Germany’s Southern Сorridor to Greater Eurasia: Away from Warsaw towards Damascus

When debating against Martin Schulz during the recent German elections campaign, Angela Merkel stated that Muslims are an integral part of German society. At first glance, this statement appears to be exclusively relevant to German domestic politics. In the context of the refugee crisis, however, it holds possibly dramatic international implications. The international order that took shape after the collapse of the Soviet Union is changing. Just like other major international players, Germany, and with it the European Union (EU), face two crucial tasks. First, they must secure their existing global power position to maintain the domestic benefits they reap from the latter, in particular economically. Second, they must maximise their positions in globally strategic regions before competitors use shifting power configurations there to their own advantage. In the context of the global geopolitical shifts that are currently underway, Germany may lead a strategic pivot away from Eastern Europe and towards the Middle East.

This pivot will be channelled in part through EU institutions, possibly garnering support from other net contributors to the EU budget. Germany holds an ace to reenter the Middle East through Syria. Namely, the German government may argue that it represents the views and interests of the large number of Syrian refugees that now reside in the country. A German pivot to the Middle East would be a step towards the consolidation of Greater Eurasia via a Southern corridor.

When debating against Martin Schulz during the recent German elections campaign, Angela Merkel stated that Muslims are an integral part of German society. At first glance, this statement appears to be exclusively relevant to German domestic politics. In the context of the refugee crisis, however, it holds possibly dramatic international implications. The international order that took shape after the collapse of the Soviet Union is changing. Just like other major international players, Germany, and with it the European Union (EU), face two crucial tasks. First, they must secure their existing global power position to maintain the domestic benefits they reap from the latter, in particular economically. Second, they must maximise their positions in globally strategic regions before competitors use shifting power configurations there to their own advantage. In the context of the global geopolitical shifts that are currently underway, Germany may lead a strategic pivot away from Eastern Europe and towards the Middle East. This pivot will be channelled in part through EU institutions, possibly garnering support from other net contributors to the EU budget. Germany holds an ace to reenter the Middle East through Syria. Namely, the German government may argue that it represents the views and interests of the large number of Syrian refugees that now reside in the country. A German pivot to the Middle East would be a step towards the consolidation of Greater Eurasia via a Southern corridor.

The context: a new world order is emerging

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The US-dominated world order that grew out of the collapse of the Soviet Union is breaking down: political centres are emerging that challenge the global leadership of the United States. Most American elites do not lack the desire to maintain their country at the global forefront. Yet the Unites States is unable to contain challengers as effectively as previously: it lacks the resources necessary today to maintain the same scope of global dominance as a decade ago. The current administration’s insistence that allies invest more in their own defence is, inter alia, an indication that in the quest to perpetuate its leadership in all major global theatres, the US is running tight on resources.

Sustaining the American power projection in the Middle East and South-East Asia is particularly important for the United States. For one thing, these strategic regions are major choke-points for global trade routes. The Middle East is also a resource hub that exports energy worldwide. Today, Iran is challenging the regional dominance of Saudi Arabia, America’s main ally in the Middle East. The recent shift of Qatar away from Saudi Arabia and towards Iran demonstrates that when common interests are at stake, the divide between Sunnis and Shias may prove insufficient to prevent the gravitational centre of the region from shifting towards Iran. Should Saudi Arabia’s position in the Middle East be noticeably weakened, the United States would suffer a major strategic blow.

American domination in South East Asia is also facing challenges. China continues to militarise the South China Sea, despite a 2016 International Court ruling condemning, among other Chinese actions, the building of military bases on artificial islands. China aims to transform the South China Sea into a Chinese lake, beyond the reach of American military pressure - again, a potential major strategic loss for the United States. China’s ambitions for Eurasian expansion are also a worry for some in Washington. Driven by overproduction at home and the desire to develop its hinterland, China is actively developing the continental ‘One Belt One Road’ project, a new ‘Silk Road’ across Eurasia. One of the main objectives of this project, both economic and political, is to reach comparatively rich European markets while circumventing maritime trade routes vulnerable to American pressure: were this project to succeed, Beijing would meaningfully strengthen its bargaining position vis-à-vis Washington.

