The Daily - How Germany’s Approach to Russia Backfired

Episode Date: April 8, 2022

Thirty years ago, Germany put forth a theory for how to work with Russia. Major energy deals, leaders argued, would keep Russia from going to war with its neighbors.Over the past 20 years, Germany has made itself incredibly dependent on Russian gas. The war in Ukraine has complicated that relationship and has shown how Germany’s approach to Russia has not only failed, but also backfired.Guest: Katrin Bennhold, the Berlin bureau chief for The New York Times.Want more from The Daily? For one big idea on the news each week from our team, subscribe to our newsletter. Background reading: Germany, dependent on Russian gas, has so far refused to cut off President Vladimir V. Putin, whose war it is effectively subsidizing to the tune of some $220 million in energy payments a day.Under increasing pressure to sever the country’s reliance on Russian energy, German officials must contend with deeply rooted economic ties. For more information on today’s episode, visit nytimes.com/thedaily. Transcripts of each episode will be made available by the next workday. 

From The New York Times, I'm Michael Barbaro. This is The Daily. Thirty years ago, Germany put forth a theory for how to work with Russia that was supposed to keep Russia from going to war with its European neighbors. with its European neighbors. Today, the story of how that theory not only failed, but backfired on Germany. I spoke with my colleague, Berlin Bureau Chief Katrin Benhold.

It's Friday, April 8th. The Western world has been looking for the next logical way to punish Russia. And everybody keeps returning to the same place, which is shutting off the flow of energy from Russia to Europe and to Germany specifically. And so that's what we want to talk about with you. Why does that keep coming up as a way of inflicting pain on Russia? up as a way of inflicting pain on Russia? Michael, Russia completely relies on the money that it earns on its natural resources, oil, gas, even coal. And the European Union as a whole has been buying a lot of all of these things from Russia. Germany in particular gets about quarter of its entire energy supply from Russia. About half the coal exports in Germany come from Russia. Some of that is oil. That's about a third.

And over half of German gas imports have been coming from Russia. So Germany is basically Russia's most lucrative client in Europe for energy and especially for gas. In fact, if you put it all together, Germany pays Russia 200 million euros a day, roughly, in energy payments. So the reason people are calling for Germany to shut off the energy coming from Russia is because that flow of energy is one of the biggest remaining sources of revenue for Russia at a time when they're being sanctioned left and right, this remains

a way for Russia to basically pay for the war. Yes, I think that's right. I mean, Russia is selling energy across the world, not just to Europe, but Europe is an important source of revenue. And Germany within Europe is the biggest source of revenue for gas exports for Russia. So, you know, the focus has been very much on this one pipeline, Nord Stream 1, which is a pipeline that carries most of the gas that Germany uses, and in many ways has become a symbol of, you know, Germany's reliance on Russia for gas, but also this stream of energy revenue flowing the other way to Russia. Right. So, Katrin, why not just turn off that pipeline? As you say, this symbol of money leaving Germany and going to Russia at a time when it may be committing war crimes.

The problem, Michael, is that over the last 20 years, Germany has made itself incredibly dependent on Russia. This pipeline carries about 60 billion cubic meters of gas every year. It's also more than half of the entire gas that the German economy uses to keep humming. Many manufacturers, you know, a lot of the sort of German companies that contribute to this being an export champion in the world, these companies use gas to power their production. So this pipeline, which carries the gas to Germany, is something that in a way represents this. Politicians at the moment say, we simply cannot cut off the gas right now. They're scrambling to become more independent, but right

now they say, we can't do it. So if you turn off this pipeline, you basically turn off the German economy. That's the thinking. Or at least it would take a very serious hit. So a lot of people are worried about this. And what's interesting is, you know, normally you've got these economists who work for labor unions, and you've got economists, you know, who work for the Business Federation and they don't tend to agree on everything. But in this case, they absolutely agree. They say the turning off the gas right now to punish Russia would be catastrophic for the German economy. They're talking about a six point decline to GDP, which is worse than anything that we've seen for quite a while, including, you know, the first year of the COVID pandemic, and in a similar ballpark to the financial crisis after 2008.

