IS "PEACE THROUGH COMMERCE" DEAD? / PROJECT SYNDICATE

Is “Peace Through Commerce” Dead?

Germany's post-war policy of engaging economically with rivals was fundamentally a bet on globalization, and globalization is always changing. Though it will undoubtedly continue to develop in new and unexpected directions, that is no reason to reject the idea that interdependence supports peace and prosperity.

Harold James

BERLIN – Since Russia’s invasion of Ukraine, German politicians have been on an apology tour for their country’s past reliance on Russian hydrocarbons and advocacy of EU-Russian energy integration. 

German Chancellor Olaf Scholz has responded to Russian aggression by declaring a Zeitenwende (turning point) and finally shutting down the Nord Stream 2 pipeline. 

Yet many still see that project as a blot on Germany’s honor and its political savvy.

A year and a half later, German leaders are still grappling with past policy mistakes and struggling to draw clear lessons from them. 

Given that Germany’s export-driven economy remains deeply dependent on the Chinese market, its approach to China is highly conflicted and ambivalent.

Hence, in late June, while US President Joe Biden refused to apologize for describing Chinese President Xi Jinping as a “dictator,” Chinese Prime Minister Li Qiang paid a cordial visit to Germany, where he and Scholz celebrated the role that Sino-German business relations might play in balancing the increasingly tense Sino-American rivalry. 

But then in September, German Foreign Minister Annalena Baerbock repeated Biden’s “dictator” jibe just as EU Trade Commissioner Valdis Dombrovskis clarified that “the EU has no intention of decoupling from China.”

Are Germans, and Europeans more broadly, over-apologizing and under-thinking? 

Critics of German policy – which is now frequently derided as “Merkantilism,” after former Chancellor Angela Merkel – would say yes. 

Yet the principle that economics can shape politics in beneficial ways deserves more respect than it has been receiving. 

This was the basic principle behind Germany’s “mistaken” Ostpolitik (Eastern Policy), which viewed the normalization of economic relations as a means of securing peace both during and after the Cold War. 

It is also the basic idea behind modern globalization.

Some critics argue that Ostpolitik was always dragged down by the flaws of certain individuals – such as German Chancellor Gerhard Schröder’s relentless money-seeking, which made him into a willing puppet of Gazprom; or Merkel’s excessive caution, itself perhaps owing to her East German upbringing. 

But others see the German approach as a larger failing born of naivety. 

As Robert Kagan famously put it 20 years ago, lovey-dovey Europeans are from Venus, while hard-nosed Americans (and presumably Russians and Chinese) are from Mars.

In any case, Germany’s current crop of leaders belong to a long tradition that also encompasses Chancellors Konrad Adenauer (1949-63), Helmut Schmidt (1974-82), and Helmut Kohl (1982-98). 

The process of building pipelines to improve relations with Russia (or the Soviet Union) started in the late 1950s and has been met with US skepticism ever since. 

But the economic cooperation that arose from such projects also provided the basis for the opening of the Soviet Union under Mikhail Gorbachev.

The idea that commerce lends itself to peace, and vice versa, is older still. 

In the middle of the nineteenth century, many Germans saw national unity as desirable primarily because of the economic benefits it would bring. 

As August Ludwig von Rochau, the man who coined the term Realpolitik, explained at the time, German unification was not “a matter of the heart; for Germans, it is fundamentally a purely commercial business.”

A century later, the same philosophy created modern Europe. 

The European Union project started in the early 1950s as a “community” for binding together German coal and French iron ore. 

Economic integration was the first step toward defusing an ancient enmity that had led to three catastrophic conflicts between 1870 and 1945.

Since that project worked, it is no wonder that the same idea would inform Europe’s response to the collapse of the Soviet Union and the fall of communism. 

Such a large geopolitical challenge called for an equally large gesture on Europe’s part. 

Defense coordination was one option (the benefits of which have become obvious, in retrospect), but European politicians chose money and the single currency – the euro – to demonstrate their commitment to each other. 

Given that this economic project succeeded in integrating Europe and preserving the peace between its members, it is understandable that many Europeans would try to apply the same model on an even larger, global scale.

Germany’s own faith in economic interconnections reflects its geographic position. 

Historically, northern Europe’s notorious Mittellage, with its lack of impenetrable mountains and other obvious natural boundaries, produced a fragility that is unknown to secluded, oceanic powers such as the United Kingdom or the United States. 

It is just as easy for armies to surge across an open plain as it is for traders and merchants to use littoral and overland routes to connect people. 

Germans thus have always been pulled between Mars, the god of war, and Mercury, the god of commerce. 

This either-or framing implies that if war becomes unthinkable (as it did after World War II), everything will depend on economics. 

But the opposite is also true: if the economic development story falters, a return to conflict becomes more probable.

While the war in Ukraine has been devastating, the fact that it has been met by financial and energy embargoes, rather than nuclear escalation, is a triumph for humanity. 

So far, the wanton physical destruction has been confined to one country. 

The war thus has important lessons for thinking about how Europe – and America, for that matter – should respond to China.

Should fear of repeating the mistakes made with Russian President Vladimir Putin inform the strategy for dealing with Xi, or does continuing to engage with China offer the best chance of restraining Russia? 

Since the answer is far from obvious, Europeans should not apologize for making such strategic calculations.

Earlier this year, when key German politicians and opinion shapers celebrated Henry Kissinger’s 100th birthday, they stressed the fact that Kissinger – and his signature realism – was a joint German-American product that had contributed decisively to the formation of a stable democratic Germany. 

They were right to do so. 

Kissinger formulated a model that can yield powerful and beneficial results – even if it always holds the potential for failure.

The previous “mistaken” German and European policy was a bet on globalization, and globalization is always changing. 

Though it will undoubtedly continue to develop in new and unexpected directions, that is no reason to reject the idea that interdependence often supports peace and prosperity.

Harold James is Professor of History and International Affairs at Princeton University. A specialist on German economic history and on globalization, he is a co-author of The Euro and The Battle of Ideas, and the author of The Creation and Destruction of Value: The Globalization Cycle, Krupp: A History of the Legendary German Firm, Making the European Monetary Union, and The War of Words.