Was there no reasonable way to deter a completely foreseeable Russian invasion of Ukraine? If there was, which country would have led on this? We submit that country should have been Germany, not the United States. However, three main policy factors prevented effective German leadership in Europe for anything other than maintaining a massive current account surplus, fiscal finger wagging at southern EU member states and energy transition experimentation. These frameworks are the German avoidance of any leadership role inside Europe due to its world war experiences, the accumulated effects of the decades long policy of Ostpolitik in relation to Russia and the blind spots created by an all-in, nearly blind positioning around their energy transition, Energiewende. The combination of these elements we believe created an unwillingness and inability to effectively counter what had become increasingly belligerent and obvious Russian intentions toward its European neighbors. We suggest this handicap has likely long been incorporated into Russia’s strategic assessment of potential European deterrence and reaction. It is reasonable to conclude that an aggressor’s perceptions of the strength of reaction from their most forceful opponents figures into their calculus for go or no-go over a red line. A red line such as, say, the invasion of a sovereign country and indiscriminate bombing of civilians.
At a more human level, the Russian invasion of Ukraine has once again brought to light the inability of the West to prevent widespread civilian suffering and destruction, some of the worst in three decades. In a real sense, the core problem remains the inability of nations to construct effective deterrents to bad actors even when these actors’ roadmaps are well telegraphed. VIEW also considers the execution of strategies without proper consideration of externalities to be a core failing in this instance as well. In the German case, this manifests as the pursuit of its energy transition with laudable intentions to improve climate conditions but simultaneously increasing energy dependence on external energy sources (Russia), which in turn contributes to a destabilized security landscape in Europe.
The Ukraine war seems uncomfortably similar to another European tragedy that we are familiar with through good friends, the Bosnian War in the 1990’s. We have heard first-hand about the horrors visited on innocent civilians during that conflict, along with the inability of the UN and the international community to properly safeguard the most vulnerable. As is the case in Ukraine today, it was not as though civilian casualties and atrocities were not visible, but still the Blue Helmets failed in their objectives. We remain frustrated with the chronic inability of the “international community” to both forecast the likelihood of these events and more importantly, deter them. Instead, there is a sense we are ready to skip ahead to another series of post-war trials at the International Criminal Court in the Hague, too late for victims. And we would put odds of this sort of legal action against any Russians as negligible, as the avoidance of this will almost certainly be one of the conditions for an eventual cease-fire. Depressingly, in the world of non-profit NGO’s, much of the focus remains squarely on securing justice for victims, not on prevention of, or positive intervention into these most devastating episodes before they happen. VIEW understands this, as NGO’s are not governments who should rigorously evaluate their grand strategies for unforeseen risks and consider externalities that may need to be mitigated or insured against. Sadly, we are watching another humanitarian disaster play out daily via social media and television. The murkiness of the battlefield makes it hard for us to judge which side may have the advantage, but we are highly confident a toll is being taken on the innocents and will continue to be extracted regardless of outcome.
Apparently, whatever deterrence strategy the collective West had regarding Russia failed. We submit there effectively was no strategy. The West contributed to instability with NATO expansion talk generally and in the case of Ukraine, a 2019 constitutional change compelling a move toward Europe did not help. The ingredients for this conflict have been glaringly visible for years and judging by the strong and unified European response, the West considers the current invasion a disastrous turn of events. Germany has even reconsidered several of the most ill-advised actions it had been pursuing until Russia pierced the Ukraine border. We say a day late and a dollar short. If European outrage is as strong as advertised however, would it not have made sense to galvanize the region in a preventative strategy of the same force and unanimity taken post-invasion? Opportunity lost putting together an ounce of prevention. The Ukrainian invasion was not stopped despite stern threats from the United States and parts of Europe. Since Russia crossed into Ukraine increasingly onerous sanctions have been enacted, yet these do not appear to have slowed the pace of conflict. Our sense is sanctions will be as effective at stopping Russia as they have others wars in the past, which is to say not very. If a peace deal is reached we are sure there will be sanction proponents touting their actions as the decisive