Germany’s Inglorious Isolation

The delicate position of Germany in the post–Cold War global order rested upon the art of diplomacy. Abiding by the warnings of Otto von Bismarck, German politicians sought for their country to have better relations with foreign powers than among themselves. This skilled, multi–instrument game maintained Berlin’s international position. Yet, the financial crisis destroyed the existing system of balance and, as Bismarck foretold, weakened Berlin’s position. This is proven by Germany’s growing isolation and the worsening of relations with its most important partners.

Bismarck’s Balance of Power

During a visit to Washington, D.C. in March 2015, Minister of Foreign Affairs of the Federal Republic of Germany, Frank-Walter Steinmeier, said that Berlin wanted to play the role of a “responsible agent” (verantwortlicher Makler). Speaking several weeks later to the leadership of his party, the SPD, he left no doubt as to his intentions, arguing that “Bismarck’s legacy shapes German foreign policy to the present day.” He explained the policy’s essence to be one of realpolitik, which relies on “the analysis of reality and the subtle intuition of the interests and behaviors of other actors on the international stage.” Put simply, it is “the art of the possible.” This is also why “the central task of German foreign policy in the coming years is rebuilding broken trust, and a basis for cooperation in the area of security between Russia and the West.”

During the Congress of Berlin in 1878, the great powers were meant to come to an understanding about the new European order after the Russo-Turkish War. They did not want the peace to disturb the balance of power, which had been shifted by Russia’s military successes in the Balkans. Therefore, at the negotiating table, an “alignment” of relations was reached.

As the host of the Congress, Chancellor of Germany, Otto von Bismarck, sought to use the occasion to convince his partners that Germany was a power that was “saturated”. It had no desire for territorial gains and instead endeavored to keep the status quo. Germany, he claimed, had reached its optimal size. This is why Germany could afford to play the role of a “responsible agent”, an impartial intermediary who would facilitate agreement between the great powers, considering each of their interests fairly.

Bismarck believed that Berlin’s aspirations of hegemony would end in defeat, for other powers would easily be able to create a successful anti-German coalition. A year before the Congress, he explained his desire for “an overall political situation in which we are needed by all of the powers, and relations between them would prevent the creation of a coalition opposed to us.”

Germany’s strategic dilemma, called the “German Question”, was that they are too strong to serve as an equal component in the continental balance of power, but also too weak to destroy this balance and dominate. The only effective strategy in such a system is to contain its hegemonic aspirations and take responsibility for the balance of power in Europe.

Chancellor Merkel has applied the lessons of the “Iron Chancellor” (as Bismarck was commonly known). She was not lured by the temptation of continental hegemony. She patiently built strategic relations with the most important powers so that Germany could become an indispensable component of the global system. Merkel took advantage of the most favorable international situation in Germany’s history, in which Germany did not have a mortal, geopolitical enemy, nor did it have to fear the rise of a hostile coalition (as Bismarck described it, the coalitions nightmares – “les cauchemar des coalitions”).

Yet, the multifaceted crisis in Europe destroyed this system. This change in the status quo threatens Berlin with isolation in the international arena. One of the most important causes of this state of affairs was Germany’s inability to play the leading role in Europe. This became apparent during the attempt to tackle the financial, debt, migration and Brexit crises. Germany proved too weak to cope with them. This fell short of the expectations of its main partners, who had called for Germany to take on the role of continental hegemon and shoulder the weight of recovery actions. As a result, today Germany must cope with the challenge of isolation.

The Crisis of “Partnership in Leadership”

The biggest problem affecting Berlin’s global position is the crisis in transatlantic relations. This has been triggered by the undiplomatic reaction of the German political class to the election of Donald Trump as President of the United States. Minister of Defense, Ursula von der Leyen (CDU), set the tone: “It was a serious shock for me when I saw how things are.” She continued, refusing to recognize any of Trump’s successes: “I think Trump realizes that votes weren’t cast for him, but against Washington.” This lack of courtesy can be explained by surprise at the result, yet those who made subsequent declarations intentionally sought to insult the president-elect. Minister of Foreign Affairs, Frank-Walter Steinmeier, proclaimed: “The result of the election is different than that which most Germans would have wished.” Moreover, he lamented the lack of specifics in Trump’s program and demanded explanations. Vice-Chancellor Sigmar Gabriel (SPD) outdid his colleagues by describing the president-elect as “a pioneer of a chauvinist and authoritarian International.”

