In Germany, an expansion of budget outlays for defense has support from the governing coalition of the Social Democrats (SPD), the Greens, and the Free Democrats (FDP), as well as the principal opposition Christian Democrats (CDU/CSU). With public sector debt-to-GDP of 65 percent, and a deficit lower than the E.U.–imposed upper limit, Germany has some scope to raise defense spending without sacrificing spending for other programs.
However, the so-called “debt brake” — written into the German constitution in 2009 — puts strict limits on the federal budget deficit. The opposition Christian Democrats, which, based on current polling trends seem likely to return to power in federal elections next year, are wary of any attempt to circumvent or reform the debt brake. This poses a problem for longer-term rearmament plans.
Given the imperative to keep deficits and debt under limits, increased defense spending would come at the cost of popular social programs and/or lowered ambitions for achieving reductions in carbon emissions. Germany’s debt brake and weak economic growth also constrain growth-enhancing public infrastructure investment. Rail and airline strikes, as well as farmers’ protests of last year, are examples of the distributional conflicts that arise as a result of constrained public spending in a weak economy. Significant rearmament efforts are likely to generate further distributional conflict. The table below compares German growth from 2020–24 to that of France and the euro area as a whole during the same period. It demonstrates the effects of the COVID–19 pandemic in 2020, recovery in 2021, and the impact of the war in Ukraine from 2022 onward. Germany, in better times the engine of European growth, is lagging behind its peers. However, a pervasive economic slump characterizes the entire euro area.
Although European NATO member governments — with the exception of Hungary, Slovakia, and Türkiye — have supported arming and financing Ukraine through its war effort, sluggish economic growth contributes to historically low popular support for leaders from the center-right and center-left across Europe. The economic slump, rising costs of living, and increased vulnerability to poverty and social exclusion, are fertile ground for anti-establishment or extreme political parties.7These pocketbook issues are at the forefront of the anti-elite challenge from the European populist-right, alongside the alleged costs — or dangers — of irregular immigration flows. However, opposition to, or lack of enthusiasm for, NATO’s Ukraine war policy is at least partly responsible for such parties’ relative success in opinion polls and elections.
The European Parliament elections in June 2024 provided a key test of rising support for Germany’s “Alternative für Deutschland” (Alternative for Germany, or AfD) and France’s RN. In France, the RN won just over 30 percent of the vote — twice the support gained by Macron’s liberal-centrist party. The AfD took just under 16 percent of the vote, finishing in second place behind the Christian Democrats at 30 percent, but ahead of the Social Democrats at 14 percent, the Greens at 12 percent, and the FDP at 5 percent. The new anti-war, populist-left Sahra Wagenknecht Alliance (BSW) scored a respectable 6 percent. The September 1 elections in two states in eastern Germany further signaled the potential of both anti-war parties — the AfD and BSW — to complicate coalition building.
The German economy: Europe’s wobbly pillar
The case of Germany — Europe’s largest economy — is crucial to understanding the dynamic tradeoffs that a prolonged war in Ukraine is likely to impose. Germany’s resolve to increase its conventional military deterrent is a years-long task requiring the determined reorientation of budgetary priorities.8Realizing this aim will mean confronting fiscal, economic, and social headwinds that are only made stronger if the war in Ukraine continues at its current level of intensity. Despite publicly embracing this ambitious rearmament agenda, Germany’s most recent budget adopted by the coalition bears witness to the strong influence of the finance minister, Christian Lindner (FDP), who is a fiscal hawk. The budget actually trims planned arms deliveries to Ukraine for 2025 while increasing defense spending modestly.9This demonstrates the power of Germany’s debt brake and its traditional fiscal caution — no matter how urgent the demands for increased spending.
