Germany agonises over Merkel’s legacy: did she hand too much power to Putin?

The war in Ukraine has prompted criticism of former chancellor’s decisions on Nord Stream pipeline and Russia

After the war in Ukraine led German chancellor Olaf Scholz to pivot dramatically last week on his country’s postwar creeds of faith, attention is shifting to his predecessors, who took Germany down a strategic path towards Russia that became a dead end.

The conflict in the east has caused a seismic shift in Germany, where Scholz has made a U-turn on a restrictive stance on weapons exports, announced huge increases in military spending and vowed to wean the country off Russian gas.

Since then, all eyes have been on Gerhard Schröder, the unrepentant ex-chancellor who in his final weeks in power shook hands with Vladimir Putin to ratify the Nord Stream pipeline underneath the Baltic Sea. Just weeks later, Schröder slipped effortlessly through the revolving door to become chairman of Nord Stream. The resultant increase in Germany’s reliance on Russian energy, politicians in Berlin now concede, may have led Putin to believe Germany would be too hamstrung to support concerted economic sanctions.

As a paid-up lobbyist of energy giant Gazprom, Schröder’s motivation is transparent: on Friday, Scholz called on his party colleague and former boss to sever ties with Russian state-owned companies.

Less clear is why Schröder’s course of expanding economic ties with Russia was broadly continued by his successor, Angela Merkel, and whether she did so purely out of passivity or to her political advantage.

When Merkel ended her 16-year tenure in December, political obituaries singled out her dealings with Putin for praise: her support for economic sanctions over the occupation of Crimea, as well as the rescue effort she initiated to have the poisoned dissident Alexei Navalny treated at a Berlin hospital, spoke of anything but naivety in her interactions with the Kremlin.

But since last week, voices have been growing louder in criticising her sidelining of the foreign policy and security experts who warned her against seeing Russia as a reliable partner in trade. “A sober assessment of the German government’s misjudgments in its dealings with Russia over the last 16 years is now overdue,” said CDU politician and former Bundeswehr officer Roderich Kiesewetter.

“To Nato’s great surprise, France and Germany in 2008 blocked a Membership Action Plan for Georgia, warning that Russia would interpret it as an existential threat. But four months later, Russia invaded Georgia anyway. In 2014-2015, when the US wanted to arm Ukraine over Russia’s annexation of Crimea, Merkel and [then French president François] Hollande opposed such a strategy, instead investing in diplomatic efforts,” Kiesewetter told the Observer.

“But in the shadow of such seeming diplomatic successes, Russia continued to build up its military threat.”

There are also fresh questions over Merkel’s unwavering support for the Nord Stream project, whose first pipeline she ceremonially unveiled in 2011. “With Nord Stream, it is now apparent that Germany was simply tricked by the Russian side: this was always a political and not a commercial project,” said Kiesewetter. “Germany never addressed the European and the security dimension of the project.”

Alexei Navalny in 2020 in Moscow
Alexei Navalny in 2020 in Moscow; Merkel initiated moves to treat him in a German hospital after his poisoning. Photograph: Shamil Zhumatov/Reuters

In Merkel’s first term in power, a certain naivety towards the pipeline project could still be explained by her power-sharing arrangement with a Social Democratic Party (SPD) still moulded in Schröder’s image, and centre-left state premiers with openly pro-Russian sympathies in Germany’s north-eastern states, particularly in Mecklenburg-Vorpommern.

“In her home state, and in her constituency, Nord Stream was always an extremely popular undertaking,” said Claudia Müller, a Green delegate from the same region. “When it came to Russia, Mecklenburg-Vorpommern effectively ran its own shadow diplomacy.”

Even after her re-election in 2009, Merkel supported the continuation and expansion of a pipeline, insisting for years it was a purely “economic project”, even if she later conceded that certain “political factors” could not be ignored.

“Economic pragmatism in dealing with Russia wasn’t just a feature of the Social Democrats’ romanticism,” said Jana Puglierin, head of the European Council on Foreign Relations’ Berlin office. “Merkel, too, believed that through trade you could bind Russia into a multilateral system, and thus a rules-based order. Even after 2014-2015, when the alarm bells were ringing, she compartmentalised the problem. She simply didn’t turn it into a political issue.”

Research by Policy Network Analytics, a non-profit data intelligence network that connects political decisions to strategic economic investments, suggests Nord Stream’s political dimension may have been more apparent to her than she has let on. Merkel was raised in Germany’s north-east, where she won a direct mandate from a constituency covering the Baltic Sea island of Rügen. In the federalised political system, parliamentarians are not expected to act as amplifiers of their own regional concerns, and the chancellor even less so.

Yet in the summer of 2009, her home state crashed on to the national agenda: the Wadan Yards shipbuilding company in Schwerin and Rostock filed for insolvency. With national elections looming three months later, Merkel faced a humiliating loss of 2,700 jobs on her home turf.

Six weeks before the country went to the polls, Merkel’s press office announced a breakthrough: “The rescue of the Wadan Yards is in sight”. At a meeting in Sochi, Merkel and Russian president Dmitry Medvedev had brokered a deal whereby the shipyards would be bought by Vitaly Yusufov, saving half of the jobs at the company. Until then, the 29-year-old Yusufov had worked as head of the Moscow office of a certain Russian pipeline company: Nord Stream AG. His father, Igor, served as energy minister during Putin’s first term and was at the time coordinating Russia’s energy cooperations as a special envoy.

“There was considerable political pressure for Wadan Yards to be rescued, and it’s questionable whether the deal would have gone through so quickly without it”, said Klaus-Peter Schmidt-Deguelle, a communications adviser who was on the company’s advisory board at the time.

Former German Chancellor Gerhard Schroder
Former German chancellor Gerhard Schröder ratified the Nord Stream deal, then became its chairman. Photograph: Kay Nietfeld/AP

Even at the time, there had been rumours that the shipyards’ insolvent previous owner, Russian investor Andrei Burlakov, had merely been a straw man for a Russian mafia money-laundering plot, an allegation also made by a Spanish state prosecutor investigating Russian criminals’ activities in Spain. (A criminal investigation into laundering was discontinued by the state prosecutor in Schwerin in 2012, due to lack of cooperation from the Russian side).

“If Burlakov was a straw man, he stopped playing that role at some point, or otherwise he would still be alive,” Schmidt-Deguelle told the Observer. In September 2011, the Russian investor was shot by a hitman in a Moscow restaurant.

According to the German communiqué about the Sochi meeting, Merkel and Medvedev not only discussed a rescue deal for the Wadan Yards but also potential Russian investment in the struggling German carmaker Opel and the micro-chip manufacturer Infineon. Neither of those plans ever materialised, to Moscow’s disgruntlement. Russian media, however, reported that the two leaders were also to discuss an “energy cooperation”.

According to Nord Stream AG, planning for the second pipeline was put in motion two years later, though its exact origins have never been openly communicated.

Asked by the Observer via email if the energy cooperation discussed at Sochi was the Nord Stream 2 pipeline, and whether the economic cooperations debated were contingent on one another, Merkel’s office declined to give an answer, referring instead to the only public statement she has made since the start of the war in Ukraine.

“There is no justification for this blatant breach of international law,” Merkel said four days after the start of the Russian invasion. “This war of aggression by Russia marks a profound turning point in the history of Europe after the end of the cold war.”


Philip Oltermann in Berlin

The GuardianTramp

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