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  The Cost of Being Honest: Merkel Foreign Policy Is Bad for Business

The Cost of Being Honest Merkel Foreign Policy Is Bad for Business

By Ralf Beste, Ralf Neukirch and Matthias Schepp

Part 2: Dealing with the 'Merkel Cost'

Others, though, aren't so sure. Whereas Merkel is inclined to ignore the aggressive posturing her foreign policy generates, others see warning signals that need to be taken seriously. BASF Chairman Jürgen Hambrecht criticized the reception of the Dalai Lama as "tactless" and promptly delivered a sweeping attack. "The way we deal with China is absolutely unjustified," he said. His deputy Eggert Voscherau echoed the boss in saying: "We have pushed open the door, but others are going through."

Eberhard Sandschneider, research director of the German Council on Foreign Relations, likewise blames Merkel for the fact that relations with Russia and China have soured.

Over in Moscow, it has become commonly accepted that Merkel's emphasis on values has cost Germany its privileged position as the leader of European trade with Russia. President Putin seemed to confirm this point of view last Monday at the summit in Wiesbaden. When Klaus Mangold, the chairman of the Committee on Eastern European Economic Relations, extolled the €7 billion in German investments in Russia this year, Putin snapped, in the chancellor's presence: "You shouldn't be proud of that. Investments of this magnitude are made by a single Italian company in Russia." He was referring to the energy group Enel.

'Merkel Spurned Us'

Others are also profiting. During a visit to Dresden last October, Putin offered the chancellor a deal to build a huge natural gas storage facility in Germany. But Merkel declined because a common EU energy policy was more important to her and she wanted to avoid separate German-Russian deals like those struck by Schröder. The project is now going to Austria. "We fell on our knees before Germany and practically proposed marriage," says Moscow journalist Mikhail Leontyev. "But Merkel spurned us."

The complaints on the German side seem disingenuous. After all, trade with Russia grew by an impressive 35 percent last year. Still, many believe there is potential for more -- the fact that this potential has not been realized is called the "Merkel cost" by many.

Steinmeier believes the chancellor's policy has room for improvement. Although he was not comfortable with Schröder's aggressive courting of Putin's favor and his silence on human rights violations in Russia, the German foreign minister enthusiastically supported Schröder's and Putin's idea of linking German high technology with Russian energy wealth.

Binding Russia Even Closer

Steinmeier is driven by the goal of securing Germany's energy supply for decades. This includes looking for alternative suppliers in North Africa, Central Asia and the Persian Gulf. But Russia is still the most important supplier, and Steinmeier wants to bind the country to Germany as closely as possible. "Closer ties through interlinkage" is the motto of his "new Eastern policy."

He also has a low opinion of open confrontation with China and would like to see less pressure being heaped on the autocrats. But Steinmeier also realizes that he cannot directly challenge the chancellor. The Dalai Lama is a pop star with an appealing political message. Eighty-two percent of Germans consider it appropriate to extend an invitation to the spiritual leader of the Tibetans.

As a result, the debate is carried out in secret, with concealed assignment of blame and quarreling behind the scenes. Some day people will ask who lost Russia for the West, a senior German diplomat said recently -- referring, of course, to Merkel as the guilty party.

But the chancellor has at least one firm ally in the Foreign Ministry. Günter Nooke, a Christian Democrat, is Germany's commissioner for human rights. The former East German civil rights activist thinks a lot like Merkel. "We East Germans happen to have personal experience with dictatorships, unlike most Western politicians," says Nooke. "We know how important public criticism is."

Nooke considers the decision to receive the Dalai Lama to be correct, precisely because of the furious protest from China: "It is a good sign that we do not let others dictate to us whom we meet with," he says.

Translated from the German by Christopher Sultan

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