Originally published at Project-Syndicate | September 5th, 2022
Germany faces no shortage of crises, from the Russian security threat and political instability among Western allies to democratic backsliding and a looming economic crisis within the European Union. But, overall, the current government has proven surprisingly adept at managing the situation.
BERLIN – It has now been more than six months since German Chancellor Olaf Scholz stood before a special session of the Bundestag to address Russia’s unprovoked attack on Ukraine. “We are living through a watershed era. And that means that the world afterwards will no longer be the same as the world before,” he observed. “The issue at the heart of this is whether power is allowed to prevail over the law … Or whether we have it in us to keep warmongers like [Russian President Vladimir] Putin in check. That requires strength of our own. Yes, we fully intend to secure our freedom, our democracy, and our prosperity.”
Scholz’s speech proclaiming a Zeitenwende, or historic turning point, came at a moment of deep shock in Germany. The country was witnessing a total collapse of strategic principles that went back to the late 1960s, with then-Foreign Minister Willy Brandt’s Ostpolitik(“Eastern Policy”) and its central premise of Wandel durch Handel (“change through trade”). The hope was that commercial, cultural, and other forms of engagement with actual and potential adversaries would eventually bring about rapprochement. After 1989, the peaceful political transitions in many Central and Eastern European countries became the expected norm for how the world ought to work.
But Putin’s war of aggression shattered these assumptions, leading Scholz to announce some of the most drastic policy reversals in postwar German history. Among other things, his government would invest significantly more in the armed forces, with a new €100 billion ($99 billion) special fund for that purpose; provide military support for the Ukrainian army; push for a joint EU sanctions regime against Russia; radically overhaul Germany’s energy policy; and conduct a review of the country’s trade policies with autocratic regimes (especially China), to avoid future dependencies.
In short, Scholz committed Germany to a far more active role in the defense of the liberal international order. But while none of these policy changes has been reversed or derailed, some have stalled, and others have progressed too slowly.
On the positive side, Germany’s complicated three-party coalition government has held together, which is a success in itself. While Scholz’s Social Democrats (SPD) have fallen in the polls, the Greens have remained strong, owing to the popularity of key figures such as Economic Minister Robert Habeck and Foreign Minister Annalena Baerbock.
Even more importantly, the government has won the battle of narratives against the Putinversteher(Putin apologists), a formidable bloc that is represented across the German political spectrum, but especially within the SPD. Those pushing for a deal in which Ukraine would cede territory to Russia are no longer influencing policy.
Despite high inflation, there has been very little industrial action and few demonstrations challenging the government’s policies. Germans generally agree that they must invest in renewable energy and reduce their economic dependencies. Short-term preparations are underway in the event that Russia cuts off energy deliveries to Europe entirely.
Still, while the government has managed to forge a political consensus on key issues, it has failed to deliver on many fronts, owing to inherited problems, ineptitude, and, in some cases, political opportunism.
For starters, the armed forces turned out to be in far worse shape than was assumed, which is one reason why Germany’s weapons deliveries to Ukraine have been miniscule compared to other NATO countries. The Bundeswehr simply is not fit for purpose. A substantial portion of the promised €100 billion will merely compensate for past underinvestment, rather than strengthening capacity.
Further complicating matters, Finance Minister Christian Lindner of the Free Democrats (FDP) insists that the Schuldenbremse (the “debt brake,” a constitutional cap on deficit spending) must be upheld, which means that higher defense spending therefore must come at the expense of other programs. In its 2023 budget, the government foresees a remarkable reduction of new government debt (from €138.9 billion to €17.2 billion), implying foregone spending on social welfare, education, health, infrastructure, and other popular priorities.
Germany’s budget policies are entirely at odds with the imperatives the country must confront. Although Germany is facing massive economic, energy, and security challenges, its finance ministry has continued to put a balanced budget first, imposing a straightjacket on the rest of the government.
Legacy issues also weigh on Scholz’s administration. Following the missed reform opportunities of Angela Merkel’s chancellorship, a mountain of red tape will hamper the expansion of wind and solar capacity. Germany also is woefully behind in e-governance and digital administration. While the government recently announced a new digital strategy, it will be many years before it shows meaningful results.
Elsewhere, new policies have exposed past neglect. For example, a sharply reduced fare for regional public rail transportation was supposed to save energy. Instead, the sharp increase in ridership overwhelmed the rail system, which suffers from decades of underinvestment, exacerbated by botched privatization efforts. Now, the rail-ticket subsidy has ended and is unlikely to be renewed.
Incompetence has also been a problem. Consider the Energieumlage (energy allocation), financial rescue operation to save companies at risk of insolvency because of higher gas prices. Starting in October, German households were going to be charged an additional 2.4 cents per kilowatt hour to help replace Russian supplies. But the way the policy was designed, energy companies will be able to offset some of their losses from gas even as they are still generating huge profits elsewhere.
Worse, Germany still plans to shut down its last remaining nuclear power stations, and it is still dead set against fracking, even as it imports energy that was generated by nuclear power or fracking elsewhere.
Nonetheless, Scholz is proving to be a steadfast leader. Despite his cautiousness, he comprehends the gravity of the Zeitenwende. Germany faces no shortage of challenges, from the Russian security threat and political instability among Western allies to democratic backsliding and a looming economic crisis within the European Union. In a commentary published in July in the Frankfurter Allgemeine Zeitung, Scholz offered a strong response to these problems, urging the EU to become a geopolitical power, and signaling that he is willing to trade sovereignty for that purpose. Speaking in Prague recently, he re-confirmed his commitment to EU reforms, advocating more majority voting in the European Council, greater security cooperation, reform of the stability pact, and expansion to the Western Balkans, Ukraine, Moldova, and Georgia.
With a relatively sound economy, a strong commitment to the liberal order and the EU, and a functioning government, Germany may be Europe’s best hope in the current crises, provided that American support for Ukraine remains strong.