Beside challenges in the Middle East and South East Asia, the United States also faces that of Russia’s reemergence as a major global geopolitical player in the last few years. A significant turning point in Russia’s comeback to the global stage has been its involvement in the Syrian Civil War, which Bashar Al-Assad government, with Russia’s assistance, is now winning. Russia has traditionally been a geopolitical competitor for powers in the Anglo-sphere. Its position today is no different.

The United States does not have sufficient resources to effectively tackle challenges from Russia, China and Iran simultaneously. The political elite currently in power in the Unites States appears to be shifting its focus to South East Asia and the Middle East rather than to the European theatre. Once challenges on the first two fronts are somewhat reduced, more attention and pressure will be turned towards Russia.

American dominance worldwide is increasingly brittle. New challengers are emerging in geopolitical and economic terms in a much more prominent fashion than previously. These shifts in political plate tectonics worldwide create new challenges and opportunities for each player that is or aspires to be of global significance. For each political subject, two questions arise: first, how to consolidate their current strategic holdings trough the period of international turbulence that we are entering; second, how to seize new strategic assets or strengthen their presence in key global regions before their competitors do so first. Among those preoccupied by these questions stand the European Union and its central power, Germany.

Germany’s losing gamble on Eastern Europe

Just as for other subjects of global geopolitics, a central task for the European Union as a whole, and for Germany at its helm, is to secure a strong position in global politics: international strength increases a political entity’s chances to prosper in a secure environment. To both maintain and strengthen their international position, the EU and Germany must carefully invest limited resources so as to reap maximum strategic gain.

Net contributors to the EU budget increasingly doubt whether current levels of investment in the development of Eastern European states bring sufficient strategic returns. Considerable sums from the EU budget are funnelled every year to Eastern member states. For the period 2014-2020 alone, Poland is set to receive around ‎€100bn from Brussels. Other Eastern Europe states are also drawing resources heavily from net contributor states. According to a 2016 KPMG report, the EU Structural Funds and Cohesion Fund accounts for as much as 11% to 23% GDP for most Eastern and Central European EU members.

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There was a hope, at the time of the EU’s enlargement to Eastern Europe in 2004, that investment in the region would boost the region’s long-term economic growth, raise standards of living there, and thus secure it as a market for companies based in states that are net EU budget contributors, including Germany. Gains that these companies would reap in new Eastern European markets would, it was hoped, boost the net budget contributors’ own the prosperity. Despite initial positive indicators, such hopes have largely failed to materialise. As a result, Germany and other net EU contributors are increasingly questioning whether it is in their best interest to continue investing in the development of Eastern European member states on the same levels as currently.

The recent tension over Polish judicial reforms and the legal row over violations of refugee quotas by certain Eastern European governments are playing into the hands of those elites in Germany and in other net EU budget contributors who believe that the amounts channelled to Eastern Europe from the EU budget should be reduced. Proposals have been made in the German government to limit EU funding for those states that do not respect ‘basic European values’. These proposals have been rejected so far by the president of the European Commission, Jean Claude Juncker, but may well be pursued again once his term ends in 2019. As well as ‘punishing’ states that violate what EU net contributors view as fundamental European norms, such measures would be a convenient means of cutting funding for Eastern European states, in particular Poland and Hungary, the principle targets of the proposed policy. Cuts in structural funds could be implemented as early as 2021, when the next EU budget cycle begins. There is a rationale for direct part of the budget currently allocated to structural funds towards arguably ‘more pressing’ areas. These areas include EU border controls and compliance with the Dublin accords. The shrinking of the EU budget post-Brexit only renders cuts in structural funds more likely.

The project of a multi-speed Europe may also be a way to achieve a decrease in budget transfers to Eastern member states. As explained earlier, despite considerable EU investment in the region, Eastern member states still offer tangibly lower standards of living to their citizens than Western ones. Discrepancies between the development levels of Eastern member states and those of states such as Germany and the Benelux countries create considerable challenges for further integration of all members at an equal pace. Certain Eastern members are currently unable and/or unwilling to comply with EU regulations or with with particular norms, such as the rule of law, on which the idea of a ‘ever closer union’ is based. Key political figures in the EU could make a convincing argument that these states should be given the opportunity of a ‘tailor-made’ membership package, which better reflects their domestic constraints, and where they place themselves within the European community. Less obligations to fulfil EU regulations and to follow EU norms would come in exchange for a decrease of the monetary benefits to be gained from EU membership, namely a limited access to structural funds. The vision of a multi-speed Europe is openly supported by President Macron, among other Western European leaders, and draws sympathy from the Germany’s political mainstream.

