RUTHFULLY YOURS

German Chancellor Olaf Scholz has announced a paradigm shift in German defense and energy policies in response to Russia’s invasion of Ukraine. He said that Germany will substantially increase defense spending and take immediate measures to reduce its energy dependence on Russia.

Scholz has also announced several other important policy reversals: Berlin has halted the controversial Nord Stream 2 pipeline, which would double shipments of Russian natural gas to Germany by transporting the gas under the Baltic Sea; it has agreed to authorize the transfer of weapons to Ukraine; and it has agreed to ban Russian banks from the SWIFT international payment system.

The measures represent a complete reversal of Germany’s post-Cold War Russia policy — which focused on pursuing economic ties rather than confrontation with Moscow — and mark a definitive end to the era of former Chancellor Angela Merkel.

During an extraordinary session of the Bundestag, the German parliament, on February 27, Scholz said that Russia’s aggression against Ukraine marks a turning point in European history:

“We are living through a watershed era. And that means that the world afterwards will no longer be the same as the world before. The core question is whether power is allowed to prevail over the law. Will we allow Putin to turn the clock back to the 19th century and the age of great powers? Or can we muster the strength to keep warmongers like Putin in check. That requires strength of our own. Yes, we fully intend to secure our freedom, our democracy and our prosperity….

“With the attack on Ukraine, Putin is not just seeking to wipe an independent country off the map. He is demolishing the European security order that had prevailed for almost half a century since the Helsinki Final Act. He is also isolating himself from the entire international community….

“President Putin always talks about indivisible security. But what he really seeks now is to divide the continent into the familiar old spheres of influence through armed force. This has consequences for security in Europe. Yes, in the long-term security in Europe cannot be achieved in opposition to Russia. But for the foreseeable future, Putin is jeopardizing this security.

That is why I say very clearly that we accept the challenge that now faces us — with clear-headed resolve….

“Anyone who reads Putin’s historicizing essays, who has watched his televised declaration of war on Ukraine, or who has recently — as I have done — held hours of direct talks with him, can no longer have any doubt that Putin wants to build a Russian empire. He wants to fundamentally redefine the status quo within Europe in line with his own vision. And he has no qualms about using military force to do so. We can see that today in Ukraine.

“We must therefore ask ourselves: What capabilities does Putin’s Russia possess? And what capabilities do we need in order to counter this threat — today and in the future? It is clear that we must invest much more in the security of our country. In order to protect our freedom and our democracy. This is a major national undertaking.

“The goal is a powerful, cutting-edge, progressive Bundeswehr [German armed forces] that can be relied upon to protect us. At the Munich Security Conference a week ago I said that we need airplanes that fly, ships that can set out to sea and soldiers who are optimally equipped for their missions. That is what is important. And it is quite certainly something that a country of our size and our significance within Europe should be able to achieve.

“But we should be under no illusions. Better equipment, modern technology, more personnel — all of this costs a lot of money. We will therefore set up a special fund for the Bundeswehr [Sondervermögen Bundeswehr]. The 2022 federal budget will provide a one-off sum of 100 billion euros for the fund. We will use this money for necessary investments and armament projects. We will now — year after year — invest more than two percent of our gross domestic product in our defense….

“In the awareness that the Bundeswehr alone does not have the means to contain all future threats … we will do more to guarantee a secure energy supply for our country. The Federal Government has already initiated one important measure to address this. And we will change course in order to eliminate our dependence on imports from individual energy suppliers. After all, the events of recent days and weeks have shown us that responsible, forward-looking energy policy is not just crucial for our economy and our climate. It is also crucial for our security….

“If we want the last thirty years to be more than a historical exception, then we must do everything we can to maintain the cohesion of the European Union, the strength of NATO, to forge even closer relations with our friends, our partners and all those who share our convictions worldwide. I am utterly confident that we can succeed in this. Because rarely have we and our partners been so resolved and so united.

