Finance: Research, Policy and Anecdotes

I don’t write that often about foreign policy, but the current situation in Ukraine worries me and brings back memories from 40 years ago.  I grew up during the height of the Cold War and many of my early political views were formed during the early 1980s. In 1979, NATO reacted to the military build-up of Warsaw Pact countries with the Double-Track Decision, which ultimately resulted in the deployment of Pershing II missiles in Germany in the 1980s (including close to my hometown). This in turn led to massive protests by the Peace Movement and bitter political conflicts (and also helped the rise of the Green party), but one can argue (as I do) that the tough position by the West ultimately contributed to the subsequent positive developments: disarmament talks between the US and the Soviet Union, the fall of the Communist bloc in Central and Eastern Europe and the Soviet Union, and the end of the Cold War. The European members of the Warsaw Pact as well as the Baltic states (previously part of the Soviet Union) are now members of the EU and NATO. The fear of mutual destruction, very much on the mind of many during the 1980s, has given place to peace, though possibly also a certain laxness about threats to Europe’s security.

Fast forward to 2022 and it seems that the Russian president Putin is not happy with the status quo and is pushing to create a two-class NATO by demanding withdrawal of NATO troops from any country that used to be part of the Warsaw Pact or the Soviet Union. It would undermine sovereignty of these countries that barely won their true independence 30 years ago. Mr. Putin argues that Russia feels threatened by NATO; it rather seems that he dislikes democratically elected governments in countries surrounding Russia, as this might provide a positive contrast to his own repressive regime. It is clear that none of the demands and actions by Mr. Putin is about Russia’s security, they are all about the security of his own autocratic regime. His aggressions against Ukraine mirror those against other neighbouring countries such as against Georgia in 2008.

It is clear that there is no immediate threat of war against Central and Western Europe; Putin’s regime is not interested in putting troops across Europe, as there are less costly (in human lives) ways to undermine democratically elected governments. The interference by Russia in the 2016 US elections and its (still opaque) role in the Brexit referendum point to a new modus operandi. Smaller states are being bullied, while in larger states, political influence is being bought and democratic institutions undermined. Cyber-attacks as recently against Ukraine and targeted terrorist attacks, such as in Salisbury, complement the toolbox.

One can also argue that Putin has been encouraged by changes in US foreign policy and the US-European relationships. As much as Trump stands out with his boot-licking of Putin and other strongmen, the slow withdrawal of the US as global superpower has started under Obama and his refusal to follow up on the red lines vis-à-vis the Assad regime in Syria when it used chemical weapons against its own people, effectively leaving this part of the world to Russia. The shift of US attention from Europe to Asia has also played a role.  And it is clear that foreign policy is the one area, where Biden is not that different from Trump in approach (though very different in tone): he has made it clear again and again that he does not believe in foreign military interventions.

However, the weakest link in all of this seems to be Germany. The remarks by the navy inspector Kay-Achim Schönbach in a conference in India (“Putin just wants respect, let’s give it to him”) simply mirrors the thinking by many of Berlin’s political class who do not really see Russia as any threat; surprisingly, the Green party, 40 years ago at the core of the Peace Movement, is now among the more hawkish voices. The Nord Stream 2 pipeline is at the core of this ambivalent relationship between Germany and Russia, which focuses on economic interlinkages between both countries, with the former chancellor Schröder being chairman of Nord Stream 1’s shareholder committee.  However, compromising the security of Europe for ‘economic’ gains, which ultimately will give the Russian regime another tool for blackmail, seems not only wrong but dangerous.

Unlike in the 1980s, there is no immediate threat of war in Europe beyond Ukraine. But, unless the ‘West’ draws a line in the sand and reacts strongly to any aggression by Russia, as minor as the incursion into Ukraine’s territory might be, this will only encourage further provocations and aggressions. Appeasement did not work in the late 1930s, the opposite of appeasement worked in the 1980s, and appeasement will not work in the 2020s! Those who do not learn history are doomed to repeat it!

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