The idea of a multi-speed Europe is not only an opportunity to breathe new inertia into the European Union. It is also a symptom that Old Europe, and in particular Germany, recognises the failure of the European Union’s existing development model. Net contributors states lack the means and/or political will to invest the amount of funds in Eastern Europe needed to bring states in this region anywhere near the level of economic development found at the core of the Union.

Spending less on Eastern European member states would free up EU budget resources at a time when opportunities and needs for investment elsewhere are not lacking both within the EU and globally. Germany, as the main contributor state to the EU budget has major influence over the Union’s strategic spending. In view of current global geopolitical shifts, the German elite may well be reconsidering which geographical regions national- and EU-budget spending should be focused on so as to bring the most benefit to Germany and to the EU.

EU investment in the development of any region opens valuable opportunities for German and other European companies, including the possibility to enter into lucrative private-public partnerships. In the long term, such investment may foster new markets for goods and services coming from Germany and other European states. The success of large firms benefits the economy of the state in which they are based: investment in regional development could well benefit German and EU-level economic growth. In the process, political dividends would be created for the leaders who decide where to channel development funds. Thus the interests of German and other European firms are likely to play an important role in determining which regions are the main recipients of EU development funds, within the Union but also abroad.

The German elite will plausibly seek to target investments so as maximise Germany’s prospects of occupying a strong position in the newly emerging international order. Due to historical legacies, Germany can hardly impose itself as a military power on the global stage. It can, however, do so economically. Already the third largest global exporter in 2016, Germany will be aiming to strengthen its global economic position further, including through EU initiatives. In this context, it may appear that some of structural funds channelled to Eastern Europe ought perhaps to be redirected to other geographical regions which may bring greater potential benefits to Germany and other net contributor states. A historic opportunity is opening for Germany to re-enter the Middle East.

From Berlin-Baghdad to Berlin-Damascus

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Germany’s interest in the Middle East dates back to the turn of the 19th century. The Middle East was a region thirsting for investment in infrastructure and for industrial imports. The Berlin-Baghdad railway was planned to bring German industrial goods to new Middle Eastern markets in the Ottoman Empire. Opportunities for investment in the region’s infrastructure were particularly prized by German firms. After oil was discovered in 1908 and began to replace coal as an energy resource for both the military and the industry, the strategic importance of the region grew further. Today, Germany, could reap similar benefits from the Middle East as it envisaged a century ago.

First, German companies could benefit from lucrative contracts targeted at reconstruction in Syria and elsewhere in the war-torn region, beginning with infrastructure. There is considerably more demand for German infrastructural investment and industrial production in the Middle East than there is currently in Eastern Europe, due largely to the destructive warfare that has torn apart the region in the last decade. Industrial production constituted 30.3% of Germany’s GDP in 2016. If Germany were to invest in Middle Eastern development through EU, new opportunities would open for joint public-private partnership in which German and also other European companies could be involved. Investing in the Middle East through EU initiatives such as the Neighbourhood Investment Facility (NIF) would be advantageous for Germany in at least two ways. Economically, this would amount to burden-sharing with other EU members. The NIF, for instance, supports the private sector primarily through investment grants pooled from the EU budget and EU member states. Politically, an EU multi-lateral involvement in Middle Eastern development may gather more support and acceptance from other state-actors than a unilateral German move to achieve the same ends. Voices are emerging at the top of German industry in support for a Middle Eastern pivot. Philipp Andree, head of the Middle East unit at the Association of German Chambers of Industry and Commerce, recently stated that ”Syria and Iraq offer real potential for the German economy.” Syrian figures such as Feras Al-Shehabi, Chairman of the Aleppo Chamber of Industry, have also expressed an interest in partnering with German companies, taking into account Germany’s experience of reconstruction after the Second World War.

