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Towards more Pragmatism - German Foreign Policy after the Euro Crisis

In a crisis-ridden Europe Germany is at the center of the debate regarding the question of future power and leadership within the EU. Even those analysts in the country, who in the past preferably referred to the country’s “culture of restraint” as the main characteristic principle of its foreign policy, today bemoan the shortcomings for more global influence in terms of targeted investments in “power and its responsible use” and ascribe it as the new, “irreplaceable” power center within Europe. The following article will analyze the debate by looking at Germany’s role in the most recent and relevant crises.

Towards more Pragmatism - German Foreign Policy after the Euro
EU Commission President Jean-Claude Juncker (1st-L) talks with Greek Prime Minister Alexis Tsipras (2nd-L), Dutch Prime minister Mark Rutte (2nd-R) and German Chancellor Angela Merkel (1st-R) during the European Union summit at the EU Headquarters in Brus

The Current Debate

No matter who governs in Berlin in the near future there seem to be two possible scenarios for German Foreign Policy in particular and the role of Germany in Europe and the world in general according to most analysts: Firstly, Germany, as an irrefutable sign of its seemingly political safety and economic prosperity (despite the Euro crisis), will continue with its “strategic complacency” –a typical reflex in any extended period of economic and market strength- and not debate the big issues, particularly those related to foreign and security policy and Germany’s role in the world. While politicians in the U.S., UK, France, Poland or elsewhere in the world are expecting more German leadership on global issues, commensurate with its weight in Europe and on the global stage as a strong economy and the second-largest exporter in the world particularly encouraging it to take more responsibility in Europe’s wider neighborhood, the government in Berlin rather limits itself to a passive role of successfully managing political conflicts at home. 

According to this view (for which you find representatives on both sides of the Atlantic), Germany will remain the “reluctant power”1, the “unwilling hegemon,”2 never becoming a “normal” Western power3, not to mention the U.S.’s new “geopolitical partner.”4 It will thus further contribute to a new “unpredictability” of German foreign policy, as in the case of Libya (being even worse than its former “reluctance”), and “irreconcilable differences” between Berlin and its European partners and the U.S. 

Secondly, rather than hiding away Germany is accepting the burden of responsibility that particularly follows from its relative economic strength and assuming the role of the “pre-eminent” power in Europe, pro-actively shaping the developments in the Middle East (Syria, Egypt), the negotiations of a transatlantic trade deal (TTIP), or the future of European relations with China and Russia. This view oscillates between those who mostly agree that currently it is still rather wishful thinking to expect Germany to take on this role,5 but think that the country has the willingness to move along this direction, and those who believe that it has already assumed a larger role in shaping Europe and preserving the liberal world order 6 by using its geo-economic and structural power to extend its influence and advance its interests. What both have in common, however, is the strong belief in Germany’s growing problem-solving capacity and the newly ascribed role as Europe’s “central,” “indispensable”7 or even “exceptional” power.8 In that sense, Germany has at the same time become Europe’s (and even the world’s) hope by adjusting Alliances and strategic partnerships as the “benign” hegemon and challenge by imposing its interests and own macro-economic traditions unilaterally (as during the Euro crisis, and, as some would argue, also in case of the refugee crisis). 

German foreign policy over the last 25 years has gradually adapted to a new strategic environment, contributed more to peace and security missions (without being interventionist), and therefore undeniably acquired more influence

Political reality in German foreign policy is somewhere in the middle of these two viewpoints of the second scenario. As a matter of fact, Germany is at the center of Europe, and even those foreign policy analysts in the country, who in the past preferably referred to the country’s “culture of restraint,” “civilian power” concept or “effective multilateralism” as the main characteristics/principles of its foreign policy, today bemoan the shortcomings for more global influence in terms of targeted investments in “power and its responsible use”9 and ascribe it as the new, “irreplaceable” power center within Europe.10 In other words, German foreign policy is changing and there are signs of a new strategic thinking on Germany’s international role that is certainly not abandoning its normative impulse but complementing it by an astonishing rhetoric about Berlin’s “enhanced responsibility,”11 shift to a “more active role,”12 and necessary investments in all power dimensions; this has considerable implications for Europe and the integration process as well as for transatlantic relations. On the other hand, this is an incremental process and its outcome remains uncertain as long as the political elites and analysts’ foreign policy discourse don’t reach the society. 



