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Trading Lessons

Germany Has No Power to Solve the European Crisis

Politics / Eurozone Debt Crisis Sep 22, 2016 - 05:40 PM GMT

By: John_Mauldin

Politics

BY LILI BAYER : Germany faces a growing number of crises, both at home and abroad. But it has limited power to address them. The country needs stability in Ukraine. It wants to influence Russia. And Germany needs to deal with the influx of refugees from Turkey. This requires an agreement with that country.

Recently, the German leadership met with officials in Europe and abroad to address these crises. On Sept. 15, the foreign ministers of Germany and France toured Ukraine's war-torn east. In August, the German foreign minister went to Moscow to discuss the problems in Ukraine and Syria.


Germany criticized Turkey’s actions following the failed coup. This strained relations with Ankara. And it raised questions about the future of the EU’s refugee deal with Turkey. On Aug. 7, a German state secretary rushed to Turkey to “re-establish direct channels of communication.”

These meetings are a small sign of a larger problem for the government in Berlin. For Germany, stability in Ukraine and the EU’s deal with Turkey on refugees are two priorities. Germany wants to play a leading role in resolving these crises.

But it is finding that the US government—not Berlin—actually has the power.

Berlin’s concerns

For Germany, stability in Ukraine is crucial. On Aug. 10, Russia accused the government in Kiev of conducting a raid in Russia-controlled Crimea. It threatened to call off planned talks with Ukraine, Germany, and France. Since the start of the conflict, Germany has tried to mediate. They’ve led multiple talks between Russia and Ukraine.

Berlin has sought this role to prevent conflict on Europe’s periphery. It fears that increased Russian aggression in Ukraine would deepen divisions between the EU’s eastern and western members. The East sees Russia as a threat. In the West, Russia is just a secondary challenge.

But, Berlin’s ability to sway Moscow or play a leading role in dealmaking is limited. European governments’ main tool for shaping Russia’s actions has been sanctions. However, sanctions are now a minor thorn in Russia’s side. Low oil prices are the primary cause of its economic woes.

Washington’s Role

Germany and France are the main negotiators between Russia and Ukraine. But Berlin is not able to guarantee the key compromises Moscow wants. The Kremlin wants Ukraine to remain a neutral power. This means not joining NATO or receiving military aid from the West.

But, Germany has politically supported pro-Western forces in Ukraine. So Russia thinks a deal negotiated by Berlin would be worthless without America’s agreement. As such, the US plays a dominant role in the talks.

The same type of dynamic is at work with Turkey. The US has all the power. The migrant crisis has shown the lack of clear decision-making in the EU. It has also caused EU citizens to lose even more trust in its leaders.

The EU’s deal with Turkey is its main way to stem the flow of migrants into the bloc. The EU has promised Turkey funds and visa-free travel to the Schengen Zone in return for taking back refugees.

But, European voters don’t like the prospect of granting visa-free travel to Turkey. This has also sparked security concerns among EU policymakers.

To qualify for visa-free travel, Turkey must meet 72 criteria outlined by the EU. Meeting all of the agreement’s terms seemed like a difficult feat even when the deal was signed. After Turkey's failed coup, both sides know that visa-free travel is off the table, though they don’t admit it publicly.

Ankara’s posturing

Turkey has threatened to quit the migrant deal if no progress is made on visa-free travel. In reality, it probably wants other concessions as well. However, Berlin has relatively little to offer Turkey other than funds. Turkey would take the money, but what it really wants is security. It is very concerned with what NATO and Syria will do.

Turkey is negotiating with Russia, the US, and the EU. The EU is leaving most of its part in the dealing to Germany.

But Turkey’s approach to each of these relationships changes often. Turkey wants the best deal and will do what it needs to in order to get it. The US, Germany, and the rest of the EU are watching what Turkey will do next. They worry that Turkey might try to reignite a refugee crisis in Europe.

Berlin is concerned about stability in Ukraine and Turkey’s moves. But there’s just not much it can do about either. Germany is Europe’s largest economy and a major player in Europe. But when it comes to dealing with Ankara and Moscow, it is the US, and not Germany, that is in a position to work things out.

Watch George Friedman's Groundbreaking Documentary Crisis & Chaos: Are We Moving Toward World War III?

Germany’s fading influence is part of a storm of instability engulfing a region that’s home to 5 billion of the planet’s 7 billion people.

In this provocative documentary from Mauldin Economics and Geopolitical Futures, George Friedman uncovers the crises convulsing Europe, the Middle East, and Asia… and reveals the geopolitical chess moves that could trigger global conflict. Register for the online premiere now.

John Mauldin Archive

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