pressure brought on Russia to force a deal. For our part, we would go with the Ukrainians on that score and their ability to make a mess of the Russian battle plan. The parallel economic war has escalated to a level where, as with all military escalations, the pain will not be exclusively borne by one side. Ramifications for global economics may well reverberate for some time after this conflict concludes. Many are writing about the how Ukraine will end globalization (we have written it was already in a steep decline and Covid stomped on it further), create fundamental changes in the currency markets ultimately to the US dollar detriment (again, this has been developing for some time) and create a new bloc of influence more Eurasian land-mass defined. Like many shifts such as these, all of them have already been “trending” but now come into focus more clearly. But this is all “horse out of the barn” stuff when we think of the people of Ukraine. What strikes us is the feeling that one side in this conflict, Russia, has been preparing more thoroughly for this confrontation than the other. Or at the least, as was the case specifically with Germany, past strategic errors created a weakened economic, military and political projection that once perceived, could be exploited. Why do we single out Germany? Surely they do not shoulder all the responsibility for not stopping Russia. True, but they are the dominant economic power in Europe, have disproportionate political influence in the EU, have made it their business to become intertwined with Russia economically and quite bluntly, should be the leader even though they hide behind their history as a shield to not take the European lead. Yes, this flies in the face of the EU bureaucracy wanting to lead in that it represents all European nations as a bloc. But how effective has Brussels been really at much more than constructing a mind-numbing bureaucratic web for its members to deal with? The reality is some countries are more equal than others and sometimes one needs to stand out and lead if they want the rewards that come from a dominant position. Any coalition has a leader, no matter how many members there are.
Given Germany’s size and influence in the EU, it naturally falls into a practical leadership position in dealings with the East and in particular, Russia. To be fair, the EU has become more assertive in many aspects of regulatory and bureaucratic controls since the Treaty of Lisbon went into force in 2009. The pull Brussels feels to insert its tentacles across nearly all aspects of European government continues apace. The development of the German relationship with Russia post-war is worth noting. The German Institute for International and Security Affairs published a helpful comprehensive overview in their 2017 publication, “German-Russian Gas Relations” and described three phases in the relationship, beginning with post-war until the start of German reunification, reunification until the Global Financial Crisis and from the GFC until today. Beginning in 1969 with the adoption of the policy of Ostpolitik, Germany began establishing deeper commercial relationships with Russia where a foundational component was the gas and oil trade. From a standing start in 1970 until 1980, Germany (West Germany then) went from essentially zero gas imported from Russia to slightly over 30% of all of the country’s gas imports. This first phase of development of the resource trade was part of a policy of incremental normalization between West Germany and the East. It was popular among the Nobel crowd, with Chancellor Willy Brandt winning the Nobel Peace Prize for his efforts at detente in 1971. Motivations were clear, Russia received imports of equipment and technology as well as hard currency, while Germany found diversification for its export markets and gas supplies while believing in the long run benefits of interdependence (maybe hoping the Russians/Soviets would gravitate towards Western norms, which they clearly have not). Beyond economics, we interpret the main goal of Ostpolitik to facilitate through peaceful means first the reunification of Germany and secondarily, cordial relations with the Soviet Union. Post reunification, our view is that the German focus was squarely on integrating East and West, with little focus externally. That meant integrating the German Democratic Republic’s gas system into that of West Germany first and foremost, to be followed by Europe thereafter. The German disinclination to be out front and lead after two disastrous world wars seems to have resulted in what we consider a strategic blind spot where when one does not think of oneself as a leader, the implications of your actions externally are likely less considered.
Shortly after the dissolution of the Soviet Union, issues with Ukraine surfaced around payments and disputes over quantities of resource delivered. The Russian-Ukrainian interplay continued to remain difficult and resulted in development of gas transport infrastructure that bypassed Ukraine and culminated in Chancellor Schroeder’s 2005 approval of the Nordstream project in his last days in office. Shortly after he left formal politics, Schroeder seamlessly joined the Nordstream team and ultimately was nominated for a directorship at Gazprom, the Russian gas company that controls the Nordstream 1 and 2 pipelines.