The Main Parameters of German Foreign Policy 

Against this background Germany’s emerging role in Europe and the world and its new potential in the global arena is following three main assumptions:

1. The traditional role models/concepts for Germany as a “civilian” or “trade/commercial” power, which is typically reactive in nature, are overhauled and at least have to be complemented by the idea of a new self-understanding that the country is emerging as a regional great power with the willingness and ability to shape its global environment by overcoming resistance and resisting others in the sense of what Max Weber called “Gestaltungswille”. This assumption ipso facto follows from the idea that the strategic culture of a country is not a unitary, but a semi-permanent feature of its national identity that can adapt to structural changes in international politics and alter the country’s predispositions toward its role in the world. For this reason, German foreign policy (as any nation’s foreign policy) does not follow a particular International Relations theoretical approach (in the case of Germany the mostly favored “social constructivist” or “liberal institutionalist” ones), but is the result of different lenses (liberalist, constructivist and realist) through which we have to observe and explain any country’s foreign policy. Neither is the often cited concept of a “normalization” of German foreign policy –as the antipode to a German “Sonderweg”- a helpful analytical tool to conceptualize the country’s external relations. In other words, German foreign policy over the last 25 years has gradually adapted to a new strategic environment, contributed more to peace and security missions (without being interventionist), and therefore undeniably acquired more influence. This, in turn, means that any attitude of reluctance or even humility is no longer authentic or being accepted.

2. German foreign policy of course remains value and soft power-oriented, but despite all diplomatic and military restrictions - which in turn rather invokes a waning power of German foreign policy - has stepped into the power vacuum left by Russia’s loss of influence in and the US’ gradual disengagement from Europe. Effectiveness and pragmatism, not ideas and legal structures, henceforth are more and more dominating foreign policy decision-making. German interests are still rather oriented towards security policy goals than vice versa, but there is a growing tendency among politicians and the German people - which still is very supportive of centralizing more power in the EU - to defend the country’s own interests against those countries which seem to be even more disoriented, and to make strategic choices - choices that are influenced by the geopolitical and economic environment and long-term considerations about the role vis-à-vis Europe, the US and the rest of the world, particularly Asia. In this sense, and despite all ambivalences about its commitments, the country is more than a “status quo” power or a regional “hegemonic power against its will”.13 It is, however, also aware that it won’t become Europe’s lead nation in the foreseeable future that can press others to follow suit or for any burden sharing arrangement; the current refugee crisis indicates that member states do everything to delay or avoid implementing relocation agreements.

3. While Germany has become Europe’s powerhouse and is developing a stronger foreign policy profile, the US is struggling with questions of widening social and income inequality at home and its leadership in the world and neither France nor the UK are really willing (or have the capabilities) to take the lead in Europe; this will have a deeper impact on the transatlantic relationship and its future role in international relations in general and European Foreign and Security policy in particular. 



The Main Policy Challenges

In order to test these assumptions/hypotheses, it is necessary to briefly analyze the four major challenges which (should) rank highest on the German foreign and security policy agenda: the future of the world economy in general (with a special focus on rising Asia and the still most significant role of the transatlantic economic partnership - TTIP) and the Eurozone crisis in particular; conflict and crisis management at the EU’s periphery and beyond (including dealing with Russia and the most pressing threats that emanate from the Middle East); climate change and energy security as the most important contemporary transnational challenges; and the demographic shifts with all their implications for internal security (refugee problem). Particularly with regard to the first three policy challenges Germany has been under constant pressure to take more serious action and responsibility and even the leading role in Europe in the recent past. 

With regard to the Euro crisis and Greece, Berlin from the very beginning insisted on economic austerity and only started following the ECB’s pledge to do whatever it takes to prevent the currency bloc’s break-up when southern beneficiaries of EU rescue packages agreed to undergo drastic structural reforms.14 One can interpret this approach not only as an example of Germany’s strength as a facilitator in tackling the crisis, but also as a clear signal of the above mentioned German pragmatism. As a matter of fact, Berlin succeeded early on in maintaining a power constellation favorable to the country and pushing its austerity plans –despite the initial support for Greece among Southern European member states. On the other hand, solidarity in the Euro crisis can also be interpreted as a quid pro quo: Berlin was ready to fund a bail-out package for Greece –and maybe other countries to follow, but at the same time Greece had to accept to rigorous austerity cuts. The reason for this dual-track policy is very simple: Berlin knows that Germany’s success is not only the result of fiscal conservatism, strict economic management and structural reforms (which account for Germany’s export-led growth) but also of the specific structure of the European Monetary Union and even the labor and financial fallout of the Eurozone crisis. It also knows that strict austerity alone will not lift up a recession-hit Europe and that, vice versa, the country benefits from an economically stable Europe, to which it exports more than 40 percent of its products.