“What unites us at this time is that we know the strength of free democracies. We know that when something finds a broad consensus among politicians and the public, it will endure — even in this watershed moment and beyond. And so I thank you and all parliamentary groups in this House who have unequivocally condemned the Russian invasion of Ukraine for what it is: an absolutely unjustifiable attack on an independent country, on the peaceful order in Europe and the world.”

Defense Spending

Scholz’s vow to raise defense spending above 2% of gross domestic product (GDP) represents a sharp reversal from previous German policy, which has been to free ride on the U.S. defense umbrella. The significance of the German U-turn cannot be overstated: Germany will become the biggest spender on defense in Europe.

For Germany, 2% of GDP amounts to approximately 76 billion euros ($85 billion). By comparison, the British defense budget currently is 40 billion pounds ($54 billion) and the French defense budget is 41 billion euros ($46 billion).

At the 2014 Wales Summit of the North Atlantic Treaty Organization (NATO), allies agreed to spend a minimum of 2% percent of their GDP on defense, but Germany — the biggest economy in the EU and the fourth biggest in the world — has consistently refused to honor that pledge. In 2021, Germany spent only 1.5% of GDP on defense, according to NATO data, which also shows that German defense spending increased by less than 0.5% of GDP since 2015.

The German armed forces (Bundeswehr) are in an especially sad state of disrepair. On February 24, the highest-ranking officer in the German Army publicly lamented that years of financial neglect had rendered the army unable to respond to Russian aggression in Ukraine. Chief of the Army Lt. Gen. Alfons Mais wrote:

“You wake up in the morning and realize: There is war in Europe. In my 41st year of peacetime service, I would not have believed that I would have to experience another war. And the Bundeswehr, the army that I am allowed to lead, is more or less stripped bare. The policy options we can offer in support of the Alliance are extremely limited. We all saw it coming and were unable to get our arguments through to draw and implement the conclusions of the Crimean annexation. That does not feel good! I am pissed off!”

A damning report published by the German Parliament in January 2019 found that critical equipment was scarce, and that readiness and recruitment were at all-time lows. “No matter where you look, there’s dysfunction,” said a high-ranking German officer stationed at Bundeswehr headquarters in Berlin. Later that year, the Bundeswehr grounded all 53 of its Tiger attack helicopters due to technical faults.

A May 2018 report by the German magazine Der Spiegel revealed that only four of Germany’s 128 Eurofighter jets were combat ready. Germany’s obligation to NATO requires it to have at least 80 combat-ready jets for crisis situations.

At the end of 2017, not one of the German Air Force’s 14 large transport planes was available for deployment due to a lack of maintenance, according to the German Parliament. In October 2017, a spokesman for the German Navy said that all six of Germany’s submarines were in the dock for repairs. In February 2015, Germany’s defense ministry admitted that its forces were so under-equipped that they had to use broomsticks instead of machine guns during a NATO exercise in Norway.

Much of the blame falls on former German Chancellor Angela Merkel. During her 16 years in office, she was content to free-ride on the U.S. defense umbrella. Successive American presidents unsuccessfully pressed Merkel to increase German defense spending. Former U.S. President Donald Trump was especially adamant that Germany pay its fair share:

“If you have a country that’s paying only 1%, and you have some that are paying less than 1%, and they are wealthy countries, on top of everything. Now we go to a new year, and they don’t pay. And now we go to yet another year, and they don’t pay. Well, now, I ask you: Do they have to pay for the back years?

“Why is it they owe us for this year, but every time a new year comes up, they don’t have to pay? It’s wrong. It’s not right. I could say that you go back 25 years.

“If Germany as an example is paying 1%, and they are supposed to be paying 2%, you are talking about billions of dollars. That means that last year, the year before, the year before, all of those years, they would owe us money. Nobody has ever brought that up. They just keep talking about the present. So if they are short one year and then you go into the new year, they never talk about the year they didn’t pay. But they actually in theory owe us that money. It’s not fair.”

