Germany, Russia, and Ukraine, With Liana Fix

Jim Lindsay:
Welcome to The President's Inbox, a CFR podcast about the foreign policy challenges facing the United States. I'm Jim Lindsay, Director of Studies at the Council on Foreign Relations. This week's topic is Germany, Russia, and Ukraine. With me to discuss German foreign policy and Germany's relationship with Russia amid the war in Ukraine is Liana Fix. Liana is a fellow for Europe at the Council. She previously served as the program director for International Affairs at the Körber-Stiftung in Berlin. She has been writing The Ukraine Scenario Series with Michael Kimmage, which is among the most read content on foreignaffairs.com. Their most recent installment is "Putin's Next Move in Ukraine." Liana, thank you for coming back on The President's Inbox.

Liana Fix:
Thank you so much for the invitation.

Jim Lindsay:
Now, when we spoke back in February, we talked just before the Russian invasion of Ukraine. At that time, the German Chancellor had just visited with President Biden in the White House, and Chancellor Scholz had pointedly refused the pledge to terminate the Nord Stream 2 gas pipeline should Russia invade Ukraine. Well, a couple weeks later, Russia did invade Ukraine and my sense is German foreign policy changed dramatically. Walk me through what happened.

Liana Fix:
You're absolutely right. German foreign policy did change dramatically, but I do think it can be best understood if thinking about the changes in German foreign policy as sort of an emergency break. German foreign policy was heading into the wrong direction in three policy areas and policy towards Russia, in security policy, and in energy policy. Those were wrong directions that were criticized for a long time, but the seriousness of these choices, the dependence on Russian gas, the reluctance of Germany to increase its defense spending and the continuous belief that dialogue with Russia might be possible has hit Germany hard after February 24. So what we see now is to steer the big ship that Germany is into a completely different direction and that takes time. And that is also not the same as what some might expect from Germany in this crisis and in the war, which is leadership. We do see a change in German foreign policy. We do see that Germany's finally doing its homework on energy, on defense, but we don't see German leadership in this war. And this is what Germany is mostly criticized for right now.

Jim Lindsay:
Let's break that up Liana, if we may, and sort of walk through each piece. And let's begin with the defense piece of it. Germany had long been criticized by other members of NATO for neglecting its defense establishment. Germany's spending on defense as a share of gross domestic product was well below the 2% target the NATO country signed up to at the 2014 Wales Summit. But after the Russian invasion of Ukraine, Chancellor Scholz committed Germany to hitting the 2% mark. He set up, as I understand that a hundred billion dollar Euro defense fund to buy equipment for Germany's depleted military forces. Those words were applauded when the chancellor made that dramatic announcement. But has the Scholz government actually followed through on what it pledged?

Liana Fix:
It did follow through on the special fund. So we do have the special fund of 100 billion, which will be needed for the investments that were planned actually a long time ago for the German Bundeswehr. But there was some confusion as to whether the hundred billion will be on top of Germany spending 2% of its budget on defense or not, and for how long the special fund will be needed. And as of now, it seems that the special fund leads Germany to a position where they're spending 2% on defense, but this is only planned for the next few years. So the question is what comes after? How can Germany find the room for maneuver in its budget after the special fund increase its budget to 2%? And I wish those who have followed German security and defense policy for a long time would have wished that the special fund would have been on top of budgetary increases. So this is a good start, but there was a question of sustainability for how long can this be maintained or will it have to be the next government who has to think about it? And also, is it actually enough the 2% if we see that other countries around Germany, let us think of Poland, are increasing the defense budget even further to more than 3%.

Jim Lindsay:
Now, the hundred billion dollar euro number caught a lot of attention. It is a pretty big number even with the euros shrinking relative to the dollar in recent months. But anyone who spends time thinking about defense policy knows that how much you spend matters a lot less than what you buy with the money you do spend. Do we have a sense of how the German government intends to spend its a hundred billion or whatever defense increases may come along in the next several years?

Liana Fix:
So they will spend the money on projects that have been planned already for a long time for the German Bundeswehr. So they will fill the gaps that we had in the past. But the other concern that there was, it's not only about what you buy, but it's also about how do you spend the money wisely. And the concern is that if Germany has to spend the hundred billion now in a couple of years, it might lead to not efficient spending, but just basically trying to get the budget out before the next government comes in. And that's sort of the opposite of long term and midterm planning, which is so important especially in the defense sector because the project just take a very long time to be completed.

