Given that Germany is a geo-economic power that is increasingly dependent upon exports and vital natural resources for its prosperity, it has adopted a cautious trading state approach in its dealings with Moscow – says Steve Szabo

Germany is the most important European player on Russia. Its economic relationship with Russia dwarfs that of the United States as well as that of any other European country. It depends on Russia for more than 30 per cent of its energy and has the largest Russian immigrant and émigré community in Europe. And some 6,000 German firms currently operate in Russia.

Given that Germany is a geo-economic power that is increasingly dependent upon exports and vital natural resources for its prosperity, it has adopted a cautious trading state approach in its dealings with Moscow. But as Russian President Vladimir Putin’s government has become increasingly repressive, the debate has accelerated within Germany about the balance between values and interests in its dealings with Russia.

German policy toward Russia — characterised by Foreign Minister Guido Westerwelle as “change through trade” — has been modeled on its successful Ostpolitik of the 1970s and 1980s. This has meant that German business can continue to make large profits in Russia while human rights and democracy advocates can be told that this is contributing to the gradual democratisation of Russia.

But this policy, which has been labelled a ‘modernisation partnership’, is now at a crisis point. German Chancellor Angela Merkel’s government opposed the Bush administration’s moves toward North Atlantic Treaty Organisation membership for Ukraine and Georgia at the NATO Bucharest Summit in 2007 – and has tried to dilute if not kill America’s plans to deploy missile defense in Europe. Berlin has also blocked attempts to create a European Union-wide policy toward Russia in the past.

In general, it has looked for compromises and ways to soften Western approaches toward Moscow. All this is now in question. Not only has Putin’s regime become more corrupt, anti-democratic and nationalist at home but also it is now pressuring Ukraine into a choice between Russia and the West. Westerwelle joined demonstrators in Kiev in support of a Ukrainian agreement with the EU, while German President Joachim Gauck has just announced that he will not be attending the Sochi Olympic Games this winter.

This follows more than a year of increasingly critical comments by Merkel on the state of affairs in Russia and has led to a deep freeze in her personal relationship with Putin. However, those who expect a dramatic shift in Germany’s Russia policies will be disappointed for a number of reasons.

First, Germany’s Russia policy remains above all guided by economics and energy and the substantial Russia lobby in the German business community is unlikely to be moved by events in Ukraine. This lobby is influential in all the main political parties, especially in Merkel’s Christian Democratic Union; and although it has rising concerns about the rule of law, corruption and its impact on the investment climate in Russia, it continues to see the Russian market as an important one.

Second, the Social Democrats are about to return to the governing coalition and are likely to occupy the Foreign Ministry. The last SPD Foreign Minister Frank Walter Steinmeier was the architect of Gerhard Schröder’s Russia policies and of the modernisation partnership. Both he and his party remain the heirs of not only Schröder but also of former Chancellor Willy Brandt and of Ostpolitik and are far less critical of Russia than much of the CDU and the Greens.

Finally Germans are broadly skeptical of Ukraine’s political culture and the durability of its Western orientation. Having been burned by the euro crisis and the costs of integrating East Germany, Berlin is unlikely to want to risk having to bail-out the Ukrainian economy. Germany has become a late and reluctant supporter of both the Eastern Partnership and of EU and NATO associations with Ukraine. Its stakes in its relationship with Moscow continue to be higher than those with Kiev.

Although, the German public and media are deeply skeptical about Putin and his system of governance. The German Marshall Fund’s latest Transatlantic Trends survey finds that Germans have the most critical views of Russia not only in Europe but also even in comparison with opinion in the United States. The two tracks of German policy toward Russia — the economic and value tracks — are now in greater tension than at any time since Boris Yeltsin’s presidency. German leaders are now walking a tightrope between these contending influences. While the political rhetoric may become more critical, in the end geo-economic Germany is unlikely to see any alternative to continuing engagement with Russia – with the hope that after Putin things will improve.

Steve Szabo is the executive director of the Transatlantic Academy, an initiative of the German Marshall Fund of the United States think-tank in Washington DC. The GFMUS first published this article as part of its Transatlantic Take Series: Germany faces tough choices on Russia