Scholz said that the 100-billion-euro fund (equivalent to $115 billion) would immediately be used to modernize the military and purchase cutting-edge weaponry. To put that into perspective, the German defense budget in 2021 was 47 billion euros ($55 billion).

Specifically, Scholz announced that Germany would buy state-of-the-art Heron drones from Israel and F-35 warplanes from the United States. He also pledged to strengthen NATO’s nuclear deterrent against Russia. In addition, Scholz said that Germany, in cooperation with other European countries, would build “the next generation” of combat aircraft and tanks.

Annegret Kramp-Karrenbauer, Germany’s former defense minister, tweeted:

“I’m so angry at ourselves for our historical failure. After Georgia, Crimea, and Donbas, we have not prepared anything that would have really deterred Putin. We have forgotten the lesson of Schmidt and Kohl that negotiation always comes first, but we have to be militarily strong enough to make non-negotiation not an option for the other side.”

Energy Security

Scholz also announced a series of measures to lessen German dependence on Russian energy supplies. He said that Germany would build up strategic energy reserves and increase the storage volume of natural gas by two billion cubic meters, which amounts to a supply of approximately ten days. Scholz added that Germany will purchase additional natural gas on world markets and he vowed to “quickly build” two liquid natural gas (LNG) terminals at ports in Brunsbüttel and Wilhelmshaven near the North Sea.

In another policy reversal, the German government suspended technical certification of the controversial Nord Stream 2 pipeline, which would double shipments of Russian natural gas to Germany by transporting the gas under the Baltic Sea.

The leaders of many Central and Eastern European countries — including Bulgaria, the Czech Republic, Estonia, Greece, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia and Ukraine — are opposed to the pipeline, which they argue will effectively give Moscow a stranglehold over European gas supplies and open the continent to Russian blackmail.

Both the Obama and Trump administrations opposed the pipeline — which is fully owned by Russia’s state-owned energy company Gazprom — on the grounds that, once completed, it would strengthen Putin’s economic and political influence over Europe.

In July 2021, the Biden administration abruptly reversed the long-standing bipartisan policy consensus and announced that the U.S. was no longer opposed to the pipeline. The move was ostensibly aimed at extending an olive branch to then German Chancellor Angela Merkel. On February 25, a day after Russia invaded Ukraine, Biden reversed his earlier decision and reimposed sanctions on Nord Stream 2.

Scholz has faced intense political pressure to halt Nord Stream 2, but it remains to be seen if his decision will be permanent or temporary. The €9.5 billion ($10.8 billion) pipeline has already been built — construction was completed in September 2021 — and technical and regulatory certification was expected to be finished by August 2022. If or when Russia-Ukraine tensions ease, the German government will probably face economic pressure to certify the pipeline and make it operational.

Meanwhile, in an even more shocking policy reversal, German Energy Minister Robert Habeck said that he was considering extending the life-span of Germany’s remaining nuclear power plants as a way to secure the country’s energy supply. Habeck is a member of the Greens party, which has always been opposed to nuclear energy.

There are long-term solutions to Germany’s energy dependence on Russia. The United States, for instance, could supply a large portion of Germany’s demand for fossil fuels if the Biden administration would reverse current policies that restrict the exploration, development and export of American oil and gas. Those policies are economically and geopolitically harmful to both the United States and it allies in Europe.

Arms Sales

In another historic about-face, Scholz, under massive public pressure, agreed to deliver arms to Ukraine directly and through third countries. The move reverses longstanding German policy on arms transfers to conflict zones.

Scholz announced that Germany would be sending 1,000 anti-tank weapons and 500 Stinger missiles directly to Ukraine. He also removed restrictions that prohibited third countries from transferring German-made weapons to conflict zones. The move will allow the Netherlands, for instance, to transfer 400 German-made rocket-propelled grenade launchers to Ukraine.

German policy has bordered on ridiculousness. Up until just a few days ago, the German government prohibited Estonia from transferring Soviet-made D-30 howitzers to Ukraine. The cannons, which entered into service in the 1960s and were originally stationed in former East Germany, were subsequently exported to Finland and then to Estonia after German reunification.