Jim Lindsay:
Okay, so let's talk about what's happening on the energy side of things. Again, back in early February the chancellor was unwilling to commit to ending Nord Stream 2, something that many of Germany's friends and allies had called on him to do. But now the chancellor has gone well beyond that. So walk us through what's happened on the energy side for Germany.

Liana Fix:
Well, on the energy side, it was pretty clear that Nord Stream 2 could not be uphold and it was a wide decision even if it was a late decision to cancel Nord Stream 2. After the outbreak of the war, Germany had one crucial decision to make, is it to stop buying oil and gas from Russia immediately and thereby putting Germany's supply the security of Germany's energy supply at risk or continuing to supply Russia with a lot of financial means to continue to pay Russia for the gas and oil that it uses to prop up its state budget and to continue this war because there's just no alternative to make sure that there will be no blackouts in Germany. And the German government has opted for the second option. It has opted for continuing to buy gas until the storages will be filled so that Germany can go through this winter relatively safely. I mean there are other mistakes that were made beforehand. Incredibly German storages, gas storages, were sold to Gazprom before the war, which made it even-

Jim Lindsay:
Gazprom is the Russian energy company?

Liana Fix:
Exactly. An energy company, which is basically a state company because it is so close to the Russian leadership and to the Kremlin. And even last year in the summer we saw that those storages were running low and this was a preparation from the Russian side for this war. And this is why it took Germany an immense effort to bring those gas storages now to 90%. Now Germany's in a position where it can get through this winter, but the costs will be incredibly high. There have been different proposals made by the government, which were quite confusing for the population, which is concerned about the rising energy prices. But at the moment it looks like the German government will spend double the amount that it is spending for the special fund for Germany's military to cut the prices for gas. So the German government is basically throwing a lot of money at the problem. And it is also at this point it does have significantly reduced its gas dependency from Russia.

Jim Lindsay:
My understanding is that the German government, both the federal level and state level, local level have tried to pursue a number of conservation plans to reduce consumption of gas. How is that playing with the German public?

Liana Fix:
Well, it was a broad discussion in the German public. Of course, it was also a discussion with a lot of jokes. How long would you shower and so on. But at some point it was clear that even if you save energy, the prices will be so high that there's no way that you can save enough to make your bill acceptable in a way, and this is the point which has scared the German public. That even if they will save money, even if they will sit in cold living rooms in the winter, they will still get an increase that is twofold or three times as much as they've paid before. But what is interesting is that the support for Ukraine has not suffered as much as one would have expected because of the energy crisis. So recent opinion polls show that the majority of Germans are more than 70%, they figure the number's actually increasing continue to support and to support the German government's line on Ukraine even if it will lead to economic problems. And I think this is relatively optimistic sign. There's so much concern that Europe will not get through this winter without concessions on Ukraine, but it seems that Germany is holding the line.

Jim Lindsay:
Why do you think that is Liana? Because there has been a lot of speculation since the early spring that Putin strategy basically is to outlast the West. That he believes he can absorb more pain for a longer period of time than the Western coalition can, that eventually particularly as it gets very cold in January, February into March that Western will will crack, fade away and that he will be able to achieve his victory in Ukraine. But you're saying that that hasn't been what has happened with the German public, why?

Liana Fix:
I mean, first of all, I think this is perhaps Putin's biggest weakness so far in this war that he's not able to read his opponents correctly. I mean he was not able to read Ukraine, he was not able to read Europe. He doesn't accept the European Union as a relevant institution. He still thinks it's all about member states and he still thinks that member states basically will abandon each other immediately in a situation of crisis. And what we've seen again and again is that Europe's thrives through crisis. It is really at that moment that Europeans come together and find common solutions. And I think the same applies to Germany. The main reason why there is no change of support for Ukraine is because Russia continues to act the way it does. And this is also the reason why Germany's Russia policy in the last years, there were concerns that Germany would go back to a special relationship with Russia to normalize relations with Russia. But it was always Russia itself, which prevented a German change or u-turn on Russia because the atrocities that we do see in Ukraine. Now, the mobilization in Russia, the annexation of those territories or the attempted annexation of Ukrainian territories, all that convince even the peace-loving German public that with Russia there's no do to make.

