🕵️ Special edition: What's next for Germany

Know someone who’d enjoy this briefing? Feel free to forward it! We're a team of ex-diplomats producing a concise and engaging geopolitical briefing for 100k+ leaders each day. It’s free to subscribe.

Germany’s geopolitics

Germany has two great geopolitical nemeses – France to the west and Russia to the east.

• Germany sits on the Northern European Plain, aka the invasion superhighway of Europe, a flat expanse across which armies and tanks can move with ease.

• Ever since German unification (the first one) in 1871, Germany’s grand strategy has focused on thwarting France and Russia as threats. 

• In both World Wars, the German army attacked France, seeking a defensible holding position on the western front before attacking Russia to the east.

• But even in peacetime, Germany’s strategic position has been the same, “neutralising” France not with tanks but with mutual economic interdependence (the European Coal and Steel Community would eventually become the EU and still ties French and German fates together). Meanwhile, Germany’s membership of NATO kept the Soviets and now Russians at bay.

That strategy helped Germany thrive during history’s fleeting moment of US unipolar power, using the intoxicating cocktail of Russian gas, Eastern European labour, US security, and EU economic heft to export German products to China and beyond. But that’s all now changing with Chinese competition, American fatigue, Russian aggression, and EU indecision. 

Of course, this is an oversimplification of centuries of history, but it’s the bare minimum necessary to understand the country’s current predicament, which leads us to…

Russia’s invasion of Ukraine

Shortly before Russia attempted its full-scale invasion of Ukraine in February 2022, Germany offered Kyiv’s defenders 5,000 protective helmets… because supplying Ukraine with weapons would’ve meant an irreparable breach in German-Russian relations. 

After all, the country was (and still is) led by German Chancellor Olaf Scholz, who, like his predecessor Angela Merkel, supported the construction of the Nord Stream 2 pipeline to hoover up more Russian gas, despite vociferous US and Eastern European objections over the risk of Russia ending up with too much leverage.

Germany had more moments of hesitation, initially declining to provide Ukraine with tanks until the US did it first, but it is now Ukraine’s top individual backer after the US:

• Germany has given $17B in military, humanitarian, and economic aid

• Its popular defence minister has pledged to support Kyiv “as long as it takes”

• Germany has pledged to double down on this support ahead of Trump’s second administration

So, why the pro-Ukraine pivot? 

A few months into the war, it became clear that Germany’s long-held policy of ‘peace through commerce’ was in tatters and that a new approach was needed. As for what exactly drove Germany’s decision, it was not just the values at stake but also the combination of Russia’s ongoing sabre-rattling and Ukraine’s unexpected success on the battlefield.

But even still, Germany has turned down multiple Ukrainian pleas for help, including for access to the legendary German-Swedish Taurus missile, which could (for example) easily destroy Russia’s critical Kerch Strait Bridge, which connects Russia’s mainland to Crimea, facilitating a key staging point for its attacks on broader Ukraine.

So, what’s next?

Scholz has doubled down on his pro-Ukraine messaging since Donald Trump's election as US President: 

• He made an unannounced visit to Kyiv in early December (his first since the very beginning of the war), during which he announced an additional $685M military package 

• He also promised that Berlin would “remain the strongest supporter of Ukraine in Europe”, and

• His foreign minister (Baerbock) has refused to rule out deploying soldiers to Ukraine as part of a future peace deal. 

If the polls hold true and another coalition ends up ruling Germany, you can be relatively sure they’ll maintain Scholz’s pro-Ukraine stance. But it’s not so simple: while most Germans back Ukraine, they’re also frustrated with their economy and weary of unchecked migration, meaning they could cast their votes for parties promising change on those issues even if it means pulling back support for Ukraine.

In fact, the top polling parties ahead of the election on 23 February have some wildly differing Ukraine policies: 

1. The opposition centre-right Christian Democrats (CDU) are currently polling first at ~31%. Party leader Friedrich Merz has often accused Scholz of being too hesitant in his support for Kyiv and is pledging Taurus missiles for Ukraine.

2. The hard-right Alternative for Germany (AfD) is polling second at around ~18% and has had several successes in local elections by focusing on concerns around migration and law and order. But it’s also the most Ukraine-sceptic party in the Bundestag, pushing to end German military support for Ukraine and stabilise ties with Russia (which also means we should expect reports of Russian election interference in support of the AfD).

3. Meanwhile, the ruling coalition’s Greens are polling around ~13%. They are fervent in their support for Kyiv and echo the CDU’s pledge to send Taurus missiles.

4. And Scholz’s own ruling Social Democrats (SPD), who continue to try and thread the needle with their reliable but restrained support for Kyiv, polling at around ~15%.

Meanwhile, Russia and Ukraine are each pushing to maximise their leverage before Trump 2.0 potentially tries to impose some kind of settlement amid continued mixed signals:

• NATO’s new boss Mark Rutte has suggested Ukraine should put off any peace talks with Russia until it can push harder using incoming Western military aid, and

• Ukraine’s Volodymyr Zelensky seems to have shifted his rhetoric, suggesting Ukraine could stop fighting to regain land lost to Russia in exchange for NATO membership (i.e. robust guarantees Russia won’t invade again).

Given that most parties appear to be preparing for a possible way out, it’s worth considering Germany’s possible role in Ukraine’s post-war scenario beyond any security guarantees. It’s hard to see a post-war Ukraine without a major German industrial presence, whether as a source of labour, winning major contracts to rebuild Ukraine’s tattered infrastructure, or helping restore its damaged agricultural fields.

But the degree to which Germany, Poland, and others can play this kind of role will depend on Ukraine’s progress in tackling corruption, which is often tied to international financial assistance.

But don’t bet against Germany!

The media narrative has been pretty sceptical of Germany lately, perhaps not unfairly:

• Its demographics are skewing old

• Its economy is slowing down

• Its 20th-century export model can’t withstand 21st-century headwinds

• And Germany’s political establishment often writes checks its rear end can’t cash

But what this narrative overlooks is that, when confronted with a crisis, modern Germany has outperformed:

• When East and West Germany unified, the narrative was that it’d take generations and untold billions to reintegrate East with West. Instead, it powered a new generation of German (and European) growth.

• In the late 1990s, The Economist famously described Germany as the “sick man of the euro”. Instead, the German DAX went on to triple, way outperforming the FTSE MIB (its Italian equivalent) and the IBEX (its Spanish equivalent). 

Germany made hay while the sun shined during the unipolar moment of American power, which clearly papered over some more fundamental cracks in the country’s political, economic, and social reality. Underwhelming Olympic performance aside, there’s no doubt that Germans have plenty of other reasons to be unhappy right now.

But Germans are, and forgive the cliche, pragmatic people. As we move into a more volatile geopolitical world governed less by idealistic value-based systems and more by cold realpolitik, pragmatism might be exactly what ensures Germany stays at the top for decades to come.