So, Katrin, how is it that Germany has become this dependent on Russia for something as essential to its economic well-being as gas? Where does that story begin? something as essential to its economic well-being as gas. Where does that story begin? You probably have to go back to reunification, Michael, when Western Germany and Eastern Germany, which was, you know, a communist country that belonged to the Soviet sphere of influence, became one country again.

The Berlin Wall fell in 1989, and there was the sense that peace in Europe was now a given. There was a huge ambition to sort of include Russia into what German politicians sometimes call the House of Europe, engage with Russia, trade with Russia, bind Russia to Europe through economic interactions. And the Germans were particularly keen on this, partly because, you know, there is a history of guilt dating back to the Second World War. Guilt over what? Guilt over 27 million Soviet deaths

as they came and liberated Germany from the Nazis. And in the German psyche, often Soviet kind of equals Russian. And so there is a sense that we owe them and we certainly owe it to ourselves that there shall never be a kind of an aggressive, a confrontational relationship with Russia. It's bad for everybody. So given all these dynamics and all these complicated sort of historical feelings, you know, Germany really kind of developed this philosophy that after the fall of communism, as Russia became a democracy and the hope was that it would sort of grow closer to the West, that engaging it in trade and becoming more interdependent, Germany on Russia and Russia on Germany, that this would further peace on the continent and bring prosperity to all. There was this sort of idea. Well, just to make sure I understand that logic, it's that if Russia is economically linked to Germany and to the rest of Europe, but especially to Germany because it's the biggest economy in Europe, then Russia acts democratically and acts peacefully towards the rest of Europe. That's right.

So how does that thinking play out in practice? So in the 1990s, after the wall came down, Germany and Russia, you know, start trading much more. And one of the clearest manifestations of, you know, a kind of future commitment almost to Russia is that people start talking about a pipeline that directly connects the two countries. Now, gas had been running from Russia to Germany for a long time. And it had been coming through these underground pipelines that, you know, went through other countries, including Ukraine and Poland,

and then, you know, lined up in Germany. But now they were talking about a pipeline that went direct from Russia to Germany, and they called it Nord Stream 1, which is this incredibly ambitious project, an undersea pipeline, nearly 800 miles long, you know, serious feat of engineering that would link Russia to Germany directly bypassing these, you know, other pipelines that exist over land and give Germany direct access to Russian gas. And so this was sort of proof that Germany meant business long term.

Because this was a long term, incredibly expensive, complicated undertaking. Right. And one of the biggest champions at the time of this pipeline was Germany's chancellor, Gerhard Schröder. And he really hit it off with this new Russian president, Vladimir Putin, who, only a year after he was elected, comes to speak to the German parliament. It's the first time a Russian president has ever addressed the German parliament. This is a big moment. And what's more, this guy used to be a KGB officer in Dresden, so he speaks fluent German. He charms the entire German establishment by standing up in parliament and speaking in German.

Speaking in what he himself during that speech called the language of Goethe, Schiller and Kant, you know, referring to like two of the most famous poets in Germany and a famous philosopher. So he really puts it on. And, you know, if you look back over that speech, it's striking. It almost seems like everything that Germans had hoped for in the 1990s, binding Russia closer to Germany, giving an incentive to become more democratic and to engage in sort of trade with the West, that all this was actually panning out nicely.

