Canny Merkel plays the long game with Putin

Financial Times  31 July 2014

By Elizabeth Pond

No, Angela Merkel did not experience a sudden epiphany about imposing tough sanctions on Russia when the MH17 airliner was shot down two weeks ago over Ukrainian rebel territory. The German chancellor’s wake-up call from her own reluctance to open EU doors to Ukraine in fact came in March, after Russia seized Ukraine’s Crimea by intimidation in Europe’s first forcible land grab in 69 years.

Since then Europe’s de facto leader has been working night and day to persuade three very different audiences that peace and security trump European economic interests, and will now require European financial sacrifice.

Ms Merkel’s first audience was Vladimir Putin, the Russian president. The second was the domestic business lobby, and the 6,200 companies that make Germany by far Russia’s most important trading partner. The third consisted of Berlin’s fellow EU members, especially Britain, France and Italy, which have their own pro-Russian business lobbies.

Ms Merkel laid down the line in an uncharacteristically blunt speech in the Bundestag on March 13.

“Relations among European states were marked for centuries by rivalry, changing alliances, and over and over again by terrible bloodshed” that culminated in the Shoah, she began. The fact that this “terror” was succeeded by more than half a century of European integration and the resulting “peace, freedom, and prosperity … still borders on the miraculous”.

Neither the EU, the US nor indeed Russia, said Ms Merkel, “can still confine itself in the 21st century to thinking only in its own interest”. Any country that does so “will harm itself sooner or later … The action of Russia in Ukraine is an unambiguous breach of the principles of international law,” she proclaimed.

In her barrage of phone calls to the Russian leader in recent months – when Ms Merkel was, in effect, the only western leader who could still communicate with him – her main message was that Europe was not going to play the wimp as he expected. Commercial interests would not override the continent’s primary interest in restoring a rules-based system of peace and its renunciation of the forcible changing of borders. If Mr Putin proceeded with dismembering eastern Ukraine, the west would react by imposing ever stricter sanctions on Russia. He was certainly correct in arguing that these sanctions would hurt Germany, she conceded, but Germany was ready to pay that price, and the sanctions would hurt Russia even more.

Ms Merkel’s message to German business people was essentially the same. They must be prepared to make the sacrifices she kept warning Mr Putin that Germany would make if push came to shove. This priming has taken place very quietly. But in the past month, more and more German exporters and importers have accepted in private that European security must take primacy over commercial profits. It took only the MH17 disaster – along with Mr Putin’s subsequent remassing of Russian troops on Ukraine’s eastern border and increased flow of heavy weapons to separatists in eastern Ukraine – for those at the head of leading industry associations to begin confessing their change of heart in public.

Persuading fellow EU members, Ms Merkel’s third audience, was perhaps her hardest task. London was loath to curtail the flow of Russian oligarch money into British banks (and, according to critics, even to enforce its own money-laundering laws strictly). Paris was, and still is, loath to stop its export of two Mistral helicopter carriers to Russia. Rome is loath to curtail its close energy ties to Moscow. But once German business people agreed to sacrifices, it was hard for others not to do the same.

At this point, Mr Putin’s relentless pursuit of his Ukraine strategy has shut the door on his last chance to de-escalate east-west confrontation and still save face. This week’s tougher co-ordinated American and European sanctions are the result.

The US commentariat, like Mr Putin, has defaulted in recent months to a consensus that Germany would never agree to tough sanctions because its economy is too beholden to Russian energy and trade.

That view discounts Ms Merkel’s service in decelerating the pace of western sanctions to leave room for escalation as and when needed; and to keep Mr Putin talking, rather than shooting, at the moment of greatest danger of a direct Russian invasion of Ukraine last May. This allowed Kiev time to mobilise the ragtag Ukrainian army and purge the most obvious Russian moles from its ranks.

In Germany, the MH17 tragedy has done much to dispel the popular notion that the country should try to engineer a conciliation between America and Russia. The shifting mood has given Ms Merkel more room for manoeuvre. She has used it well – and cemented her own emergence as the geopolitical leader of Europe.

The writer is a journalist and author who has covered Ukraine for 30 years

http://www.ft.com/intl/cms/s/0/1be41a2c-0e61-11e4-a1ae-00144feabdc0.html#axzz39383oagz

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