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The Cost of Being Honest

Merkel Foreign Policy Is Bad for Business

By Ralf Beste, Ralf Neukirch and Matthias Schepp

German Chancellor Angela Merkel prides herself on being honest with -- and critical of -- world leaders. But within her government, dissatisfaction is growing, and German trade may be suffering.

Two chancellors, two styles. One of them strolled along the shore of the Black Sea at sunset with Russian President Vladimir Putin in 2005. When asked how he felt about the internationally condemned elections in troubled Chechnya, he said that he was unable to discern any "significant interference" by Moscow.

After meeting with Chinese Prime Minister Wen Jiabao in 2004, he said that he looked forward to the volume of German trade with China doubling to €100 billion by 2010. He also believed that the European Union should lift its arms embargo against Beijing as quickly as possible. That was the style of former German Chancellor Gerhard Schröder.

His successor, Chancellor Angela Merkel, takes a completely different approach. Her motto is: "Openness is better than harmony." She insists that values take precedence over economic interests. Merkel, a Christian Democrat, followed up her first meeting with Putin in January 2006 by meeting with the Russian opposition. In a speech at the German embassy in Moscow, she encouraged the assembled regime opponents to contribute to "the revival of life in Russia."

In late September of this year, only four weeks after visiting Beijing, Merkel received the Dalai Lama at the Chancellery. Beijing reviles the religious leader of the Tibetans as a dangerous separatist.

Anger at Every Level

The results of Merkel's new approach are becoming increasingly apparent. On the Sunday before last, Putin arrived at a summit meeting in the western German city of Wiesbaden two hours late. During a press conference at the city's Kurhaus conference center, there was open disagreement on almost every important issue, from Iran to pipelines to trade agreements.

And when it comes to China, arguing isn't even an option. Angered by Merkel's reception of the Dalai Lama, Beijing has since cancelled virtually every meeting with the Germans, including a human rights summit scheduled for December, as well as various state dinners, breakfasts and exhibitions. "The Chinese are letting us feel their anger at almost every level," says Gernot Erler, a deputy in the Foreign Ministry. German diplomats predict that Beijing will continue to snub Berlin at least until the 2009 election.

The quarrel with the two major powers to the east has led to divisions within the ruling Grand Coalition made up of Social Democrats and Christian Democrats. There is disagreement over how much confrontation with Russia and China is acceptable, and whether Germany should condemn abuses in authoritarian countries openly or behind closed doors.

But the lines are not as clearly drawn as one might expect. Chancellor Merkel is not completely blind to economic interests, nor is Foreign Minister Frank-Walter Steinmeier -- from the SPD -- unconcerned about human rights. Both consider the Russians and the Chinese to be important partners in dealing with international conflicts.

Merkel Approach Unproductive

Peaceful resolutions of the Iranian nuclear crisis and the Kosovo conflict are unlikely without the support of the two powers, both of which hold permanent vetoes in the United Nations Security Council. If anyone can exert a moderating influence on the dictatorships in North Korea, Burma and Sudan, it is the Chinese. Russia, meanwhile, is Germany's leading energy provider, as well as a booming economy offering attractive opportunities that can help secure German jobs.

But the differences begin over the question of how to proceed. The foreign minister prefers to take a cautious approach, while the chancellor favors directness. Merkel is convinced that clearly stating one's position cannot hurt. Steinmeier, for his part, believes that Merkel's approach is unproductive.

For two years Merkel's policy was unassailable. Her "values-based foreign policy," as she calls it, seemed to provide Germany with a moral compass. After Schröder's fawning reference to Putin as a "flawless democrat," critical words were more than welcome.

Merkel managed to garner public support by simultaneously maintaining continuity in German foreign policy. She continued to refer to Russia as a "strategic partner" and took sizeable business delegations along on her trips to the Far East.

Conflict with Interests

But it is gradually becoming clear that the chancellor is not only changing the style of Germany's foreign policy, but is also asking her country to make a small break with tradition. For decades, German foreign policy mirrored the country's status as a major commercial power. The Germans quietly pursued their interests by maintaining good relations with Russia and China.

Merkel is moving away from this West German tradition. Having grown up in the dictatorship of communist East Germany, she applies that experience to German foreign policy. The result is greater sympathy for the skepticism shown toward Russia by newer EU members from Eastern and Central Europe.

Merkel has deliberately turned her back on Schröder's policies. Instead of merely submitting lists of the victims of authoritarian regimes and requesting that the situation be remedied, Merkel prefers clear discussion. In her view, neither her support for human and civil rights nor the integration of the Eastern Europeans conflicts with German interests. Merkel feels that there is no evidence that an offensive human rights policy jeopardizes investments or lessens political influence. She believes that only those who express their opinions openly are treated with respect.