Against this backdrop, Chancellor Merkel’s comments could seem subdued. She stated that the Federal Republic of Germany and the United States were “joined by a deep attachment to the values of democracy, freedom, respect for human dignity, regardless of origin, skin color, religion, gender, sexual orientation or political views” and to the newly elected president she proposed “close cooperation on the basis of these values.” Most commentators saw this choice of words as the setting of terms to Trump.

German politicians seem to forget that German-American relations were fundamental to the post–Cold War order. They were shaped by the doctrine of “partnership in leadership” which was worked out in Washington, D.C. in 1989. The Americans recognized that they were not in a position to independently impose their principles on the world, so allies would be needed to promote them. Wanting to maintain its position as global leader, the United States had to find appropriate partners. In northern Eurasia this was Germany, which, in the following two decades, took upon itself the burden of extending Euro–Atlantic institutions, NATO and the EU, to the east.

Following such harsh criticism from German politicians, it is difficult to imagine that the new President of the United States would perceive Germany as a strategic partner. On this occasion, the diplomatic breakdown could not be blamed on Trump. As noted by a commentator in the Frankfurter Allgemeine Zeitung, German politicians insulted the President of the United States, not Donald Trump. It could scarcely be believed that they did so unwittingly, since they know full well the distinction between the institution (office) and the person holding it.

The cooling of relations with Berlin might work to Trump’s advantage. He will certainly continue the policy of limiting the political and military presence of the United States on the Old Continent. The reluctance to cooperate on the part of the main European power could be a good pretext for further withdrawals of American forces and resources from Europe. This freed up potential would surely then be engaged in other parts of the globe.

The German authorities obviously did not see the asymmetry of interests. Clearly, the difference in potential between the Federal Republic of Germany and the United States shows that the partnership between the two countries was not equal. Militarily, the Germans are simply a client of the United States. This imbalance led to Merkel’s close consultation on her eastern policy with Trump’s predecessor Barack Obama. She was aware that European countries are militarily weak, and therefore lacked strength in peace talks with Russia. A condition of effective diplomacy in the conflict between Ukraine and Russia was the support of the United States, the most powerful military in the world.

Germany’s new problems were of its own making. Partnership in leadership was one of the most important factors in Germany’s special position in global politics. Berlin, having the potential to assume the role of a regional power, played in a higher league of global powers.

French-German Delusions

The Paris-Berlin axis was the foundation of European integration. In the 1990s, both powers made the decision to accept central and southern European countries into their integrating structures. This envisaged the eventual membership of nearly 30 nations. This required a fundamental consideration of its current cooperation mechanisms, starting with decision-making processes.

European elites recognized that it was impossible to maintain the principle of homogenous integration, or the same level of integration advancement across all member states. Differentiation was obvious, thus there was a division of countries in terms of the extent to which they would cooperate. The EU was meant to become a structure resembling concentric circles, created by states similarly advanced in integration. The narrowest circle was to be created jointly by France and Germany. Since the decision to expand the Union was made in parallel with the introduction of a common currency, the first fundamental division between the Eurozone and the rest of the member states inevitably arose.

Today it is safe to say that the French–German attempts to build a European federal state have ended in defeat. A disastrous mistake had already been committed by Chancellor Helmut Kohl, one of the greatest advocates of federalism, as by agreeing to accept the Euro, he abandoned the possibility of creating a political union in Europe. According to his original plan, the new union was to stand firmly on two pillars: a common currency and a political federation. The French President François Mitterrand did not want to deepen political cooperation. First of all, he wanted to weaken a united Germany, and thus take away their most important geo–economic weapon, the Deutsche Mark. The French authorities wanted the Euro to ensure that Paris maintained its position of power in Europe.