Germany even before the crisis had always favored saving, investment and comparatively tighter fiscal and monetary policy stances to inflation, more than countries in Southern and Western Europe

It is often stated in the literature that in the case of the Eurozone crisis in general and the Greece crisis in particular Germany’s fixation with austerity is the reason for Greece’s travails; in the U.S. some scholars even blamed the country for its hypocrisy as it received debt relief under the Marshall Plan after WWII, but was now making Greece and other member states suffer from its dictate. The truth, however, is that Germany even before the crisis had always favored saving, investment and comparatively tighter fiscal and monetary policy stances to inflation, more than countries in Southern and Western Europe which traditionally (like the U.S.) had a preference for consumption and expansionary fiscal and monetary policies. Moreover, different macroeconomic policies had led to divergent account balances already before the crisis. It would, however, be an oversimplification to interpret Merkel’s stance in the Eurozone crisis as one of being only deeply rooted in the orthodox school of economic ordoliberalism, which holds that states should set the rules for market forces, that deficits are harming economies, a moral hazard and terribly wrong.15 Germany itself went through a hard economic adjustment process at the beginning of the 21st century realizing that structural reforms were absolutely necessary to prepare the country for globalization and deep economic integration which made member states throughout the EU not only more prosperous but also vulnerable like never before. In other words, Berlin’s insistence on structural reforms in the Southern European countries and particularly Greece was based on the insight that dysfunctional domestic constellations in those countries were a source of risk not only for themselves but for the whole EU (fear of contagion). By doing so, Berlin may have chosen another path of solidarity, but one that reflected an understanding of how the Maastricht criteria had fundamentally failed to take into account divergent fiscal policy stances as a driving force of current account imbalances in an EU which did not provide incentives for anti-cyclical fiscal policies and lacked any financial redistribution mechanisms. 

Germany must escape from its contradiction to call for a rules-based world and punishment of Syria for using chemical weapons on the one hand, but then on the other hand let others do the punishing

Nevertheless, it should be noted that Berlin as well, in the end, gave in to painful compromises such as the ECB’s new role as a lender of last resort, its policy of quantitative easing. Nobody in Berlin at any point would have taken the risk of a break-up of the Currency Union. On the other hand, one should not overlook the facts that Greece had already benefited from a $117 billion write-off of debt owed to private banks and that much of the $380 billion in remaining debt in 2015 is owed to the member states, meaning Dutch, French, German and other European taxpayers, when Greece and its counterparts in the EU finally worked out a deal to keep Greece in the Eurozone. Moreover, it was not Germany alone, but especially poorer eastern European member states which in the end wanted to be tough on the issue of Greece and other Southern European member states. That’s why the more realistic narrative about the Eurozone crisis with regard to Berlin’s role is that of Germany as a very pragmatic, but nevertheless solidary facilitator of a compromise, at a painful cost to both sides. 

Against this background, the fact that Berlin took neither course exclusively but instead pursued such a pragmatic approach of doing both step by step is why the government has sustained such impressive popular support at home –and why even the NSA affair did not really weaken its ability to govern. By doing so Germany even withstood U.S. pressure and stronger preference for using counter-cyclical macroeconomic policies (that is a politics of “quantitative easing” and deficit spending to stir the demand side of the economy) to solve the Euro crisis and also reduce the large current account imbalances on the global level. And it has been so far withstanding all allegations that Germany has become a geo-economic power that is aligning with mercantilist emerging powers such as China although a crumbling Eurozone has made its economy more dependent on demand from these countries. As a matter of fact, it is just doing what other countries (including the U.S.) are doing: pivoting towards the region, which –economically speaking- is booming the most and where entrepreneurs see major profit margins. This is why all criticism that Germany’s demands would be a “betrayal of everything the European project was supposed to stand for”16 is overshooting the target. 

Berlin’s energy policy, on the other hand, is a perfect example of the country’s traditional soft power approach and at the same time willingness to even withstand the increasing domestic pressure as energy prices have started to divide the German electorate. Though the government is trying to correct the premise of Germany’s energy transition which holds that soaring prices for fossil energy would make eco-power affordable, it is still committed to the idea that climate and energy policy is less about gaining power than saving the world from global warming –a perfect example also that the country is not becoming less multilateral. While the U.S. is heading for oil and gas self-sufficiency, which will bolster Washington’s international position and its economy, Berlin, knowing that low energy prices are the driver for any industrialized country, is about to even harm its climate goals by eco-power. At the same time, however, it is realizing that energy security policy in Europe (not least because of Russia) has to be diversified on the supply side and become a “hard security” issue. 