The prolonged Ukraine War scenario could oblige Europe to bear more of the burden — to date, primarily carried by the United States — for arming and equipping Ukraine’s military. Given the fiscal constraints faced by Europe’s NATO members, there is an unavoidable tradeoff between maintaining the level of arms and equipment sent to Ukraine, and any substantial effort by European NATO members toward rearmament and increasing their responsibility for their own defense. European rearmament is an essential component of adapting to Europe’s new security situation and will be accomplished, if at all, only over several years of concentrated effort.10
Germany abruptly decoupled its natural gas supply from Russia in 2022, resulting in the first significant shock to its economy in the wake of Russia’s full-scale invasion of Ukraine. This decoupling affected, most crucially, Germany’s energy intensive industrial sectors, whose international competitiveness relied on access to relatively inexpensive natural gas. Consumers were also adversely affected as the energy supply tightened and increased the cost of household heating during the winter of 2022. The German government moved fairly quickly to secure natural gas — particularly liquified natural gas (LNG) — from other suppliers, including the United States, to fill any gaps and avert an acute social crisis. The spike of natural gas prices — and the resulting rise in electricity prices — in 2022 has passed but energy prices — and consumer prices as a whole — have settled above where they stood prior to the Russian invasion. Inflation, moreover, is still greater than 2 percent.
Germany’s export-led growth model has been thrown into disarray by the knock-on effects of higher energy costs, a surge of technologically advanced Chinese manufacturing exports to Europe, and some protectionist measures affecting European exports to the United States. The E.U. is the most trade-reliant region in the world; trade in goods and services is 44 percent of GDP, almost twice the trade reliance of the United States.11Germany’s economic success has been built on industrial exports within Europe but also globally, with the United States and China as major export markets. The rise of great-power blocs and the erosion of the U.S.–sponsored liberal international economic order has forced a major adjustment on Germany and on Europe.
Positive net exports — the current account surplus — remain a major contributor to Germany’s GDP. After faltering in 2022, the surplus stands at 6 percent of GDP in 2024. This indicates Germany’s strong vulnerability to renewed trade shocks, including from potential tariffs imposed by the United States, or Chinese measures to punish the E.U. for limiting market access to Chinese exports. These developments have weakened public support for bearing the cost of the “green transition” spearheaded by the Green Party’s economy minister, Robert Habeck.
Germany’s sluggish GDP growth is in part a knock-on effect of the war, including blowback from sanctions the U.S. and E.U. imposed on Russia, and the disengagement of German companies from Russian investments and trade. Yet it also reflects long-standing structural problems that have been left unaddressed. The fundamental challenge Germany faces is sluggish labor productivity growth, due in large part to the slow adoption of productivity enhancing information technology (IT), private and public sector underinvestment, an aging population, and labor shortages.12
German domestic politics: Scrambling party configuration and popular anxiety
The three-party coalition led by Chancellor Scholz (who served as finance minister under former Chancellor Angela Merkel) has been unable to project a sense of purpose — reflecting, in part, the divergent priorities of the three coalition partners. By August 1 of this year, the combined support of the three coalition parties had fallen to 30.5 percent from 53.3 percent in January 2022. The SPD polled at 14.9 percent, the Greens at 10.8 percent, and the FDP at 4.8 percent. The CDU/CSU reinforced its first place polling position, with support standing at just over 32 percent at the end of 2023, up from 23.3 percent in January 2022. By August 1, 2024, its support stood at 30.5 percent — a level of support that is, by historical standards, low for the CDU/CSU.13
A competitive duopoly of the Christian Democrats and the Social Democrats structured German politics for decades, with either of the two parties paired with the smaller Free Democrats in coalition, or the major parties together in a “grand coalition.” This stable picture has gradually given way to the dispersion of electoral preferences, with six parties now expected to surpass the 5 percent threshold for parliamentary representation in federal elections in the fall of 2025. The four parties representing an enlarged mainstream consensus are the CDU/CSU, the SPD, the FDP, and the Greens. The anti-establishment AfD — shunned by all other parties for any coalition building — has since mid-2023 held second place in opinion polls, after the CDU/CSU. Support for the AfD rose from just under 11 percent in January of 2022 to over 22 percent in early January 2024. After several damaging scandals, however, the party lost ground to poll near 18 percent, but remained ahead of the third place SPD. The new populist-left and anti-war party BSW had about 8 percent support in recent polls.14
This configuration of voter preferences implies that Germany will be governed either by a grand coalition between the CDU/CSU and the SPD, or by coalitions of either of those two parties with the Greens, the liberal FDP, or the BSW. This assumes, of course, that the firewall precluding any governing coalition with the populist-right AfD will hold. There has been no firm determination from the mainstream parties to eschew a coalition with the BSW. The AfD and the BSW are relatively strong in the former East Germany, indicating the persistent economic and cultural distinctiveness of that population, where disappointment with the results of reunification, alarm about immigrants, and social precarity are greater than in the former West Germany. The AfD and BSW are somewhat Eurosceptic and are disposed to reconcile with Russia.
