Germany’s geopolitical opening

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Germany is no longer a geopolitical chessboard and is beginning to see itself as a major world power again – and it has been forcefully defending its interests and national economic strategy ahead of the G20 summit this week, writes global intelligence company Stratfor in an analysis.

This analysis was authored by global intelligence company Stratfor.

''German Defence Minister Karl-Theodor zu Guttenberg said on Tuesday that Germans as a nation 'must really do something to articulate the relationship between regional security and economic interests without coming to deadlock'. Guttenberg cited China's decision to limit rare earth element exports as an example of how competition for resources with the emerging powers could negatively affect Germany’s economic well-being.

In other words, Guttenberg made a direct link between Berlin’s economic and security policies. In any other country such a link is obvious and often reiterated by policymakers, but when German President Horst Koehler expressed similar sentiments in May, he was forced to resign a week later due to criticism that he was overstepping his constitutional bounds (the presidency in Germany is a ceremonial position and one of Europe's constitutionally weakest head-of-state institutions).

Germany is, of course, not like any other country. It was the primary culprit behind the deadliest conflict to ever befall mankind – World War II – and of the greatest state-organised massacre of a single group of people – the Jewish Holocaust. As such, it essentially was forced to give up much of its sovereignty for the next 40 years and to serve as the board for the geopolitical chess match between Washington and Moscow throughout the Cold War.

Since the end of the Cold War and German reunification in 1990, however, Germany has slowly regained its voice. Berlin's efforts in the 1990s were largely focused on integrating formerly Communist East Germany into a unified political system and evolving the EU institutions – such as the euro – that would be acceptable to the German population and beneficial for Berlin.

Germany spent the 2000s learning to use that rediscovered voice, sending forces outside of Germany for the first time since World War II – to Kosovo in late 1999 and Afghanistan in early 2002. Berlin also used the decade to learn how to raise its voice, as it did in its vociferous opposition to the US invasion of Iraq from mid-2002.

But the most intense expression of German interest came in late 2008, when Berlin shot down the proposal for an EU fund to rescue Central and Eastern European EU member states affected by the global financial crisis, forcing them instead to go to the International Monetary Fund. Berlin ultimately agreed to rescuing Greece and the wider euro zone in the first half of 2010, but only after it got the rest of Europe to accept its terms. Part of those terms was a redesign of the EU economic rules, which are being crafted now largely by Berlin to fulfill its own interests.

Germany is therefore becoming a 'normal country', as Finance Minister Wolfgang Schaeuble stated at the height of the eurozone economic crisis in April 2010: pursuing its national interests and discussing policy issues – from using force to defend its economic interests to the failure of its multicultural immigration policy – unrestrained by post-World War II guilt.

As an example, although Koehler was forced to resign only a few months earlier, Guttenberg is unlikely to face any serious trouble for his comments because of his capacity as the defence minister. Guttenberg even referenced Koehler's resignation to highlight how the links between defence and the economy should cease to be a taboo in today's Germany.

To further emphasise this point, we can note that Guttenberg's comments were not the only case of old-fashioned realpolitik emanating out of Berlin on Tuesday. Ahead of the G20 heads of state summit on 11-12 November, German policymakers are pushing back against the US suggestion that the G20 should agree on a set of new principles to hold trade imbalances in check. Washington clearly is aiming these comments at Germany, China and Japan, the world's most prolific exporters. German policymakers have countered by calling the US comments protectionism in disguise.

Germany's export-dependent economy is booming, with its gross domestic product set to grow 3.5% in 2010 – higher than the 2.5-3% growth forecast by the Organisation for Economic Cooperation and Development for its 33 members, the most developed economies of the world. In part, Washington believes this German economic growth is built on the back of US government stimulus and consumer demand, while Berlin refuses to stimulate its own domestic demand.

Germany argues that its export-oriented economy and subsequent trade surplus arose because its exports are of better quality and more competitively priced than those from the United States and other advanced economies. Berlin has also accused Washington of engaging in currency manipulation, citing the US Federal Reserve decision last week to engage in additional quantitative easing.

While there may be some truth to Berlin's charges, German exports have also no doubt benefited from the euro's weakness compared to the US dollar in 2010 due to the eurozone's internal instability.

Germany is forcefully defending its interests and national economic strategy ahead of the G20 summit. The stage is therefore set for a serious disagreement between Washington and the chief trade surplus countries, specifically Germany and China, at the summit. Germany is also beginning to take shots at China, especially for its decision to limit exports of rare earth elements crucial for German industry.

These economic disagreements come as Berlin becomes comfortable with its own geopolitical assertiveness. As far as Germany is concerned, it is no longer anybody's chessboard. It is beginning to see itself as one of the world powers again – with grand strategies, pawns to sacrifice and everything else that goes along with the title of a chess grand master.''

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