Therefore, it should not be surprising that the Eurozone crisis is leading to some unrest between Berlin and Paris. The common currency did not realize the hopes invested in it and it was not a catalyst for integration. It led to the lowest ever credit rates being offered to the poorest, southern countries. Italian, Greek and Spanish leaderships began to irresponsibly put their countries in debt; in order to maintain their power they catered to every whim of their electorates. A new intangible wall arose in Europe dividing creditors and debtors. The anti-crisis measures, still ongoing after six years, have only deepened this division. Essentially, the Euro became a ticking time bomb placed under the foundations of European integration. Worse still, the political leaders not only have no idea how to bridge this divide, but they seem to not even recognize that one exists. New recovery programs depend on new loans which continue to drive debtors further into debt. These so-called anti-crisis measures do not help the southern economies, which are in dire condition, but instead merely delay the approaching catastrophe.

A segment of the German elite, most of all a group of respected economists, has long warned about the fatal consequences of introducing the Euro. However, politicians responsible for its introduction did not listen. And here they made a serious mistake, with direct political repercussions. Above all, the Eurozone crisis will prevent stability in Europe.

Such a conclusion can be drawn from the book published a year ago authored by Hans–Werner Sinn titled The Euro: From Peace Project to Bone of Contention (Der Euro. Von der Friedensidee zum Zankapfel). In 500 pages, the most influential German economist has made a diagnosis of what he describes as the disease plaguing the Eurozone.

The biggest surprise for political leaders may be the ascertainment that the so-called “transfer union” has been implemented in practice. This is a requirement of France and southern countries tied to it, that creditor-nations transfer huge sums to debtor-nations with the goal of evening out differences in development in the Eurozone. The mechanisms for evening out the levels of wealth and prosperity have long existed within the Union. This is the goal of the well-known structural and cohesion funds. Yet, these expenditures are a fraction of the GDP of the entire EU. Meanwhile, in the case of the transfer union the sums are much greater, perhaps over 10% of GDP. This is why the wealthiest countries oppose the idea and Berlin has repeatedly distanced itself from the proposal.

The problem is that despite the opposition of creditors, hundreds of billions of Euros are flowing from the north to the south of the continent. This is happening thanks to the policies of the European Central Bank, which are neither transparent nor in accordance with EU law. Ever since the financial crisis struck there has been a huge and ongoing loan operation directed toward the countries of southern Europe. At the same time, the EU is liable for the debts of member nations. Therefore, it breaks its own treaty, which clearly prohibits it (the “no bail-out” clause from article 125 of the Treaty on the Functioning of the European Union).

In March 2015, Sinn calculated that the debts of the six countries presenting the biggest problem in the Eurozone (Greece, Italy, Spain, Portugal, Cyprus and Ireland) had soared to almost 11 trillion Euro, or 335% of GDP of these countries. This means that the debt cannot be paid off and the creditors will have to accept losses.

The German economist is of the opinion that continuing the policy of transfers would end in catastrophe. Loans totaling hundreds of billions of Euros have not had positive effects. The economies of southern European countries are still in crisis. The only indicator that is growing is debt. Transfers are thus a play for time, only delaying the crash.

The best antidote to the debt crisis is discontinuing the transfer union, in other words, the EU giving loans to member states in debt. Sinn points to the examples of the United States and Switzerland, where the central government does not take responsibility for the debts of individual states or cantons. If the EU is to survive it should respect its own laws and allow member states with an irresponsible monetary policy to go bankrupt.

Sinn argues that Germany is not the victor in the Eurozone crisis. Indeed, it ultimately sowed the seeds for the breaking down of their European policy, which was conceived in the 1990s.