Under intense pressure, Germany relented and agreed to send weapons to Ukraine. German Defense Minister Christine Lambrecht announced that Germany would send 5,000 military helmets to Ukraine. Kyiv Mayor Vitali Klitschko called the offer an “absolute joke” and asked: “What will Germany send us next, pillows?”

Economic and Financial Sanctions

In yet another policy shift, Germany agreed to cut some Russian banks out of the SWIFT — the Society for Worldwide Interbank Financial Telecommunication — global payment system. The move — coordinated with G7 members Canada, France, Italy, Japan, the United Kingdom and the United States — limits the ability of Russia’s central bank to support the ruble, which has fallen to historic lows against the euro and the U.S. dollar.

The ban, which blocks sanctioned banks from transferring money in and out of the country, exempts energy transactions. The aim, apparently, is to cripple Russia’s banking network without disrupting energy flows from that country. American commentator Andrew McCarthy explained the paradox:

“Europe and, to a lesser extent, the United States are now dependent on Russian energy. The Europeans get 40 percent of their gas and a quarter of their oil from Russia, and we depend on Moscow for 7 percent of our oil. If we cut Russia off from the messaging system that facilitates global financial transactions, and Russia thus could not collect its oil revenues, Putin would turn off the taps….

“Second, Russia owes us a lot of money. Despite Putin’s years of rogue behavior, American and European governments have blithely continued doing business with Russia and encouraging the entanglement of our commercial and financial sectors with Moscow’s….

“A SWIFT cut off would put payments on those debts at risk (as may the apparently ongoing crash of the Russian economy). The damage to American and Western economies in that case would be immense.”

Reactions

Germany’s decision to reverse its longstanding appeasement of Russia has been greeted with a mix of disbelief, relief and praise. It has been variously described as “a revolution,” “a full paradigm shift,” “a change of mentality,” “a fundamental rethink,” “a fundamental turn,” “utterly extraordinary,” “a big step,” “a major shift,” “a historic policy shift,” “a historic announcement,” “an astonishing reversal,” “a game changer,” “a truly historic moment,” “a breath-taking turnaround,” “a great relief,” “a watershed moment,” “a 180-degree turnaround,” “a massive U-turn,” “a critical turning point,” “nothing short of extraordinary, and “this is huge.”

German political scientist Marcel Dirsus wrote:

“Olaf Scholz is changing decades of German foreign policy in a single speech. Russia went too far and now Germany is waking up. Incredible.”

Veteran transatlantic security analyst Andrew Michta tweeted:

“I have to say I don’t recognize Europe as it responds to Putin’s gangsterism against #Ukraine…all of a sudden I see the Continent grow a spine. Way to go!”

Andrew Gray, politics editor for Politico, noted:

“Watching Scholz in Bundestag today is watching decades of German foreign policy change in a few minutes before your eyes.”

Politico’s chief Europe correspondent, Matt Karnitschnig, added:

“Reminds me of something Amb. Kornblum [former U.S. Ambassador to Germany] once told me: the pace of change in Germany is glacial, until it’s not. Today is the German political equivalent of an arctic shelf melting.”

German foreign policy analyst Ulrich Speck tweeted:

“Germany has taken a strong position. The biggest European economy and the unofficial leader of Europe. Putin knew well why he invested so much in friendly relations. Germany was open to that. But the attack on Ukraine changed everything. Comes certainly as a shock to Putin.”

German journalist Michael Knigge added:

“It is hard to overestimate how much Putin’s attack on Ukraine changed Germany. Less than a week ago Nord Stream 2 was still alive, delivering lethal weapons to Ukraine taboo & cutting Russia out of Swift out of the question. Putin’s invasion changed Germany. Turning point.”

Europe specialist Max Bergmann predicted:

“We are witnessing the emergence of a global power in this crisis: the European Union. I was confident that a Russian invasion w/d be a shock to Europe and lead to a robust response. But never w/d I have predicted the announcements from Germany, EU, and others. Truly stunning.”