You know, he was talking to parliamentarians. He was saying, Russia is a friendly European nation. He was actually talking about stable peace on this continent and how it's a, quote, paramount goal for our nation. He went so far as to actually describe, quote, democratic rights and freedoms as the key goal of Russia's domestic policy. So you can imagine, members of the parliament,

from the conservatives all the way to the social democrats, were riveted. In fact, he got a standing ovation that day. Wow. He kind of seemed to embody this post-Cold War world and Europe in which peace with Russia was not just possible, but actually kind of a long-term prospect. So trade for peace, this philosophy that money to Russia will make it a better actor, this all seems to be working. And it's very much embodied, it sounds like you're saying, in this speech where Putin comes to Germany and says, here I am, your partner, just the way you want me to be. That's right. And you know, it would take another few years. But in 2005, this Nord Stream 1 contract is signed by Schröder. And when Schröder's successor comes into office,

it's Angela Merkel. And she's a conservative. So she's from a totally different party and disagrees with Schröder on lots of things. But on one thing, they're totally aligned, it seems, and that is the Russia policy. She's the one who actually ends up opening Nord Stream 1 in 2011. Thank you very much, Chancellor Merkel.

Indeed, you may take your place at the wheel. Ladies and gentlemen, excellencies, we've come to the high point of our ceremony. We're going to turn the wheel of history. She travels up to the Baltic Sea. So now I will ask you to put your hands on the wheel, but don't turn it yet, okay? Don't turn it yet.

And kind of turns the proverbial spigot with several other European leaders and also the Russian president. And there's photos of the occasion and they're all standing there together, you know, turning that wheel looking incredibly happy. They're looking like this is a very good thing. And Angela Merkel is in fact so convinced by this idea of this gas interdependence with Russia that that same year announces that she wants to phase out nuclear power altogether. This is the year of the Fukushima disaster in Japan. Germans have never been crazy about nuclear power, but this particular disaster really turned public opinion against nuclear power even more. And so Angela Merkel decides we're going to phase out nuclear power. And she does it that same year that Nord Stream 1 opens, which sort of shows how reliable she clearly believed this source of energy was. So even Angela Merkel, who was never blue-eyed

and sort of delusional about Vladimir Putin, thought that this gas supply was something you could rely on pretty much forever. Right. And in the process, Merkel, of course, is deepening Germany's reliance on this gas pipeline from Russia. Absolutely. Germany was relying on nuclear for 25% of its electricity generation.

So with that on its way out, gas became even more important. And in fact, at that time, they were already planning a second pipeline in the same place, which they were going to call Nord Stream 2. in the same place, which they were going to call Nord Stream 2. But then in 2014, Russia invades Crimea. And this was a moment really when Germany's allies for the first time seriously began to question this reliance on Russian gas and began to question the wisdom of signing up for a second pipeline. Right, because when Putin invades Crimea, it suggests that this German philosophy you have been describing, Katrin, that trade makes Russia a more peaceful country, might not

be entirely correct. Exactly. So this was kind of the first wake-up call. And it does jolt the German establishment. There's no question that people are beginning to think, you know, very hard about this philosophy of theirs. And this is when you begin to see very serious and vocal opposition from Germany's allies in Europe, but also in America. You know, there's a lot of Congress people who argue that Germany is making itself way too dependent, that Germany becomes kind of almost a hostage to the Kremlin, that Russia is now holding all the cards because Russia delivers the gas and controls that tap. supply, that they could turn off the tap at any time. And that very threat would mean that Germany could not act in the way that it needed to, because it was too dependent. Germany kind of said,

we don't believe that. The Russians have always been reliable with their gas deliveries. And so they kind of reassure their allies. They say, we think this is fine. And Nord Stream 2 goes ahead. We'll be right back. So, Katrin, once Russia starts to threaten Ukraine at the end of last year and into the beginning of this year with troops on its border, how do Germany's leaders think about the place of these two giant gas pipelines in this emerging conflict. Germany was incredibly slow to really start talking about pipelines. I mean, as recently as January, Chancellor Scholz, who had, to be fair to him, just been in office for a month, still was talking about Nord Stream 2 as a, quote, private business project. And so less than three months ago, this government still seemed wedded to the idea

that they could just proceed with a further entanglement with Russia and that the pipeline should go ahead. It was interesting when Scholz went to see President Biden in February, and they stood there together for a press conference at the end. And Scholz was very directly and multiple times asked whether he was prepared to shut down Nord Stream 2 if Russia actually invaded. He said that he would take measures, but he didn't name the pipeline and he just dodged the question.