Jim Lindsay:
So have events in the last several months put pressure on Germany's coalition government. You have what I believe is called a "traffic light" coalition. Social Democrats are the lead party in cooperation with the Green Party and the Free Democrats. How has that coalition stood up among circumstances? I don't think any of those party leaders anticipated.

Liana Fix:
Yeah, we are now almost one year after elections in Germany and the "traffic light" coalition, so a coalition of Social Democrats, of Greens, and Liberals the first time we have such a coalition in Germany at all a coalition of three parties. At the beginning of that term, they had a special let's say glamor around them. They were happy to represent a new start for Germany. Well this has obviously faded completely. I mean the war and the crisis have made it incredibly difficult for this coalition to continue the program and their ideas that they had at the beginning of their term. What we do see now is that within the coalition, obviously the different parties are trying to cater to their constituencies. So the question whether Germany should continue to use nuclear energy has been a big question for the Green party. On the other side, the Liberals have struggled immensely with the question of should Germany stop the debt break and continue spending more? So we do see coalition in-fighting, but what keeps this coalition together is that they basically have to do the homework to correct the mistakes of past governments in an incredibly short period of time. So they're acting within a pressure cooker, the relevant ministries and the minister. And this is something which is also noticed by the public.

Jim Lindsay:
Now the big change in recent weeks has been the success the Ukrainian military has had on the ground. Major advances and successes in the northeastern part of Ukraine, but also over the last 10 days or so successes in the southern and southeastern part of Ukraine. How is the success of the Ukrainian military being seen in Berlin?

Liana Fix:
It is a proof of concept that Ukraine is able to have successful counter offensive. And because of that it was especially important to bulletin because so far the German chancellor, Olaf Scholz, he refused to say that Ukraine must win this war. And there was always a concern that at some point Germany might prefer a ceasefire than Ukrainian counter offensives. And the reason is that escalation management in the German context is seen as a much higher priority both by Germany and France actually than it is in Poland and in the Baltic states. So Ukraine's counter offensive were an important proof of concept, but now the more Russia escalates, the more Vladimir Putin escalates, the more the fear of an escalation which might at some point raise the nuclear question is discussed in Germany. Again, a typical German angst, a German fear is the nuclear fear. Germans have a very different relationship to nuclear issues than for instance the French who are very comfortable with nuclear energy. And therefore an escalation scenario is something where again, a German public which is not used to confrontation is afraid of.

Jim Lindsay:
Is the Scholz government worried that Ukraine might become too successful and end up triggering a broader war?

Liana Fix:
I think one question which does play a role is the question of Crimea. So will there be a military congress of Crimea? So far we've seen attacks on Crimea without significant Russian reactions to that. But the question of Crimea is something which could raise the sentiment if Ukraine should not be too successful. But when it comes to the east and especially those territories, that Russia has reconquered after February 24, the German government has been very clear that those Ukrainian territory and Ukraine has every right to reconquer the territory. Now the interesting part is when we come to the discussion of tanks, the hottest discussion in Berlin in the last weeks was about tanks and about the difference between certain types of tanks in Germany, which all have cat names by the way, the Leopards, the Gepards, the Marders. And what is interesting is that the German government has drawn a red line when it comes to the delivery of German-made Leopard battle tanks. We've seen Soviet era tanks delivered to Ukraine in the past by Poland and by others. But the German government has made the delivery of these tanks really a big and wide red line.

Jim Lindsay:
Why is that?

Liana Fix:
It is to the surprise of even of other allies, but it also seems to be to the surprise of the United States. Where representatives of the United States have communicated that well, if Germany wants to go ahead and deliver those Leopards, it is welcome to do so. But it reflects a general German attitude to this war, which relates back to what I said about leadership. Germany is comfortable being part of the Allied crowd. Germany is comfortable with doing the same delivering heavy weapons that had been delivered by others or in a similar way, but Germany is not comfortable, for example, to lead a European coalition on Leopards. Germany will not do the first step on this.

Jim Lindsay:
Why is that?