Second, a pivot to the Middle East could win Germany a more diverse access to energy resources than it currently has. This is an advantage that Eastern Europe cannot offer to Germany, or to other states in Old Europe. Although alternative forms of energy are quickly developing, hydrocarbons are likely to remain a major energy source for Germany and the rest of the EU in the near future. As the situation stands today, Germany is strongly dependent on energy imports, in particular from Russia. This dependence is aggravated by attempts to cut back on nuclear energy. Russian-German relations today are strained by the Ukrainian crisis and recent American sanctions against Russia have rendered energy cooperation with the country more difficult for German and other European firms. The Nord Stream 2 pipeline project, for instance, has been adversely impacted by the last American sanctions’ regime. By building new energy partnerships in the Middle East, Germany could diversify its energy sources without a considerable increase in the cost of energy imports. Energy diversification from other sources, such as Liquified Natural Gas from the United States, would greatly increase energy costs and thus have a negative impact for instance on the competitiveness of German exports. Before the civil war erupted, Syria was eyed by Qatar and Iran as a transit zone for projected oil pipelines to Europe. If such projects were to be resumed in post-war Syria, a foothold in the country would certainly be to Germany’s strategic advantage. Investing in regional development through EU initiatives, Germany and other Old European states would nurture direct contacts with potential energy partners in the Middle East and improve their bargaining position when negotiating with regional stakeholders.

The Syrian refugee card: Germany’s ace

Historically, it is through relationships with local actors that external powers have had most influence in the Middle East. In the 19th century and the early 20th, the French advanced their interests in the region by building ties with local Christian populations. The Russians claimed to defend the interests of Orthodox believers. The British offered their support to Jews and Muslim Arabs, leaning towards the group most useful to promote British interests in the region at a given time. Kaiser Wilhelm II of Germany attempted a similar method to advance Germany’s interests in the Middle East: he declared himself to be “Hajji Wilhelm”, the protector of Muslims. Germany’s game in the Middle East was short-lived, however. After its defeat in the First World War, Germany lost any positions it had gained in the region. In addition, its primary regional ally, the Ottoman Empire, disappeared from the map.

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Today, Germany has a historic opportunity to reenter the region by drawing on the Syrian refugees it has accepted. During a televised debate with SPD Chancellorship candidate Martin Schulz, Chancellor Angela Merkel declared that Muslims are an integral part of German society. Mr. Schulz supported her position, demonstrating a degree of consensus on this position among the mainstream German elite. The size of the Muslim community in Germany has soared with Syrian refugees in the last years. Ms. Merkel’s statement demonstrates a readiness to defend the interests of the Muslim community in Germany on equal grounds to those of other German residents. Defending the interests of the German community could involve defending the interests of Syrian refugees now residing in Germany. With hundreds of thousands of refugees from Syria taken in, the German government could ‘legitimately’ claim to represent the interests of part of the Syrian population during negotiations on the post-conflict settlement in Syria. Germany today has a historic chance to circumvent Turkey as a difficult regional partner and secure a foothold in the Middle East through economic and political involvement in the stabilisation and reconstruction of Syria.

Germany’s Southern corridor to Greater Eurasia

A German pivot to the Middle East would have repercussions far beyond the European Union. It may open a Southern corridor to building Greater Eurasia. In the Middle East, and in particular in Syria, Germany has common security interests with two major Eurasian powers: Russia and China. German involvement in the political stabilisation and reconstruction of Syria, including through EU initiatives, would open new opportunities to develop dialogue and cooperation between Germany and Russia. A mutually beneficial relationship between both countries is much more likely to develop through the Middle East than through Eastern Europe.

Part of the German elite supports deescalation with Russia. This position is mainly motivated by German economic interests. In August 2017, the German Minister for Foreign Affairs Sigmar Gabriel pointed out that the Germans “don’t want to completely destroy … [their] business relations with Russia, especially in the energy sector.” This is a position shared by the chairman of the Free Democratic Party (FDP), Christian Lindner, who went even further, stating that Germany may have to put the Crimean issue aside for a while to move out of a “dead-end situation” in relations with Russia. Following Germany’s September elections, the FDP will most likely enter the fourth Merkel cabinet, should a Jamaica coalition be agreed upon. Russia is a key energy provider for Germany. Russia is also a large importer of German products, in particular of industrial goods and pharmaceuticals. There is much room for German companies to expand into the Russian market, in particular into the Russian East, which Moscow seeks to develop. Numerous German companies would benefit from political deescalation with Russia, as this would likely be accompanied by a gradual lifting of sanctions and a climate of greater trust among business partners.