A photo taken on March 11, 2015 shows US Secretary of State John Kerry (R) and German Foreign Minister Frank -Walter Steinmeier arriving to speak to the press at the State Department in Washington, DC during Steinmeier's visit to USA. Germany said on July 22, 2015 it was A photo taken on March 11, 2015 shows US Secretary of State John Kerry (R) and German Foreign Minister Frank -Walter Steinmeier arriving to speak to the press at the State Department in Washington, DC during Steinmeier's visit to USA. Germany said on July 22, 2015 it was "demanding answers" from the United States over fresh.

The issue which still contributes most to what experts like to call Germany’s “expectation gap,” are the perceptions of Germany at home and abroad when it comes to conflict and crisis management in the Greater Middle East with the conflict in Libya and across the greater Middle East-North Africa region.17 It would certainly be important for Berlin to leave behind the status of an inconsistent partner who abstained from the intervention in Libya and who maneuvered between natural allies and those who in effect were opposing those allies in the case of Syria. Germany must escape from its contradiction to call for a rules-based world and punishment of Syria for using chemical weapons on the one hand, but then on the other hand let others do the punishing. Nevertheless, it is also true that Germany’s reluctance in this regard is not an indication of a lack of willingness to commit troops to defend common values in general, but in line with a trend of other Westerns countries (including the U.S.), which have also become tired of wars. Berlin’s readiness for an albeit small “out of area” mission in Mali, its decision to arm the Peshmerga, its decisive role in the nuclear power struggle with Iran and last but not least the fact that the majority of the German people supports an increase in defense spending, indicate that Germany may still continue to prefer to exercise military restraint. However allegations of the country becoming “disconnected from the Western mainstream” do not square with its intentions and actions to meet the threats from misrule, upheaval, and sectarian/religious violence south of Europe’s shores. Beyond that, these developments have proven Berlin’s strategy correct in that the combination of pressure and sanctions is not simply the necessary prelude to an inevitable war, but rather an instrument to hopefully avoid it. And they support Berlin’s assumption that the overwhelming majority of conflicts in the world today cannot be solved militarily - which is also particularly true in the context of the Ukraine crisis, in which Germany became the leading power in dealing with Russia. 

Last but not least, there is the refugee crisis that many see as another example of Germany’s still value-oriented foreign policy. It is certainly true that Merkel’s stance on refugees can be seen as a moral issue. Moreover, it was a chance for the country (just a few weeks after the Greek crisis had reached its peak) to change Berlin’s image from the “ugly German” to the “welcoming culture.” On the other hand concern for Europe was at the heart of the chancellor’s refugee policy. Ahead of all other member states, Germany argued that the migration issue posed an even more severe challenge to the EU than did the Eurozone debt crisis, not least after it realized that it had a central role due to the sheer numbers of refugees which the country received. Repeatedly, Berlin raised its concern (compared to most member states) regarding the terrible living conditions of refugees in Lebanon, Jordan and Turkey; the EU’s unsecured external borders and insufficient asylum systems in Greece and elsewhere; and the implications of human trafficking in the Mediterranean. Finally, by pushing other member states (particularly its Eastern neighbors) for European “solidarity” and forcing a vote over the distribution of refugees Germany reinvigorated the image of once again molding European institutions and decision-making processes to serve its own interests.18 

Knowing that there are structural constraints to its leadership role in Europe and that the EU’s response to the crisis is divided and ineffective, Germany is cooperating with Turkey as the best option to control the flow of migrants into the EU and to Germany

In other words, Merkel’s position reflects what the Obama administration has called “smart power” –a combination of a value-driven, “liberalist” approach on the one hand and a very pragmatic realpolitik on the other hand, driven by the chancellor’s clear-sightedness about the dangers faced by Europe in general (less by the refugees but by the rise of far-right and xenophobic parties and movements), and Germany in particular as the country that benefits most from European integration.19 The problem, however, was/is that –other than in the Eurozone crisis- the other member states did not accept Germany’s role as Europe’s “facilitator” and default liberal political hegemon and thus forced the country to give up its fixation on abiding by rules when it came to applying the rules of the Schengen regime in the context of the crisis. This, in turn, led to Germany’s dilemma that it could decrease the number of refugees only through a European scheme. 

The “European solution” is based on a threefold approach: Germany is continuing to seek for new burden sharing arrangements; pressing for more effective controls on the EU’s external borders (by strengthening Frontex) and the establishment of so-called “hot spots” in the EU’s border states, denying refugees the right to choose their country of asylum within Europe; and finally supporting the expansion of the list of “safe countries of origin” and cutting deals with Turkey. As for any liberal hegemon, however, this comes at a high price (as not everybody is willing to follow the hegemon) and Berlin meanwhile wonders whether these costs are still worth bearing; that’s why there is also sympathy for the idea of closing the Bavarian borders and exercising Germany’s right under the Dublin regulation to turn back refugees who have crossed other safe countries in Europe.