Liana Fix:
It is a little bit of an attitude, try to keep your head below the trenches because you might never know what the reaction of Russia will be. So better to be protected in a group than going ahead alone. And I think it is a sign of fear and what is interesting is that at this point the question of Leopards might actually also have become an escalation scenario in Moscow. Perhaps before Moscow would have not cared about Leopards or Gepards of the different kinds of heavy weapons sent to Ukraine. But as it has become this big issue for Germany, it also has a performative impact on the outside world. And I do fear it is out of fear of escalation that this red line is drawn.

Jim Lindsay:
I want to get back to the issue of Crimea and have you explain a bit why it is that sustained Ukrainian military actions in Crimea would cause real concern for Berlin because Germany recognizes Crimea as being legally part of Ukraine, it condemned the 2014 Russian seizure/annexation of Crimea. So why would military activities in Crimea seeking to make Ukraine whole trouble Berlin?

Liana Fix:
There was a difference between military activity that we've seen so far, so attacks and strikes on Crimea and reconquering Crimea as an island. I mean you're absolutely right. Germany does not accept Crimea as part of Russia. Crimea is part of Ukraine, but there is sentiment that Russia's threats that Crimea is considered part of Russian territory and part of Russia's nuclear umbrella are seen as credible threats and those are seen as more credible threats than the attempted annexation of territory in the east where even Moscow itself doesn't seem to know where the borderline is or what belongs to Russia and whatnot. Crimea is also because there is an understanding about the historical background of Crimea and the singularity of Crimea the importance of Crimea even to the Russian president compared to the importance of eastern Ukraine. So there's a fear that military reconquers of Crimea will lead to an escalation scenario with Russia and is more likely than attempted annexations in Ukraine's East.

Jim Lindsay:
Well let's talk about Vladimir Putin and his plans. Where do you think Putin is headed next?

Liana Fix:
He has upped the ante and this is the second time that analysts might have expected him to muddle through and to not pull the card of escalation after February 24. But he has done it. He has gone for mobilization and I think it's fair to say that this is not only a partial mobilization, but this is a mobilization which is governed by quotas and different Russian regions. So it is mobilization which can basically affect every Russian family. He's going for full escalation and he's trying to scare Ukraine and the West away from further offensives, which he's afraid he might not win. And that's exactly what we see right now. We see that Lyman has been taken by Ukrainian forces. We see that Ukrainian forces do make advances in the south of Ukraine towards Kherson and that obviously puts Putin's threat that there is a red line around those attempted annexed territories to the test. So what Putin tried to do is to prevent a collapse of Russian forces in the east with the mobilization and to buy time until he can stabilize with the presence in the east. This is not working for now and it remains to be seen what his reaction will be.

Jim Lindsay:
How much credibility do you give to his threats to use nuclear weapons and how would the Russian government use nuclear weapons in this context? Obviously using nuclear weapons against any NATO country would run the risk of a full scale nuclear exchange, which could hardly be in Mr. Putin's interest. It's also hard to see how a test detonation would influence things and also any use of tactical nuclear weapons would very likely rally the world against Russia.

Liana Fix:
Absolutely. But what I'm concerned is that this sort of cost benefit analysis that you've just made and which seems very plausible to us, is not the same cost benefit analysis that Putin might see. And that's a mistake that we've done before February 24. We thought, well obviously the costs are too high and there are no benefits. So while it remains unlikely for the moment that he will use nuclear weapons or tactical nuclear weapons, it seems to be an option that he has on the table and that he actively communicates to the West that he has it on the table. And his speech, he alluded to Hiroshima talking about a precedent that was set by the United States. So it is part of his instruments and the question really is there are probably still a lot of other things that he can do attacking critical infrastructure and the West seabed infrastructure before he has to resort to nuclear weapons. But if now he's sort of doubling down with mobilization and escalation, the question really is will he go as far as use nuclear weapons? And I do think it remains an unlikely option for the moment, but a serious concern for the future if Russia suffers further defeats.

Jim Lindsay:
And I should know that the Russians have a very sizable arsenal of so-called tactical nuclear weapons. Those are nuclear weapons that have a smaller yield than you would associate with nuclear payloads on intercontinental ballistic missiles. They're designed precisely to be used on the battlefield. So it is part of Russian doctrine to use or potentially use nuclear weapons as part of a, it's often called, escalate to deescalate scenario.

