German Sovereignty Has Limited Wiggle Room Left
Natalia MEDEN | 07.10.2014 | FEATURED STORY

German Sovereignty Has Limited Wiggle Room Left

Right after the Crime’s reunification with the Russian Federation many refused to believe that Brussels was serious calling for imposing sanctions against Russia. Unlike the United States these punitive measures backlash against Europe at the time its economy has not fully recovered from the drawn-out financial and economic crisis. 

This time the clumsy bureaucratic EU machine moved adroitly enough. As early as April the European Council adopted sanctions to punish Russia for violating the territorial integrity of Ukraine. Then the tragedy of Malaysian Boing gave the advocates of punitive actions a new pretext to be used to their advantage. Nobody gained, but now European tax payers have to compensate the farmers who have suffered losses as a result of the taken steps. No second round of Russian retaliatory measures followed the already imposed food embargo. Strange as it may seem, but it made some European leaders use the fact to affirm that the sanctions policy was a right choice. I believe it’s just an attempt to save face after the revelations made by US Vice President Joe Biden about the methods the US used to make Europeans introduce sanctions against Russia. 

One way or another, the European Union leaves sanctions in force. The first signal came from the Chancellor of Germany. During the press-conference with Prime Minister Alexander Stubb Angela Merkel said the time was absolutely wrong to even discuss the cancellation of sanctions. Then the European Union made public the list of claims to Russia. It said there was continuing presence of Russian troops on Ukrainian soil, including Russian officers in the Donetsk and Luhansk People’s Republics, the border was kept open and humanitarian cargo was sent without the permission of Ukrainian authorities. 

German politicians want Russia to comply with at least some of the demands put forward by the EU but they keep on saying that the door for talks should be kept open believing that the handle of the door will be kept by Berlin. But the agreement of all 28 EU member-states is needed to do away with the sanctions. If somebody in Germany thinks the prolongation of sanctions’ regime is a result of responsible and independent policy – it’s nothing more than self-deception. When a formation is marching in step and somebody stamps his foot louder than others – it’s not independence, it’s not even an act of bravery. That’s not something normally done when it comes to German economy. The sale of RWE DEA is an example. RWE DEA AG is an international oil and gas company headquartered in Hamburg, Germany. It is a subsidiary of RWE. The group went on sale being burdened by 31 billion euro debt. In March the German Economics Ministry approved the sale of the oil and natural gas to an investment holding vehicle of Russian entrepreneur Mikhail Fridman. His LetterOne was chosen not for political reasons but because Mr. Fridman offered to pay 5,1 billion euros more in comparison with the price offered by Canadian bidders or German BASF. But the RWE's sale of its DEA unit hit snags in the U.K. British regulators were said to oppose the deal and ready to revoke DEA 's offshore drilling licenses for British gas fields. The London’s threat was an argument to reckon with… The position of Peter Terium, Chief Executive Officer of the RWE AG Executive Board, became shaky. The fact that RWE took an active part in the geopolitical games in Ukraine (selling reverse flow gas to Ukraine) was not enough to convince Great Britain that Germany was a reliable partner. 

As the Ukrainian crisis started, Berlin really believed that Russia may resort to gas blackmail. German gas importers were experienced enough to disagree with such absurd (citing Kurt Bock, the Chairman of the Board of Executive Directors of BASF) supposition. It’s hard to say what ultimately dissipated the German fears, was it because they trust their businessmen (the opinion of the head of BASF is shared by many) or because Moscow had many times repeated the explanations to make precise its stance on the issue. Anyway, unlike in summer, the fears in Germany have been assuaged as the winter approaches. Germans are not scared of Russian “gas weapon” anymore. The fear appears to be also gone because it was instigated by Western propaganda which has changed its ways as time goes by. 

Germany and the European Union say the same thing. The anti-Russia sanctions are inevitable and the European unity should be in focus. The Prime Minister of Finland says economic measures are the only way to deal with Russia. He thinks the time is right to say farewell to the illusory idea of integrating Russia into Europe. (1) Bulgarian President Rosen Plevneliev repeated the same hackneyed stuff about Russia in his interview (2) as he was talking about an aggressive nationalist state which should learn from partners etc.). Biased German media outlets ramp up anti-Russia rhetoric. ARD TV channel has recently showed Ukrainian “freedom fighters” wearing Nazi insignia. A Bundestag deputy asked the channel managers to comment. They refused. But what is important – propaganda efforts bring results. According to survey conducted in early September, more than a half of responders supported the anti-Russia sanctions (54%). No matter the political pressure, a roundtable on Russian economy was held in Rostock with the participation of former Chancellor Helmut Schroeder. He called for sanctions suspension and said the policy was irrational. So what? Mainstream media published just a few lines about it. If someone wants to know more about it there is an internet version of Handelsblatt. The trick is that the article is offered for money which is a rare practice for this newspaper. 