The Euro cannot be the main basis for integration, as instead of connecting, it divides, creating a fundamental conflict between debtors and creditors. This conflict threatens the very existence of the EU. France and Germany, the countries which were meant to be the “engine” of the EU, are arguing over the strategic direction to pursue next. Paris does not agree with having an actual political union, because it would mean, for example, the joint administration of their nuclear arsenals, when it only wants the wealthiest EU countries to take greater responsibility for Eurozone debts.

In the German political discourse, proposals are increasingly appearing to abandon the federalist concept and its main requirement of deep European integration. The former President of the Federal Industrial Association of Germany, Hans-Olaf Henkel, has been calling for the division of the Eurozone into two currency areas for years. One area would include Germany and the rich countries of northern Europe, and the other would accommodate France and southern European states, signifying a final break between Berlin and Paris. He argues that the current profits that Germany gains from exports thanks to the current shape of the Eurozone does not cover the huge expenditures required to prop up near-bankrupt states. His sensible economic argumentation, which converges with Sinn’s arguments, is still considered outlandish today. German elites and society cannot imagine Berlin divorcing itself from Paris. Their political habits would of course be changed. However, when the next stage of the debt crisis is revealed, when the average German realizes that he had to pay with his pension for the alliance with France, or when he has to choose between this alliance or a prosperous and comfortable old-age.

The absence of a uniform German position and a strategic compromise between the powers, means that, in the short-term, genuine reform of the EU should not be expected. France will not give up on the idea of forcing Germany to continue with the transfer union, given its strong support from Italy and other countries of southern Europe. This means that until the next wave of the crisis hits, Europe will remain in a clinch.

The Eastern Policy Wilderness

The most surprising element of the impasse in transatlantic and European relations, is the worsening of relations with the most important players in Eurasia. In the normal course of things, the weakening of the western vector of German policy should bring with it the strengthening of the eastern vector. But there has been nothing of the sort.

The weakness of Berlin’s position was revealed by the war in Ukraine, during which Putin undermined the foundation of the entire post–Cold War order in Europe. The annexation of Crimea constituted the unprecedented violation of two fundamental principles: the inviolability of borders and the prohibition of the use of force in international relations. The Kremlin proved that “the end of history” is a baseless myth.

In this case, the would-be hegemon of Europe failed to deliver. As usual, Merkel was biding her time. She could have ended the crisis but she would have had to exhibit character and courage, choosing one of two methods. Either demonstrate the cynicism of state power and, in concert with others, “sell-out” Ukraine to Putin, or defend high values and decide on real sanctions against Moscow, which would have hit Russian energy exports. In reality, she chose the strategy of maneuvering, advocating simultaneously for supposed sanctions and cooperating with Russia in building the Nord Stream energy pipeline. Such a policy only encouraged Putin to make further attempts to destabilize the West. Only now are German elites becoming aware that the Kremlin is leading a brutal information war against them. But even this has not pushed them to undertake more decisive action against Moscow. Having American blessing for this type of irrational appeasement is only a partial explanation.

Following the weakening of relations with Moscow came the worsening of relations with China – the second most important power in Eurasia after Russia. The latest visit of the Vice–Chancellor of the Federal Republic of Germany, Sigmar Gabriel, to China in November 2016 brought a noticeable cooling between the two powers.

The foreshadowing of the visit was not promising from the start. Even before the departure of the vice-chancellor, the Chinese Ministry of Foreign Affairs summoned the German deputy ambassador and delivered a protest. The Chinese were dissatisfied with the German debate on Chinese investments, specifically the alleged American pressure to prevent the sale of one of Germany’s high-tech companies to the Chinese.