However, the rise in support for the AfD may reflect, in part, a disposition among voters to protest the current state of affairs in Germany rather than their conversion to far-right views. According to a polling study conducted in mid–August 2023, 44 percent of people expressing support for the AfD do not demonstrate what the pollsters considered either neo–Nazi or far-right views. These voters seem to be troubled more than the average German voter by anxiety about migrant flows, the economy, and potential entanglement in the war in Ukraine. Their comparative indifference to climate change also distinguishes them from other voters.15
At the other end of the spectrum from the AfD, the “Die Linke” (The Left) Party was unable to raise its polling numbers above the 5 percent mark throughout 2022 and 2023. In October of 2023, Sahra Wagenknecht — then a prominent Die Linke politician — announced the formation of a new party, BSW, which centers its political program on opposing sanctions against Russia, and seeking a political settlement to the war in Ukraine. Wagenknecht has pointed to what she calls a “representation gap” that the new party seeks to fill.
The published program of the AfD states that there can be no viable security order in Europe that excludes Russia.16On the populist-left, Wagenknecht brings her vocal anti-war stance to the forefront of her party’s appeal to voters. With respect to foreign and security policy, then, the AfD and Die Linke parties are holdouts for a return to the “Ostpolitik”17tradition inspired by the powerful “never again war” maxim in German strategic culture.18The SPD, however, having long asserted that Ostpolitik brought about the peaceful end of the Cold War and reunification of Germany, has retreated from its public defense of the policy in view of its apparent failure to tame Russian power in the post–Cold War period.
A revealing survey from the European Council on Foreign Relations in May 2022 exposed the division of public opinion about the war in Ukraine across several European countries. Roughly three quarters of those polled across Europe held Russia mainly or solely responsible for the war, supported Ukraine’s cause, and backed the imposition of sanctions against Russia. However, respondents were split into a “peace” camp, which prioritized an early negotiated outcome — even if this meant that Ukraine made substantial concessions — and a “justice” camp, which sought military victory for Ukraine irrespective of the duration and intensity of the conflict. A substantial “swing” category was ambivalent and sat between the peace and justice positions.19
The peace camp outpolled the justice camp in all of the E.U. member countries polled, with the significant exception of Poland. Among Germans, 49 percent aligned with the peace camp, while 19 percent supported the justice camp.20In Germany, the peace camp received the support of 43 percent of CDU/CSU voters, 55 percent of SPD voters, and 78 percent of AfD voters. The authors, Ivan Krastev and Mark Leonard, correctly anticipated that the difference between the peace and justice camps would define the main schism within and among countries in Europe toward the Ukraine War as it has evolved.The durable association of many Germans with the peace camp is also evident in the rising share of public opinion that calls for greater efforts by the German government to find a diplomatic solution to the war in Ukraine. This view rose to 55 percent in a November 2022 poll — an increase of 14 points since June of that year.21A plurality — 41 percent — thought Germany’s weapon deliveries to Ukraine were adequate. 30 percent found them excessive, and 21 percent judged them insufficient. The same polling organization found support for supplying weapons to Ukraine holding firm in March of 2023.22A total of 63 percent found the provision of weapons either adequate or insufficient (47 percent and 16 percent, respectively), resulting in the same overall picture as in November 2022. At the same time, the share of those calling diplomatic efforts to end the conflict inadequate remained fairly stable at 53 percent. In July 2024, Krastev and Leonard published the results of more recent polling across Europe, demonstrating how sharply Europeans and Ukrainians differed on how the war would or should end. Most Europeans polled anticipated a settlement to the war that falls short of total victory and fails to produce the full restoration of territorial integrity for Ukraine.23