There is a strange situation here. Contrary to what forecasts had said, the Russian retaliatory measures missed Germany. It’s not Russian but rather EU-imposed sanctions that hurt the country’s exports. Germany realizes it well but nobody wants to even lift a finger to turn the situation around to Germany’s advantage. It makes remember that Germany is directly involved into the “Ukrainian project”. The recent decision to send 200 paratroopers to Ukraine as part of OSCE mission speaks for itself. The times when the country’s politicians swore that no German soldier would step on the soil of the countries where Wehrmacht waged war are over. Germany is going to provide boots on the ground. They spent a lot of time mulling the possibility of sending a dozen of servicemen to Mali or the Horn of Africa, but they displayed good will and wasted no time in taking the decision to send 200 military personnel to Ukraine. Still, Chancellor Merkel was sincere enough saying at the joint press-conference with Finnish Prime minister Alexander Stubb that she was sorry the anti-Russia sanctions had to be introduced. Sigmar Gabriel, Federal Minister for Economic Affairs and Energy, complained about the weakest consumer demand since 2009 and reduction of orders for German industry. He mentioned Ukraine as one of the reasons. German exporters suffer losses. The engineering plants in the east are most vulnerable. Gregor Gysi, the leader of the Left in parliament, says 80% of German export to Russia goes from the east (former German Democratic Republic). Unlike the large ones, small engineering enterprises cannot compensate what they lose by switching to other markets. They face bankruptcy. Alexander Lamsdorf, a vice-president of European parliament, called on the federal government to compensate the producers’ losses, but he never mentioned easing or softening of sanctions. Mr. Lamsdorf supported the Polish initiative on creation of European energy union. It means European taxpayers will have to shoulder more burden paying for the sanctions. 

But nature abhors a vacuum. Russian consumers switch over to other suppliers. Igor Sechin, the head of Rosneft, made no bones about it talking to Spiegel. According to him, Germany produces first class equipment but the company is to go on with its investment projects and will place orders in other countries like China and Korea. (3) Chinese Ambassador to Germany Shi Mingde said China is not happy with the deterioration of relations between the European Union and Russia but it would be unreasonable to miss the opportunity and make more gains as Russian market offers good prospects. (4) German experts never doubted that China would be the prime beneficiary as a result of the anti-Russian hysteria unleashed by the West. Back in spring geopolitical gains and energy issues swept the agenda. As the European sanctions came into effect the attention switched to the advantages of China’s manufacturing industry. The West vacated the place on the Russian market to be taken by others. 

Germany is a typical example of the fact that economy defines the geopolitical clout of a state. The Germany’s advent to become a major actor on the world map under Emperor Wilhelm II would not have been possible if it were not for the economic breakthrough in the middle of the XIX century and the following growth that Germans themselves called “'the first industrial miracle.” The rise of Germany impressed Europe so much that after the first world war of 1914-1918 France, the winner, was looking for a counterweight to balance the German economic might. French politicians were perspicacious enough to surmise that in the end 70 million hard working and organized Germans will outweigh the French who were the winners in the war. It was said by Henri Mathias Berthelot, a French general during World War I who served as chief of staff under Joseph Joffre, the French commander-in-chief. He said it in 1923 when France occupied Rhineland. Those days France tried to contain Germany by cutting it off from the industrially developed region. Later, under quite different geopolitical circumstances, Franзois Mitterrand put forward a condition for lifting objections against Germany’s unification – the introduction of one European currency so that Germany would have to shoulder the main economic burden. He made no mistake. Germany became a sick man for a number of years. It had “to stomach” the former German Democratic Republic and strengthen the European unity. Now France is not what it used to be anymore, it’s not able to struggle for its place under the sun. Now it’s Washington who is closely watching Germany. It does not shy away from the most repugnant things as spying on German politicians. It’s all right they say. Angela Merkel will have to put up with it. The Transatlantic Free Trade Area Treaty will cement the transatlantic ties. Germans can see with their own eyes what it is going to lead to. The U.S. division of Munich-based global conglomerate Siemens has relocated its corporate headquarters to Washington. The economic success is what defines the leading position of Germany in the European Union. Is it worth to risk the economic well-being of the country by refusing to use the benefits of strong points, like the advantage of traditionally deep and mutually beneficial ties between Germany and Russia? 

1), 10.02.2014.
2) Frankfurter Allgemeine Zeitung, 4.10.2014.
3) Spiegel, 1.09.2014.
4) Reuters, 2.10.2014.
Tags: European Union  Germany  US