It was actually President Biden who said, if they invade, Nord Stream 2 is history. And when Putin, a couple of days before the invasion, recognizes these two breakaway republics in eastern Ukraine, Donetsk and Luhansk, Scholz finally announces that Nord Stream 2 won't go ahead. Just to be clear, this is Germany shutting down the pipeline that's not yet operational rather than shutting down Nord Stream 1, which is throwing tens of millions of dollars a day,

we think, to Russia. That's true, although it is the first step, the first sign that Scholz is acknowledging Germany had it wrong for 30 years. And just a few days later, after Russia is actually invaded, Scholz stands up in parliament and gives a 30-minute speech. und gibt einen 30-Minuten-Sprech, der Bundeskanzler Herr Olaf Scholz, der Bundeshaushalt 2022 wird dieses Sondervermögen einmalig mit 100 Milliarden Euro ausstatten, Die Armament, you know, with 100 billion euros worth of special funds to get the German Army up and running again. Wie Sie wissen, haben wir gestern entschieden, dass Deutschland der Ukraine Waffen zur Verteidigung des Landes liefern wird. He announces that they would, after all, deliver weapons to Ukraine, another taboo, which had been unthinkable just a couple of days before.

Ukraine, another taboo which had been unthinkable just a couple of days before. And crucially, he announces that Germany had to extract itself from its dependency in energy terms on Russia. For a free, open, just, and peaceful Europe. We will defend it. So this is a complete reversal of the philosophy, Katrin, that you described as taking root after German reunification in the early 1990s, which says,

get more and more bound up with Russia, because that will make Russia a more peaceful country. This is Germany rejecting that philosophy. Exactly. On that day in February, basically Germany decided that it had been wrong about military policy, that it had been wrong about its foreign policy regarding Russia, and that it needed to change its energy policy. It was kind of a complete rethink and one that went pretty deeply to the kind of core of German post-ren identity, and to the core of the German business model. But of course, this has to be a lot easier to say than to do, to suddenly stop being dependent on Russia for energy, because as you've told us, Germany has gotten rid of its nuclear energy, for example,

and its whole economy would collapse without Russian gas. It's incredibly difficult, Michael. And, you know, they are being tested almost every day with more and more people pushing them to do more and move faster. And in some ways, they're moving remarkably fast, given that they've done nothing for a very long time. But you can see, for example, that coal imports from Russia have already halved in just over a month.

Wow. Oil imports, you know, have gone down pretty significantly from, you know, kind of a 35 to a 20 percent share in the total. Gas is harder. We've had ministers travel the world trying to sort of identify alternative sources, but they need so much of it. So it's been incredibly hard. And you can imagine that the pressure is only growing. Last weekend, when these terrible images of the atrocities in Bucha, of these people, civilians lying dead on the streets, flickered across German television screens as they did

across the world, that's when it really all blew up. And Germans were being pressed by their allies, especially in Eastern Europe, to basically rise to the occasion and cut off the gas. Even within Germany, the pressure is rising. It's very interesting. We've had critiques from neighboring countries for quite a long time. Within Germany, you're now seeing in very conservative newspapers, editorials that are basically talking about Germany's moral obligation given its sort of genocidal past. So, you know, you've got this financial newspaper, Handelsblatt, which had an editorial that said, the country that proudly proclaims that Europe will never again see the likes of Auschwitz is pumping 200 million euros each day into Putin's

