German export-oriented foreign policy is called into question

ANGELA MERKEL and Joe Biden dined together July 15 in Washington on what was almost certainly his last trip to America as German Chancellor. The date recalled the unique proximity of the two allies. It was the 75th anniversary of the arrival in Bremerhaven of the first Co-operative for American Remittances to Europe, packages of food and supplies that kept many people from starving in ravaged Germany by war.

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There was a great show of warmth between the lame chancellor and the US president. Mr Biden is trying to restore relations with the United States’ closest allies after Donald Trump treated them with contempt. But the love-in had its limits: on Russia and China, Germany and America are not aligned. “Russia is a work in progress between the two allies, but there is a wide gap as to the right strategy for China,” said Charles Kupchan of the Council on Foreign Relations, a think tank.

Despite growls of discontent at home, even within her own party, Merkel continues to stay the course in many of her dealings with Moscow and most of her dealings with Beijing. It has become an acute problem with Nord Stream 2, a 9.5 billion euro ($ 11.2 billion) undersea pipeline, fiercely opposed by the US Congress, which will bring natural gas from the Russian peninsula. from Yamal to the German coast, bypassing Ukrainian and Polish transit routes. The project is expected to be completed in August.

“Nord Stream 2 is a heavy millstone around our necks which damages our credibility,” said Wolfgang Ischinger, former German Ambassador to America. The pipeline largely wiped out credit Merkel won for pushing other Europeans to impose sanctions on Russia after it annexed Crimea in 2014. In May, Biden attempted to defuse the conflict by lifting sanctions against the company building the pipeline and Matthias. Warnig, a former East German intelligence officer who is its director general. But he needs something in return, as Congress is expected to demand new sanctions next month.

However, at a joint press conference after their meeting, the two leaders did not announce any new compromises on the pipeline. Ms Merkel said Europe had “a number of instruments at its disposal” to react if the Russians stopped gas transit through Ukraine, which fears the loss of transit charges, but she did not. committed to using none in particular. She also did not describe any new German initiative to strengthen Ukraine, such as helping it develop new sources of income and energy infrastructure. For his part, Mr Biden said: “The Chancellor and I have asked our teams to consider the practical steps we could take together” and to assess the impact of Russian actions on Europe’s energy security. and Ukraine. “We’ll see,” he said. “We’ll see.”

Like her predecessors, Merkel tried to balance loyalty to Germany’s allies with attempts to engage economically with adversaries. Yet while Willy Brandt is Ostpolitik (Eastern policy) was one of the most successful doctrines of the post-war years, Wandel durch Handel (change through trade), the mantra of the past two decades, is a distortion of Ostpolitik, argues Hans Kundnani of Chatham House, a UK think tank. Ostpolitik at least had reunification as a strategic goal: the idea of ​​political change through trade is often just an excuse for closer trade ties with autocratic regimes. This is one of the reasons why other EU leaders recently thwarted Merkel’s pressure for the first EU summit with Vladimir Putin since the Russian president annexed Crimea.

Until a few years ago, German policy in China was mainly guided by Wandel durch Handel, promoted in particular by the major automobile manufacturers which constitute the first German industry. Over the past decade, China has grown to become Germany’s largest trading partner, with merchandise trade reaching $ 243 billion last year. And Volkswagen, Europe’s largest automaker, now sells more than 40% of its passenger cars in China (see charts).

But German enthusiasm for doing business with China has waned. In early 2019, BDI, Germany’s leading industry association, released a document calling China a “systemic competitor” and expressing concerns about high barriers to entry, state subsidies to local businesses and ‘other distortions in the Chinese market. Bdi boss Siegfried Russwurm recently said that Germany needs “an honest discussion about how we deal with autocratic trading partners”. Human rights are not an internal affair, Russwurm insisted, calling China’s treatment of Uyghurs, a Muslim minority, “unacceptable”.

Policies are changing too. A new law requires German companies with more than 3,000 employees to prove by 2023 that their supply chains are free from human rights violations (from 2024, it will apply to those over 1000). Penalties for infractions can amount to 2% of a company’s annual turnover.

Despite this, Merkel is sticking to her policy of treating China with children’s gloves. She was reluctant to ban Huawei, a Chinese company, from bidding on contracts to build Germany’s fifth-generation telecommunications networks, as America wanted. In the final days of Germany’s rotating EU presidency last December, she passed a treaty designed to give European companies better access to the Chinese market. This angered the new Biden administration and was blocked by the European Parliament. And in June, Merkel forced other G7 leaders to water down their summit’s final communiqué to avoid upsetting China.

Will Merkel’s successor chart a different course? Of the three people vying to replace her after an election in September, two give the impression that they are unaware of the scale of the challenge posed by Russian and Chinese aggression, says Constanze Stelzenmüller of the Brookings Institution, a think tank. Armin Laschet, the Christian Democrat (CDU) candidate, and Olaf Scholz of the Social Democrats make weak arguments that America wants a “new cold war” and is trying to force Europeans to “decouple” from the China.

On the other hand, Annalena Baerbock, the candidate of the Greens, wants to stand up to Russia and China. But its chances are dwindling, the latest polls giving the Greens less than 20% of the vote while the CDU and its allies hover around 30%. As a potential junior partner, she would have some leverage in Chinese and Russian politics, but it’s hard to say how much; its priority would be climate change. This is why Mr Biden will continue to listen to Ms Merkel, even if she is about to come out. Her successor is likely to follow her faithfully.

Editor’s Note (July 15, 2021): This article has been updated since its publication.

This article appeared in the Europe section of the print edition under the title “Auf Wiedersehen, Amerika!”

About Cheryl Viola

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