German China scholar Andres Fulda wrote:

“Thank you for reversing Germany’s Russia policy @Bundeskanzler Olaf Scholz! Now let us also completely rethink German China policy. Future German foreign and security policy needs to be based on deterrence and compellence vis-a-vis autocracies.”

Irish political commentator John McGuirk concluded:

“Germany basically doing what Donald Trump demanded that they do — to widespread ridicule — for the four years of his Presidency. I know it galls people to hear it, but Trump was right about some very big things.”

Commentary

Johannes Boie, editor-in-chief of Bild, the largest-circulation newspaper in Germany, wrote:

“Yes, the Chancellor’s speech came a day or two too late. But that no longer matters.

“Because today Olaf Scholz spoke in the Bundestag. And the chancellor spoke plainly! We have not seen that from him before….

“The head of government has changed significantly in the Ukraine crisis. And now he’s changing the country!

“‘We are in a new era!’ he said in reference to the Russian government’s brutal, unjustified attack on Ukraine. Now a jolt goes through sleepy, boring Germany.

“100 billion euros for the Bundeswehr as an immediate measure! Fighter jet and drone programs will be accelerated! Finally, money for defense, as NATO has long demanded!

“Numerous measures designed to ensure that German citizens do not suffer from high energy costs. Liquid gas terminals for a more independent energy supply!

“A left-wing chancellor is implementing demands for which conservative and center-right journalists and politicians have been ridiculed for many, many years. Maybe that’s the only way….

“Scholz spoke words and sentences that have not been heard from a government in Germany for a long time: ‘We are on the right side of history!’

“And: ‘The war is a catastrophe, but it will also prove to be a catastrophe for Russia!’ The list of measures followed: Arms to Ukraine. Cut off Russia economically. Is a German chancellor threatening the Russian tyrant?

“There was confidence, strength, power! Finally!”

In an essay for the center-right newspaper Frankfurter Allgemeine Zeitung, commentator Gerald Braunberger wrote:

“The session of the Bundestag on February 27, 2022 will probably go down in the history books. With great clarity and supported by a very large majority of MPs, Chancellor Olaf Scholz redefined the coordinates of German politics. The consequences will be significant.

“Germany’s participation in the West’s sanctions policy is correct, even if the sanctions are not only felt in Russia. They cannot be calculated exactly, but at least temporary uncertainties on the financial markets, increases in the price of raw materials and impairments to economic growth are very possible in Germany as well.

“Ambitions in energy and defense policy reach far into the future. It is remarkable how quickly the war in the east has increased Germany’s willingness to build two LNG terminals. In general, all attempts to reduce dependence on Russian gas are to be welcomed. This will not happen quickly, it will cost a lot of money and require an unbiased examination of other energy sources….

“Scholz surprised with the announcement that he would mobilize an additional 100 billion euros for the Bundeswehr. This is also a correct and important signal, but the Bundeswehr’s malaise can be explained just as much by the inefficient use of available funds as by a lack of money.”

Commentator Wolfgang Münchau, in an analysis for the Eurointelligence news outlet, wrote that the policy reversals announced by Scholz are a good start, but following through on them will prove difficult:

“A lot changed in a week, but don’t be complacent about the sheer scale of what is yet to happen. And look at the small print. The Swift sanctions exclude transactions for oil and gas. Of course they do. Germany can’t keep importing gas, and then not pay for it. The weapons Germany is now ready to send Ukraine won’t affect the outcome of the war. On Nord Stream 2, Germany had no choice. The Americans would have sanctioned every shareholder, every customer, and every SPD politician involved with it. It was a smart move to pre-empt this….

