Is Olaf Scholz’s European foreign policy failing?

Dr Nicholas Wright is a Visiting Researcher at the University of Surrey’s Centre for Britain in Europe. A version of this article was published previously on the Encompass website.

Since becoming chancellor at the head of Germany’s first three-party federal level coalition in December 2021, Olaf Scholz has enjoyed a torrid time. On assuming office, his domestic in-tray was already unenviable: alongside the urgent need to galvanise Germany’s post-Covid economic recovery, the coalition agreement with the Liberal FDP and Greens included commitments to urgently address significant weaknesses in Germany’s physical and digital infrastructure; strengthen the country’s parlous pensions system; and put sustainability and a meaningful response to the climate crisis at the heart of all areas of policy-making. However, Scholz has found much of his attention taken up instead with a set of inter-linked international crises stemming primarily from Russia’s invasion of Ukraine. These have not only threatened to derail his domestic agenda but also seen his strategic acumen called into question and once again led to fierce debate over Germany’s willingness to play the kind of international leadership role in security that is commensurate with its position as Europe’s leading economy (and the fourth largest globally).

Russia’s position as an anti-status quo power has been clear since at least 2014 when it annexed both Crimea and large parts of eastern Ukraine. However, Vladimir Putin’s decision to launch a full-scale invasion of its neighbour in February has upended Europe’s security architecture and many of the broader assumptions that have underpinned it for the last 75 years. Arguably nowhere has this seismic change been more keenly felt than in Germany.

German political, business and foreign policy elites have long believed that economic and commercial engagement with Moscow was the best way to improve east-west relations and encourage Russia on a path to reform (a policy known as ‘Wandel durch Handel’ or ‘change through trade’). Since 2014 Germany, alongside France, has been heavily invested in unsuccessful efforts to mediate a peace deal between Russia and Ukraine through the Normandy Process. It also persisted with the construction of the Nordstream II gas pipeline direct from Russia in the face of strong criticism from its allies, particularly in eastern Europe. It has taken the brutality of Russia’s ‘special military operation’ in Ukraine to shake Germany’s leadership (especially within the SPD) from its complacency and accept that this strategy has failed.

The Scholz Government’s initial policy response to the invasion indicated the ground had indeed shifted. Nordstream II has been suspended indefinitely and Germany has given strong backing to the EU’s sanctions regime against Russia – the toughest ever imposed on a third country. Most significantly, on 27 February Scholz gave a landmark address to the German Parliament declaring Germany’s unequivocal support for Ukraine and announcing a Zeitenwende (literally ‘turning point’) in German foreign and defence policy that included a huge boost in the defence budget that would see it overtake France in terms of spending. Germany, it seemed, was finally getting serious about the threat posed by Russia and its own role (and responsibility) to counter this.

Since then, however, Scholz and his government have found themselves under pressure on a variety of issues related to the consequences of Russian actions. Despite providing significant quantities of humanitarian aid along with sanctuary for around 750,000 Ukrainian refugees, Germany was perceived as having fallen short in the direct military aid it was willing or able to provide to Kiev. Meanwhile, broader concerns emerged over the capacity of the German military to actually spend its increased defence budget, as well as criticism, particularly from France, over plans to buy American equipment off-the-shelf rather than investing in the European defence sector’s ability to develop alternatives.

The impact of Russia’s invasion has also been felt through huge spikes in energy prices, affecting households, businesses and industry across Europe and leading unsurprisingly to demands for an EU-level response. Scholz’s government has implemented a robust domestic support package to mitigate the impact of higher prices and potential energy shortages on German citizens, and avoid a recession. However, this willingness to take drastic action at home stands in contrast to its opposition at EU level to plans for common borrowing to enable a similar, EU-wide cap on energy prices. This has brought Germany into conflict with its EU partners who reject the argument that it is a special case as recession there will negatively affect the EU as a whole. Poland has even accused Berlin of using the crisis to gain a competitive advantage.

These disputes have also contributed to a deterioration in relations with Paris. The importance of the Franco-German relationship historically – particularly to European integration – cannot be overstated. It is equally true that tensions and disagreements have been a regular feature of their interactions historically. Relations between Scholz and Emmanuel Macron have been particularly strained, though. This year’s annual Franco-German ministerial summit was cancelled, as was a joint press conference with Macron when Scholz visited Paris in October. France considers Germany’s domestic response to the energy crisis (announced without any prior consultation) as selfish while Berlin is frustrated by French opposition to plans for a new pipeline to bring gas from the Iberian peninsula to the rest of Europe. The Élysée is also smarting from Scholz’s recent visit to Beijing, seen as lending credibility unnecessarily to President Xi just months after the German government identified China as a “systemic rival”. German behaviour is seen as lacking in solidarity – and according to one official, “trust has been broken”.

Scholz’s foreign policy travails can in part be explained by the scale of the challenges he faces at the same time as leading a new-ish government still trying to establish itself. There is also the complexity of managing a three-party coalition alongside the same struggle for foreign policy supremacy between the Chancellery and Auswärtiges Amt that faced his predecessor. That being said, the clumsiness apparent at times in Scholz’s diplomacy indicates his inexperience as a national leader and suggests a slowness to fully get to grips with the changed strategic reality facing Germany and its European partners. Scholz’s chief of staff recently declared that “Germany is still a “teenager” when it comes to foreign security policy”. Whilst it may be unfair to level the same charge against his boss, Scholz nonetheless needs to up his game. Europe depends on it.