So over the years, aside from enriching a former Chancellor as a sponsor of Russian gas, Germany’s energy situation evolved as follows:
Primary Energy Consumption Source (Source: German Energy Balance)
1990 2010 2019
Coal 15.5% 12.1% 8.6%
Lignite 21.5% 10.6% 9.1%
Petroleum 35.1% 32.9% 35.2%
Gas 15.4% 22.4% 25.0%
Renewables 1.3% 9.9% 14.8%
Nuclear 11.2% 10.8% 6.4%
Indigenous Production 41.8% 29.2% 28.1%
Imports as % of Primary
Energy Production 57.5% 70.7% 74.4%
Of Imports:
Coal 2.1% 13.2% 12.0%
Oil 59.2% 46.8% 47.6%
Gas 20.4% 25.8% 33.3%
The German picture is one where, compared to 1990, the country imports more energy, has ramped energy consumption in gas and renewables and shrunk its capabilities in nuclear and coal. Importantly, its indigenous production capabilities in all categories save renewables has declined since 2010, resulting in nearly three- quarters of it energy needs provided by external sources, by definition creating a more insecure domestic energy platform. And we have not even discussed the costs associated with this transition and inefficiencies of the resultant grid. Purely from an emissions standpoint, Germany has reduced their Co2 load by -4.9% from 2005-2017 while the US has decreased theirs by -14.5% and China has grown emissions +73.7%. In fact, despite all the efforts and costs Germany has heaped upon itself, China has in 12 years added emissions equal to 5.8 total Germanys. This highlights the difficulty, bordering on futility, of constructing an aggressive and costly national climate transition plan that has many risks involved, some borne by neighbors, where a goal is to make a meaningful impact on global emissions. Especially when your footprint is less than 1/10th the size of the biggest house on the block.
Given the Ostpolitik effect of intertwining its economic future with that of Russia, Energiewende and the EU essentially turbocharged the starkly negative implications of that strategy on regional security and Germany’s ability to foresee and act as a regional leader. How?
First, the EU became more aggressive in trying to dictate a commercial structure for dealings between countries inside Europe and those with relationships from the outside. This created risk to the Gazprom business model which had for decades been built on a cozy Germany to Russia and monopoly to monopoly sort of relationship. The EU push, now with newer authority granted it by sovereign members (Germany one of them), was to unbundle gas operations (anti-vertical integration) and open markets (negative for pricing), both dramatic changes to the historic operating paradigm for Russian gas. As Russia considers natural resource protection a national security issue, any change in the positioning or advantage of her flagship gas operator would be considered a grave economic risk, one might say existential from an economic point of view. An appropriate analysis of the Russian industrial foundation should have assessed how big a risk this could have been perceived, what potential mitigation efforts would be taken and how these would effect the German and regional risk landscape. Certainly, the Nordstream ventures were a an effort along these lines but they lead to the second implication of the German meta-strategy, dependence. With increased dependence came a decrease in optinality for not only Germany but Russia as well. How could the Germans not have seen Russian aggression coming and what benefits from the relationship did they see that justified this diminished energy sovereignty?
Second, the goals and spirit of Energiewende meant gas importation would remain significant, especially with the nuclear grid sunset strategy in place. Instead of relying on technology to maintain a safe, internally generated power source with nuclear, Germany singularly chose to abandon nuclear and instead bet on the technologies behind wind and solar. The requirement to eliminate nuclear put additional pressure on gas and even coal for baseload, non-intermittent power production. Given these are increasingly imported and use of fracking technologies apparently never saw full consideration, reliance and funding of Russian gas remained front and center to Germany’s medium term energy future. Nordstream pipelines were further solidifying links with Russia that somehow seemed appropriate to Berlin. We wonder what scenario Berlin thought was the most likely construct of the future and how increasing dependence on power from an ever more volatile neighbor was a positive input into that future. It really is a sort of “what were they thinking?” scenario. The broader risks of narrowing energy sources of supply while increasing imports seem to have been completely ignored by some blind, one dimensional thought process to avoid what was considered an existential crisis in the climate.
So in the end we have a country that has historically prided itself on its intellectual rigor and methodical approach to process formulation that takes up an ill-conceived policy (Ostpolitik), poorly executes a mega-transition (Energiewende) and shies away from its responsibilities as a major regional power. Instead of having made hard choices that considered regional implications of their actions, Germany ignored risks to their neighbors and themselves, did not feel compelled to assume a leadership role in ensuring regional security and has let other, less powerful Europeans be more aggressive in trying to avoid the reality the people of Ukraine face today. Opportunity lost.
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