Despite signals by some important political figures in Germany that deescalation with Russia is desirable, it remains politically difficult to achieve. Opponents of deescalation are still numerous within the establishment and an adversarial position towards Russia continues to be the mainstream one. At the present moment, public opinion is hardly ready for a shift in a different direction. Considering the current probes in the American administration around alleged Russian involvement in the 2016 elections, politicians are cautious to directly advocate better relations with Russia, for fear of adverse consequences to their political capital. Furthermore, numerous Eastern European member states in the EU view Russia as an existential threat and gravitate the consensus-based politics of the Union towards a confrontational approach with their large Eastern neighbour.

Developing constructive dialogue and cooperation between Germany and Russia may best be achieved in the near future outside of the European theatre, particularly in the Middle East. Projects in the Middle East are set in a more historically neutral region for Germany and Russia than any projects that are attempted in East Europe. Attempts to cooperate in the Middle East are likely to encounter comparatively less resistance from local political stakeholders, but also from those who support a hard position against Russia in the contest of the Ukraine crisis. The Syrian post-war settlement and the country’s reconstruction are an opportunity to build trust between Russia and Germany, if the latter would choose to be involved. Russia and Germany have common interests in the Middle East. Both states would like to see a stabilisation of Syria and its economic recovery. Attacks by Islamic radicals have hit both Germany and Russia in the recent past and continue to be a threat for both states today. Greater security and improving standards of living in Syria would work to decrease radicalisation in the region. In the context of post-war reconstruction, there are numerous opportunities for Russian and German firms to cooperate in win-win arrangements.

Besides opening paths to fruitful cooperation with Russia, Germany’s involvement in the Middle East would also bring opportunities for similar cooperation with another key Eurasian player: China. China has been increasingly turning its attention towards Syria in the past few years. This shift partly relates to concerns about the spread of radical Islam. So-called Islamic State operatives were for instance arrested in Malaysia in March 2017 and later that year in Singapore. Another important factor for China’s growing involvement in Syria is that large economic dividends can be reaped from the region. Since 2016, China has sent several business delegations to the country and taken part in trade exhibitions in Damascus, Latakia and Tartous. Ultimately, the Chinese would be interested to incorporate Syria into their One Belt One Road project, which aims, inter alia, to develop Eurasian cooperation. As is the case with Russia, Germany shares numerous interests in Syria with the Chinese. This opens opportunities for cooperation between both countries at government-level and also for example at the intersection between private and public sector development initiatives. The Syrian civil war appears to be at its last stages. With a pivot to the Middle East, Germany could secure an advantageous position to develop dialogue with both Russia and China in areas of mutual interest, with likely support from local stakeholders.

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A Greater Eurasia which reaches out to Europe could take the form of an arch of cooperation across the North of the Eurasian continent, a ‘Northern Corridor’. The hostility of certain Eastern European states to Russia, and the Ukrainian crisis where a solution is not foreseeable in the future dampen the prospects of such deeper cooperation through this corridor. The move towards Greater Eurasia has more chances to succeed through the ‘Southern Corridor’ that passes through the Middle East. In this region, prospects of productive dialogue and viable cooperation between key Eurasian players are far more promising, in particular when it comes to Russia and Germany.

Conclusions

In shifting the international order, Germany may secure a meaningful global role only through economic weight. Germany’s projection of economic power is intimately related with the European Union. In the last few years, large sums have been invested by net EU budget contributors to develop Eastern member states. This investment has broadly failed to translate into a harmonisation of standards of living between East and West. Hopes that Eastern member states may become advantageous markets for companies from Western ones, benefitting Old Europe’s economies, have largely failed to materialise. With this in mind, the German elite could be eyeing investment opportunities with better returns than those pursued by net EU budget contributors for over a decade in Eastern Europe. Cutting EU funding for Eastern member states would free up resources that may be redirected towards the Middle East as a key strategic region for Germany on both economic and geopolitical levels. EU engagement with the development of the Middle East would benefit Germany and EU member states by creating opportunities for energy diversification and for lucrative private-public partnership for European firms. Angela Merkel’s statement that Muslims, including Syrian refugees, are an integral part of German society whose interest her government seeks to represent, is a step toward seizing this historic opportunity for Germany to pivot towards the Middle East. With such a pivot, Greater Eurasia would move one step closer to reality.