Liana Fix:
I find it an interesting question and it was raised by James Acton to what extent Putin actually still adheres to the nuclear doctrine that was laid out. And I think this is the crucial point. I mean the nuclear doctrine says it's really about the existence of the Russian state. It doesn't say anything about securing territory that you have that you're trying to enact through nuclear weapons. This turns the idea of nuclear weapons of deterrents completely around. But the point again is does Putin see this as part of his instrument which he uses when he deems it necessary, or is he still constrained by nuclear doctrines? Is he still constrained by his own army, which is certainly not excited about the thought of messaging in terms of moving weapons, testing weapons, but those before there will be nuclear weapons used we will certainly see movement, we will see testing. And that is a crucial point again for Europe especially and for the West, how much Europe will be intimidated by such science of nuclear weapons being moved out of the storage of tests being undertaken.

Jim Lindsay:
Well, I would imagine that US intelligence services, other intelligence services of NATO members are paying a lot of attention to where they believe these tactical nuclear warheads are being stored and whether they're being moved to the front. I would imagine that the Biden administration would likely take a page out of the playbook and followed last year in the run up to the war that it will publicize any such movement in a bid to try to deter the Russians. Is that a reasonable inference to make?

Liana Fix:
Well, I think absolutely. I mean I wouldn't count too much on German intelligence to be honest in this regard-

Jim Lindsay:
Well, the United States has terrific national technical means of intelligence and actually even from commercial satellites, you can learn a lot as we discover over the last year.

Liana Fix:
Yeah, I mean I think the German intelligence community has had difficulties before the war of predicting the war and making the right analysis. But I do think obviously it's the U.S. intelligence which we count in the situation. But the question then again is how to interpret these movements. Are those, again threats? Is it real preparation for a nuclear use and all that might happen in a very short timeframe? So the question really is we have to prepare now for options that can be used in this case and for measures that can deter the Russian president and those measures and communicating those measures should not only come from the United States, it should also come from partners like Germany who say, well if seriously the use of nuclear weapons is considered, or if we do see any movement, we will react in this and this and this way. This is plan A, B, and C. And this part of deterrent should not only be on the shoulders of the United States.

Jim Lindsay:
Do we have a sense of what Chancellor Scholz's government would put on that list of steps, A, B, C, and D?

Liana Fix:
Well, the difference obviously with Germany is that it doesn't have the same escalation potential that the United States has, but there are some things that could still be done. I mean, first one reaction could be to say, and there perhaps the Leopads can come in handy is to say, well, we will lose all the constraint that we have on support for Ukraine. The other one is we will lose all the constraints that we had on sanctions. So for instance, sanctions on Gazprom bank and on other entities of Russia, which have so far been excluded would be a possible way. But the decision sort of above threatening, for instance NATO conventional strikes, this is rather something that the alliance would have to do together or which would have to be communicated by the United States that NATO will certainly find a reaction to that, in all likelihood not a nuclear reaction, but certainly a conventional reaction which would bring deeper into this war.

Jim Lindsay:
Well that's an interesting scenario, Liana, can we just play it out a bit? I'm going to accept just for the purpose of discussion, if the Russians were to use a nuclear weapon in Ukraine and the United States would choose not to respond with its own nuclear forces, but it has the option to escalate horizontally rather than vertically. One possibility is that NATO or the transatlantic relationship can rally around Washington's commitment to do something militarily. But another possible scenario is that it breaks up the western alliance because perhaps the United States, I don't know hypothetically sinking a Russian ship in the Black Sea or striking at a Russian launching position for this nuclear attack could divide the allies and perhaps become a strategy that Putin may himself entertain.

Liana Fix:
Well, I think you're very right, we will enter the territory of direct NATO-Russia confrontation with that. I mean, if there will be NATO conventional strikes that may lead to conventional confrontation between NATO and Russia, which again weighs us a nuclear question in another, in a very different way. But I do think the question whether Europeans will be on the side of the United States on this will depend on the way how Russia has acted and used the nuclear bomb. And looking at how Russia has acted in the past, how ruthless it has acted. My assumption is that there would be an international outrage, the same kind of outrage that we've seen after the outbreak of the war. And I have to say I was surprised that the German public was so outraged, which pushed the German government to take even stronger steps and stronger sanctions. And I do think that one scenario could be that Europeans are scared and just want all this to stop, but perhaps the more likely scenario I do think is that they will be outraged how that power like Russia, which goes so far to break the nuclear taboo and in Germany it would be considered a civilization breach that there will be a consensus that this power must be stopped. At the moment, I would rather say that there will be unity just because it is so unimaginable and we will see pictures of that. We will see it all on social media. It will be a hugely emotional and incredibly horrific and tragic event, which will hopefully never happen, but which will raise resistance and perhaps also strong will in Europe to resist such actions.