This is why Berlin –though the chancellor is under pressure in her approach to the bilateral relationship with Turkey- in a very pragmatic way reached out to Erdoğan in the refugee crisis. Knowing that there are structural constraints to its leadership role in Europe and that the EU’s response to the crisis is divided and ineffective, Germany is cooperating with Turkey as the best option to control the flow of migrants into the EU and to Germany. The deal –financial support (at least 3 billion Euros) and fast-track of the visa liberalization process in return for a control of the migration from Turkey to Europe- will probably be funded to a large part by Germany. However, Berlin seems to be willing to pay this price, depending on Turkey as a pivotal partner and a divided and weak EU. In this sense, the EU-Turkey deal can also be interpreted as an extended bilateral deal between Berlin and Ankara. What it clearly indicated are the limitations to German hegemony in Europe: neither is the power potential of Germany in terms of composition and reach similar to that of the U.S. on the global level (at least in the past), nor does the highly institutionalized setting of collective decision-making in the EU allow the kind of free-wheeling power politics of the US or provide enough incentives for followership. Otherwise, Europeans would have taken matters and more money into their own hands to control the migratory pressure, and to live up to their normative integrity under the constraints of realpolitik. 



The Still Crucial Role of Transatlantic Relations

It is important to note that Germany’s role in the respected fields have to be analyzed in the context of its implications for U.S.-German relations. There are two paradoxical developments that currently shape this relationship: first, while it is still one of the most relevant bilateral economic and political relationships –the U.S. is the biggest market for German exports outside of Europe; Germany is the U.S.’s largest trading partner in Europe, with a total trade flow worth $172 billion, there is also an erosion of trust and clear signals of discontent with each other. This is not simply the result of the fallout from the NSA spying scandal, but due to the fact that perceptions of younger German and American policy makers and people have been shaped by controversial issues such as Iraq, the GWOT, the nature of the welfare state, carbon issues, the digital divide, the financial crisis or trade aspects (TTIP). 

There is, however, a great misperception about this supposed gap indicating that the two sides are still closer together than any other bilateral relationship. Many Americans are as upset as Germans about the encroachments on their privacy carried out by the NSA’s surveillance programs, as legislation on Capitol Hill attests. And many Americans still have a generally positive view of Germany (60 percent - more than 70 percent as reliable). The debate about where to draw the line between guaranteeing security and safeguarding civil liberties is arguably as vibrant in Washington as in Berlin. In other words, there is primarily an expectation gap if it comes to the point where we have to make trade-offs between competing values and negotiate differences (in terms of prioritizations due to different threat perceptions). 

Second, while the U.S. –though still playing the dominant security role in the world- has also become less risk-prone (“leading from behind”) and is realizing that there is no consensus on a feasible, quick fix for the most pressing issues on both sides of the Atlantic. German attitudes with regard to the country’s role in the world appear to be changing into the opposite direction –which from time to time may also provoke some sort of soft-balancing against the U.S. This development involves both opportunities and risks in equal measure. 

The debate about where to draw the line between guaranteeing security and safeguarding civil liberties is arguably as vibrant in Washington as in Berlin

On the one hand, positions on both sides of the Atlantic with regard to the chances of successful Western conflict and crisis management particularly in the Middle East have converged in a way that both sides see them more realistically and today have no illusions about their respective roles as external actors in the region. This new pragmatism corresponds with Germany’s less ambitious foreign policy agenda regarding the promotion of a liberal world order by Western leadership and will have an impact on future transatlantic burden sharing –with Germany and its European allies playing a larger role in Europe’s neighborhood and the US taking responsibility particularly in Asia, Latin America and parts of the Middle East (Gulf region). On the other hand, there is an inherent risk that the U.S. –still the only nation that can exert leadership- cannot convince a skeptical American public about its global commitment, will further retrench and even sidestep Europe, while Germany feels vindicated by this development and continue to depend on a global security system (“hedging” strategy) to which it definitely could make more contribution. According to this scenario, the U.S.’ strategy of “leading from behind” will become the real dilemma of the West. Taking all these trends in the global arena together it looks as if the most realistic future scenario for German foreign policy in general and transatlantic relations in particular will be a new Western world, not instead of, but within a post-Western world. 




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  19. Kemal Kirisci, “Europe’s Refugee/Migrant Crisis: Can “Illiberal” Turkey save “Liberal” Europe While Helping Syrian Refugees?,” European Policy Centre, Policy Brief, (February 19, 2016)

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