Matters soon worsened. In Beijing, Gabriel was to jointly appear with the Chinese Minister of Commerce, Gao Hucheng, before members of the Sino-German Economic Committee. Unexpectedly, the meeting was called off. According to the Frankfurter Allgemeine Zeitung, the cause of the cancellation was a statement by one of the Chinese trade ministers who made the accusation that in Germany a “hostile mood towards investment” prevailed. The same newspaper recalled the statement of the Chinese ambassador in Berlin who complained about the “growing protectionist tendencies” in Germany. In turn, Gabriel, as the newspaper reports, “didn’t leave the slightest doubt in Beijing that Chinese investments in Germany and Europe will be strictly controlled and if need be, thwarted.” He announced a harder line towards Beijing and a firm defense of German investors, who have complained of being discriminated against in China.

The growing crisis in relations between Berlin and Beijing should come as no surprise. The visit of Chancellor Merkel in June was already full of discord. The weekly Die Zeit referred to the situation in an article with the symptomatic title: “Sharp Conflicts with a Difficult Partner”. Both countries are geared towards exports and conflict between them was unavoidable, especially when the balance of trade increasingly favored the Chinese. In addition, one must consider the unparalleled scale of Chinese investments in Germany. Germany is wary that in this way the Chinese will obtain their own technology and innovations, thereby becoming more competitive in the global marketplace.

An even more glaring symptom of the crisis of Germany’s eastern policy is the cooling of relations with the countries of Eastern and Central Europe. Until recently, this region was regarded as Berlin’s exclusive zone of influence. For a quarter-century, Germany has blocked the emergence of any kind of coalition that could oppose it without difficulty. Germany grew accustomed to imposing its will on weaker clients. The hubris of power usually triggers a response. When Germany tried to force the Czech Republic, Slovakia and Hungary to accept a quota of immigrants last year, they rebelled, refusing to obey and for the first time organized a common coalition. Germany had lost control of its closest region.

***

Germany has found itself in a dire diplomatic situation. And the future does not seem promising either. In 2017, the German political class will be focused on the election campaign. The Social Democrats, who are losing ground, are grasping at anything to slow their downfall. With an absence of ideas for domestic policy, they will be fighting with the Christian Democrats on the field of foreign policy under the banner of building a European superstate and anti-Americanism. The biggest current asset of German diplomacy – a cross-party consensus in strategic matters – will be sacrificed for the sake of continuing the careers of uncharismatic politicians like Sigmar Gabriel. This will only deepen the isolation felt by Germany in the international arena.

The weakening of Europe’s dominant power brings with it many challenges. Great powers assume the role of regional stabilizers. When they lose strength, a power vacuum is created that must be filled. This is how a new equilibrium is created. This signals that a period of disorder and uncertainty awaits us in Europe. Vladimir Putin will certainly try to take advantage of this situation, knowing that a weaker Germany means a stronger Russia; this is why power is relative. He will not miss the opportunity to once again expand his sphere of influence. The most straightforward way to achieve this goal would be to agree upon a new arrangement between Moscow and Berlin. Germany, abating in strength, may not be able to resist such a temptation.

However, another outcome is also possible. Specifically, where the central European countries create a coalition which starts to compete on the European scene. However, even if such a coalition was to succeed, it would be too weak to play the role of a third power (the Visegrad Four countries account for less than 10% of the EU population, and only a few percent of its economy). That is why these countries could instead try to make a new agreement (taking into account their subjective role) with Germany and create a new system that would stabilize the situation in Central Europe. This, on the one hand, will require the changing of Berlin’s paternalistic attitude towards its former satellites, and on the other hand, greater effort and responsibility from Poland and her regional partners.

The German dilemma rests in the choice between two strategies, pursuing hegemony or a balance of power. The biggest paradox is the fact that the federalization projects serving to deepen European integration, have created the conditions for the dominance of Germany on the continent. The practice was inconsistent with theory, which suggested that the handing over of the scope of authority from nation-states to supranational institutions weakened the influence of state powers. With that in mind, the best way out from the current crisis seems to be a reform of the European Union which would bring balance between the main powers and small and medium countries. Essentially, this would mean a return to the principles which were in effect prior to the signing of the Treaty of Lisbon.

All texts published by the Warsaw Institute Foundation may be disseminated on the condition that their origin is credited. Images may not be used without permission.

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