“The real issue is not now how we pay Russia, but what we pay Russia for. Germany has made itself dependent on gas from Russia, a dependency that will not be easy to reverse. Germany needs it both for electricity generation and heating. More importantly, it is dependent on Russian gas to cap energy costs for its corporate sector, a potential threat to competitiveness. Olaf Scholz has given the order to his government to examine alternatives to Russian gas. That’s a good start. But I see no way for Germany to compensate fully for Russian gas imports during a supply crisis. The dependence on Russia did not go away during the last week….

“Germany will remain dependent on Russia for a long time, unless the EU builds up alternative gas supply sources and channels, such as the transport of liquefied natural gas from Spain. Until this happens, I would withhold judgement on the scale of the transformation. And the corporate sector remains powerful.

“But starting from where we were, last week was a good week because it changed the debate. The test will come when Germany has to make some really hard choices. That has not happened yet.”

Commentator Thomas Sigmund, in an essay for the German financial newspaper Handelsblatt, wrote that the Merkel era is finally over:

“Nothing is anymore as it was. The strong speech by the Chancellor on Sunday in the Bundestag represents a turning point in the Berlin Republic. Olaf Scholz flipped the switch and completely reorganized foreign and security policy.

“The exclusion of Russia from the Swift payment information system, 100 billion euros for the Bundeswehr and the promise of wanting to achieve NATO’s two percent target for defense spending — the turnaround is breathtaking and definitely ends the Merkel era.”

Writing for the influential German blog Tichys Einblick, George Gafron noted that words must be followed-up by deeds:

“Anyone who followed the special session of the Bundestag on the overall situation after the Russian attack on Ukraine actually had to doubt whether they were really watching the right TV program. Was that really the Social Democratic Chancellor Olaf Scholz? Was it really the representatives of the Greens, who unanimously spoke out in favor of strengthening the Bundeswehr and immediately implementing the 2% target of the gross national product for defense? The tones on energy policy sounded just as if they were from another world. Almost everything suddenly seemed possible again.

“Not only is there to be a coal reserve, but also an end to dependence on Russian gas supplies through a broad diversification of energy supplies, including the export of large quantities of liquid gas. Yes, there is even talk of a completely new energy policy. The Germans experienced a situation as if a group of doctors had to tell a patient whom they had previously told about sunburn that it was skin cancer. The unity of the state-supporting parties in government and opposition was also surprising — what happened?

“Almost overnight, German politics was roused from its slumber. The freezing cold reality has descended on us all. In the last decades after the reunification of Germany, the desire for harmony and peaceful trade with the whole world increasingly became the driving force behind German politics. The truth was too uncomfortable to face. The development of aggressive and militant nationalism in nineteenth-century thought was simply ignored. What’s more, there were always enough voices that showed understanding for the Kremlin’s behavior and blamed the West itself for its escapades….

“Germany, in particular, did everything possible to slow down the integration of the new NATO members into the structures of the alliance. The consequences of this were decisions by the United States to conclude special agreements with Poland, Hungary and above all with the Baltic States. Only then did the Merkel government give in. And again it was Berlin that prevented Ukraine’s admission to NATO at the NATO summit in Bucharest in 2008.

“The findings of their own intelligence services were simply ignored. The Federal Intelligence Service verifiably informed the Federal Chancellery again and again at certain intervals about the massive rearmament of the Russian army and the corresponding restructuring, which greatly expanded the attack possibilities of all branches of the armed forces. The same applies to the Federal Office for the Protection of the Constitution [Germany’s domestic intelligence agency], which not only drew attention to the intensive increase in Russian espionage activities against the Federal Republic. All of these studies disappeared on the instructions of the Chancellor….

“Not to mention the state of the Bundeswehr. These days, the highest authority in the Bundeswehr had to openly admit that the country’s army is currently not in a position to carry out its mandate under the Basic Law to defend the Federal Republic of Germany. In retrospect, how hollow must be the talk of more sovereignty and a say in the world from a country that is not even able to defend itself against third parties….

“The signpost for the near future has been set up. However, the path itself has yet to be actually trodden.”

Soeren Kern is a Senior Fellow at the New York-based Gatestone Institute.