Russia Plays Both Sides in Germany

Moscow knows it doesn’t have much economic leverage right now.

By: Ekaterina Zolotova

On Dec. 8, a delegation from the AfD, a far-right German opposition party whose interests in the country tend to align with Russia’s, arrived for talks in Moscow. 

Russian Foreign Minister Sergei Lavrov made a rare appearance at the meeting. 

Also early last week, Russian President Vladimir Putin held a phone call with German Chancellor Angela Merkel after a considerable period of abstention. 

The reason for the uptick in attention Russia is paying to Germany is simple: Berlin hopes to restore ties under the Biden administration, and Russia doesn’t like that. 

So Moscow is trying to make inroads with Germany while it can, influencing domestic politics and ensuring that bilateral trade and economic relations will grow despite Germany’s turn to the United States.

Russian-German relations have always been one of the issues around which European politics revolves. Historically, Russia has been uniquely vulnerable to invasion from the west, and that westerly threat is never so potent as when it includes Germany. 

Maintaining friendly relations with Berlin through trade and commerce is therefore a matter of national security for Moscow. 

They disagree on any number of issues, but both recognize the complementarity of their relationship: Both of their economies depend on exports, and each has stuff the other needs.

But for obvious reasons, Germany prefers to have excellent trade relations with anyone who wants German goods. Largely this is because the German economy is the foundation on which the European Union is built. 

But since almost 40 percent of its gross domestic product is generated by exports, churning out goods for outside consumption is tantamount to German geopolitical power more broadly. (This is all the more important as its economy recovers from the COVID-19 pandemic.) 

Germany has therefore indicated clearly that it is ready and able to integrate with the U.S. further and hopes that the election of Joe Biden means the U.S. will reciprocate in kind.

The U.S. is Germany’s top export destination, so it doesn’t make much sense for Berlin to forego U.S. markets simply because it also has strong ties to Russia. And in fairness, Moscow never really expected it to, even when U.S.-German ties soured somewhat during the Trump administration. 

However, it hoped to capitalize on some of the bad blood – caused partly by protectionist trade policies, Washington’s attempt to sell liquefied natural gas in Europe, and the sanctions levied over the controversial Nord Stream 2 gas pipeline – by emphasizing the practicality of Russo-German commercial interests.

Despite these hiccups, the U.S. and Germany are still close partners, and Berlin’s recent overtures are creating more tensions between Russia and Germany. (“More” in that tensions were already present thanks to the events surrounding Nord Stream 2 and the poisoning of Russian opposition leader Alexei Navalny.) 

Moscow understands that the German economy is looking for bigger, more solvent markets, and that it doesn’t have a ton to offer more than what it already does. 

It needs a fresh start, but for that to happen, Germany must first lift sanctions – something that is unlikely to happen so long as Berlin refuses to recognize Crimea as Russian territory.

Sanctions, however, cut both ways. Experts from Germany’s Ifo Institute for Economic Research estimate that the sanctions imposed on Russia in response to Crimea (and to Russian activity in Donbass) have cost the German economy 5.45 billion euros ($6.61 billion) annually. Processing and chemical industries, as well as the automotive and mechanical engineering industries, were hit particularly hard. 

The head of the Center for the Promotion of Economic Cooperation between Germany and Russia has noted that if the sanctions were lifted, Germany would be able to increase its exports to Russia by more than 15 percent. 

Russia meanwhile remains a reliable source of cheap gas for Germany, which relies heavily on foreign gas supplies, despite a drop in supplies due to COVID-19.

Without traditional tools to put pressure on Berlin, Russia sees one point of leverage: trying to curry favor with certain legislators ahead of legislative elections in nine months. The German economy was slowing even before COVID-19. Different German constituencies have questioned the direction the government should take after the pandemic, specifically challenging the status-quo Merkel established. 

By reaching out to parties like the AfD, Russia is getting a feel for how the political winds are blowing and how it can best position itself for any outcome. Russia has chosen a low-cost strategy toward Germany by simultaneously strengthening ties with opposition parties and the ruling coalition alike. 

AfD has lost some of its numbers, but it is still a viable alternative to the status quo, and since most of its support is found in east Germany, it’s the preferred party of Russia.

Russia does not have many economic tools to improve relations with Germany, but it’s trying to acquire whatever leverage it can by playing internal political parties against each other. 

For now, it can sit back and observe how the parties evolve so that it can step in if and when the system starts to change.

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