U.S. policy and the reorientation of German foreign and security policy
Germany’s dominant foreign and security stance through its postwar and post–Cold War iterations has been usefully conceptualized as “civilian power.” Hanns Maull, a leading proponent of this concept, has summarized civilian power in three simple maxims guiding action: “never again”; “never alone”, and “politics before force.”24The vow of “never again” implies forswearing aggressive war on the part of Germany itself but has been expanded to imply the responsibility to oppose any new aggressive war or genocidal violence. The maxim “never alone” captures the commitment of Germany to act only in concert with the E.U., NATO, and, ideally, United Nations Security Council authorization for any use of force. “Politics before force” encapsulates the preference for seeking conciliation and compromise. The disposition to relegate the use of force in conflict resolution to a distant, last resort is implicit in all three of the guiding tenets of the civilian power concept.
Germany’s core raison d’état is to avoid breaking its alliance with the United States while, at the same time, prioritizing the E.U. as its framework for action. Both positions are embodiments of Germany’s postwar guiding principle of “never alone.” Germany’s solid backing for Ukraine makes manifest the imperative Germany faces in ensuring that the United States remains Germany’s security guarantor and does not diminish its defense commitments to Europe. At the same time, prudence demands that Germany – acting within the E.U. and NATO – enhance its own independent conventional military capacity to deter any threat from Russia. While staying faithful to its alliance with the United States, Germany has tried to influence the United States’ policy vis-à-vis Ukraine toward continued caution to avoid escalation with Russia. Germany’s refusal to give long-range Taurus missiles to Ukraine demonstrates its continued determination to plot a very cautious course. Implicitly, it appears that Germany is still wedded to its long-standing policy maxim of “politics before force.”
The imperative embraced by Germany’s leadership to defeat Russia decisively in Ukraine implies an attempt to make sweeping and difficult changes to the country’s postwar and post–Cold War strategic culture. Germany has become second only to the United States in supplying arms to Ukraine. But Chancellor Scholz continues to face criticism in the U.S. and the U.K. for being too reluctant to risk escalation that could, in his judgment, put Germany’s own security at risk. After the recent success of the AfD and the BSW in regional elections in Germany’s east, Scholz has tentatively advanced the idea of seeking a diplomatic settlement for the war in Ukraine, but doing so by relying on winning Ukrainian support for diplomacy.
The ambition toward the rearmament of Europe — inspired by Russia’s attack on Ukraine and Russia’s successful resistance to the sanctions regime that Western allies hoped would disable its warfighting capabilities — produces tradeoffs as Europe struggles to carry more of the burden arming Ukraine. In other words, finite resources given to Ukraine have an opportunity cost and — unless the resource constraint could be lifted by the issuance of European debt instruments, for example — slows the development of Europe’s conventional deterrent capability. Europe’s defense-industrial complex, which is a closely guarded prerogative of national governments, cannot easily serve both the growing needs of Ukraine and those of national-alliance territorial defense.
