy argument. A more forceful security policy could be necessary to protect energy supplies or trade routes.

Additionally it is important to analyze whether Germany’s foreign policy approaches are really that different from those of alleged moral value powers. The geoeconomic characteristics of “selective multilateralism” and “the elevation of economic interests over human rights” have been apparent in US relations for decades. Although Germany shares several of the geoeconomic characteristics, it is not exemplar.


Ukraine Checks German Policy

Germany’s role in the Ukraine conflict only hinders a geoeconomic foreign policy argument. German President Joachim Gauck recently demanded that Germany should not shy away from taking up military responsibilities and argued to not rule out military measures in conflicts from the very beginning. Though German noninterventionism certainly exists, it is a product of the post-war environment and has historically been welcomed by the US and France.

Germany’s support for tough economic sanctions against Russia challenges Szabo’s thesis. Ostausschuss officially supports these sanctions and thereby prioritizes moral values over economic interests. Szabo discounts the sanctions, characterizing them as “not really biting.” He adds that “in Berlin any idea of a containment strategy and writing off dealing with Putin is a nonstarter and would mark a reversal of its long-standing reluctance to use economic levers for political purposes in its dealings with Russia.” However, it follows that containment and military measures are a nonstarter in Washington as well. An open channel to Putin through German SPD foreign minister Steinmeier could as well be tactically welcomed in Washington. Steinmeier’s spontaneous meeting with Putin days after he abruptly left the G20 summit in Brisbane indicates this may be the case.

For Germany, developments in Ukraine and the 2017 elections will serve as the major indicator. Depending on which camp gains favor, Berlin will shift further toward or away from a geoeconomics driven foreign policy. Szabo and those supporting a morally determined foreign policy overemphasize the inevitability of a new paradigm with Germany as the standard.


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