war chest. You know, all of a sudden, this editorial says, the discussion in Germany about whether our economy would grow by 6% or just 3% in the event of an energy embargo seems petty and insignificant. We resemble a hostage to the Kremlin. I just want to talk about this editorial because it is very powerful what you just read. It seems to be asking, how can we, as a country that committed the ultimate war crimes, help finance a war in which another country is allegedly committing its own atrocities? It's an incredibly difficult question in this country. And you can imagine the sort of moral debates that are raging right now. You actually have a majority of Germans by now in polls saying they would be prepared for their government to simply cut ties, cut the gas ties

with Russia and shut off. But the government is arguing that they don't actually know what that would mean. Cutting off the gas would not just mean, you know, a massive rise in energy prices. It would mean an increase in unemployment. It would mean a recession that might be worse than anything we've seen for a couple of decades. They're basically acknowledging that they've lost all leverage, which is exactly what their allies had warned them of many years before. You know, Catherine, in thinking about the story that you have just laid out here, it really feels like the economic relationship that Germany pursued with Russia since reunification, since the 1990s, it did

not prevent Russia from doing bad things, which was the theory. In fact, it has given Russia leverage that probably allowed it to invade Ukraine because it knew on some level that Germany could only go so far in punishing it without profoundly hurting Germany itself. It knew how reliant Germany was going to be on its gas. In other words, Putin figured out that this theory of interdependence in an area like gas, that could be a weapon that he could use against Germany. Not a weapon, really, that he could use against Germany, not a weapon really that Germany could use against Russia. That's right. I mean, there's no question that Germany got the balance wrong. You get a scenario where basically you turned interdependence into a kind of dependence,

which has kind of exposed a fundamental weakness in the story that not just Germany, but a lot of countries in the West, you know, that we pretty much all told ourselves after the fall of communism, after the end of the Cold War, that if you trade, if you make the costs of foregoing peace high enough, then you preserve peace. And it kind of works up to a point, but that point is basically when you're dealing with autocracies, like Russia. Well, Katrin, thank you very much, as always. We appreciate it. Thanks, Michael.

On Thursday, in the latest effort to punish Russia, the European Union, including Germany, voted to ban the importation of Russian coal. But despite pressure from Ukrainian officials, the EU did not ban Russian gas. In a statement, Ukraine's foreign minister said that as long as European countries continue to buy Russian gas, they are, quote,

continue to buy Russian gas. They are, quote, supporting Ukraine with one hand while supporting the Russian war machine with the other hand. We'll be right back. Here's what else you need to know today. On this vote, the yeas are 53, the nays are 47, and this nomination is confirmed. On Thursday, the Senate voted to confirm Judge Katonji Brown Jackson as a justice on the Supreme Court, making her the first black woman to serve on the nation's highest court. as well as three Republicans who broke ranks with their party,

Senators Susan Collins of Maine, Lisa Murkowski of Alaska, and Mitt Romney of Utah. In our nation's history, 115 individuals have been confirmed by this body to serve on the Supreme Court of the United States. Of those, 108 have been white men. Only four have been women. Only two have been African American. But Ketanji Brown Jackson will be the first African American woman ever to hold the title of justice. In a speech from the Senate floor, Democratic Majority Leader Chuck Schumer called it a long overdue moment. Think about the impact that will have on our democracy. Untold millions of kids will open textbooks and see pictures of Justice Jackson among

the highest ranks of our public figures. How many millions of kids in generations past could have benefited from such a role model? Jackson, who replaces Justice Stephen Breyer, is expected to officially join the court at the end of its term, sometime later this summer. end of its term, sometime later this summer. Today's episode was produced by Stella Tan, Asta Chaturvedi, Jessica Chung, and Chelsea Daniel. It was edited by Patricia Willans and Paige Cowett, contains original music from Marion Lozano and Dan Powell. And was engineered by Chris Wood. Our theme music is by Jim Brunberg and Ben Landsberg of Wonderly. Special thanks to Alishaba Etube.

That's it for The Daily. I'm Michael Bilboro. See you on Monday.