Some Europeans would bring forward a new aim for NATO — burden-shifting — whereby Europe itself aims to provide, within a decade or two, a conventional deterrence capability to dissuade Russia from any renewed aggression. It is far from clear whether Russia has either the intention or the capacity to risk aggression against any NATO member. But the determination by Europe’s NATO members to assume a greater role in Continental territorial defense is prudent and, if pursued within a diplomatic effort to stabilize, rather than inflame, tension could serve U.S. interests well.25By bearing more of the weight of conventional deterrence in Europe, the European powers (within NATO, the E.U., or both) would naturally achieve a greater degree of autonomy and independence. This is not necessarily harmful to U.S. interests. Advocates of a policy of restraint in U.S. foreign policy have long argued that the United States should avoid frustrating the rise of a more independent and autonomous Europe. The current crisis calls for a radical revamp of U.S. policy toward accepting Europe as a peer rather than a client. Since Germany is the strongest power in Europe, such a revamp would mean accommodating, to some extent, Germany’s foreign and security policy preference for conciliation and dialogue.
Even under a prolonged low-growth scenario, the E.U. as a whole — with Germany as its leading economy — is likely to remain a significant political and economic global player, one whose affinity for the United States should be cherished. The United States’ hegemonic role vis-à-vis Europe too often appears unable to fully appreciate the perspectives of its European partners: too little hearing and heeding, too much mobilizing and persuading. A degree of insensitivity characterizes, for example, the U.S. drive to induce Europe to confiscate official Russian reserve assets held in European banks. As most of these assets are maintained in Europe, any negative impact resulting from their confiscation would adversely affect the euro as an international reserve currency — an important strategic asset for Europe.26The E.U. has acquiesced in the confiscation of the interest earned on these frozen assets but not on the principal. It bears reminding that Ukraine will depend on Germany to fund much of its reconstruction and to steer Ukraine’s E.U. accession.
A European Council on Foreign Relations paper of last year argued that U.S. strategy in Ukraine had contributed to “vassalizing” Europe — even if U.S. support for Ukraine had been indispensable and was welcomed by European elites and the public.27The authors recommended that the United States promote, rather than resist, a greater autonomous military capability for Europe. The German government and public seem at last to be embracing the idea of producing — along with European partners — a force able to establish and maintain a conventional balance of power in Europe capable of deterring any further Russian aggression. This process will need time and resources. It will also be much easier to achieve if a “compromise peace” in the war in Ukraine can reduce the demands of the war on European military and financial resources.
Even if it chose to, the United States could not rescue Germany from its imperative to revise its worldview to align with a security environment where Russia poses a more plausible threat to Europe. However, ending the war through negotiations would create breathing room for Europe to realize the multi-year aims now being embraced to build a credible conventional deterrent paid for and led by Europeans themselves — a European pillar within NATO. While adopting this approach would not deliver an outright victory for Ukraine or an ignominious defeat to Russia, it would satisfy the fundamental and longstanding U.S. interest in a strong, united, democratic, and prosperous Europe — an indispensable partner for the United States and other liberal democracies.
There has been an unmistakable element of pressure from the United States on the pace and nature of Germany’s adaptation to the crisis, which has consequences for Germany’s political stability and allocation of scarce public resources. Putting all eggs into the “we win, they lose” basket is a risky strategy, especially when it is weighed against the centrality of a resilient and liberal, democratic European order to the defense of vital American national interests. A Germany where liberal democracy and the European social model is eroded is not in the long-term strategic interest of security in Europe. Moreover, the slow economic growth of the euro area is fertile ground for the rise of anti-liberal populism that is generally hostile to the United States and to the European Union.
Current U.S. policy has imposed disproportionate costs of the Ukrainian conflict on Europe. This is a bad bargain, not least because Europe’s economic and institutional vitality is essential for its ability to increase its own military readiness. A settlement to end the conflict short of outright victory for either side could bring forward a period of stabilization and recovery, which is becoming more evidently pressing each day for Ukraine, Germany, and Europe as a whole.
Dr. Molly O’Neal is a non-resident fellow at the Quincy Institute and former U.S. Foreign Service Officer whose career, from 1989 onward, was devoted to U.S. relations with Central and Eastern Europe, Russia, and Eurasia.
Source link : https://quincyinst.org/research/the-risks-to-germany-and-europe-of-a-prolonged-war-in-ukraine/
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Publish date : 2024-10-07 16:00:00
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