Jim Lindsay:
Well, and certainly would matter in that situation that President Putin believed that the West will hang together rather than come apart at the seams. I mean, deterrence is about trying to influence the perceptions and calculations of the adversary. And as you pointed out, going back to the original invasion, most people were skeptical that you would see a full scale invasion because when they totted up the cost and benefits, they couldn't see how it all worked for the Russian president. He obviously countered the numbers quite differently.

Liana Fix:
I do just hope that he's not misreading the West in a way in which he actually believes what Sergei Karaganov, the famous foreign policy voice for Moscow said that the United States will not be willing to defend Poland through Article Five in a nuclear way because if he believes that that it might actually be a whisk that he would be tempted to use nuclear weapons or to escalate towards NATO because he's convinced that the United States would not be willing to fulfill their pledge and that would be a dangerous misreading of the western alliance.

Jim Lindsay:
Oh, it certainly would be. But Liana, I want to close in a slightly different note. We've talked a lot about internal German foreign policy and we've talked about the Ukraine war. I'm just curious to what extent has the shift in German foreign policy extended to a change in Germany's view of its relationship with China? For a number of years, China has been an important export market for German industry particularly we talked about machines and highly sophisticated industrial products. Is Germany in the process of rethinking its relationship with China?

Liana Fix:
That's the $1 million question, and I think there are two answers to that. The one is those in Berlin who believe that the same mistakes that were made with Russia should not be repeated with China. This is one answer, but there's also the other answer which says, Well, Russia and China are different and they are part of a different box and should be treated differently. The way Russia acted and the way how our dependency on Russia played out is not a template for our relations with China. And I think this is sort of are the two polls where Germany-China policy develops at the moment. We do see that the German economy is actually sort of the dependency on the Chinese economy is not becoming smaller. So the investments continue. We see continued German business interest and we see that the as a metric dependence from the German side on the Chinese side is continuing. It seems that both Olaf Scholz and Emmanuel Macron will go to Beijing in November. I'm sure it'll be the first in person meetings after more than two years, Angela Merkel was in Beijing in 2019. And that will be an important marker also for the west of the European Union and other member states who have a more critical view of China, say Lithuania, and who will observe very closely how Macron and Sholz act in Beijing. What we do see is that there was more criticism about the human rights situation in China from the German government, and that's also because we do have a Green party in government who's very explicit about human rights. But the question, and this will play out in Germany's national security strategy, which is at the moment drafted in Berlin and should be presented to the world probably at the end of this year or latest at the beginning of next year. The question how to frame China is the most challenging one because within the government, the Social Democrats are more cautious on China, the Greens are more hawkish and the idea that China can be a partner, a competitor, and a rival at the same time. The old concept of the European Union seems to be outdated. But there, the national security strategy is really something that we can see in the end, which party had the upper hand in discussions in Berlin. And it's definitely a document to watch and to analyze when it comes to Germany's future China policy.

Jim Lindsay:
On that incisive note, I'll close up The President's Inbox for this week, my guess has been Liana Fix, fellow for Europe here at the Council. Liana, as always, it was a joy to talk to you.

Liana Fix:
Thank you, it was a joy talking to you.

Jim Lindsay:
Please subscribe to The President's Inbox, an Apple Podcast, Google Podcast, Spotify, or wherever you listen and leave us a review. We love the feedback. You can find the articles mentioned in this episode as well as a transcript of our conversation on the podcast page for The President's Inbox on cfr.org. As always, opinions expressed in The President's Inbox are solely those of the host or our guests, not of CFR, which takes new institutional positions on matters of policy. Today's episode was produced by Ester Fang with Senior Podcast Producer, Gabrielle Sierra. Ester also edited this episode. Thank you, Ester. Special thanks to Michelle Kurilla for her assistance. This is Jim Lindsay. Thanks for listening.