It’s the end of the line for Germany’s two-track foreign policy

The writing is on the wall for Angela Merkel. The German Chancellor has been celebrated by many as the last great champion of European liberal values. Yet after a decade and a half in office, she is now preparing to step down next year. As German politicians line up as potential candidates to succeed her as Chancellor, global leaders are jockeying to replace her as the lynchpin of European foreign policy. Merkel’s greatest achievement on the global stage has been her ability to balance her image as a liberal champion with a hard-headed and practical pursuit of German economic interests. But whoever eventually fills her shoes will struggle to maintain that double legacy.

Even as Merkel enters the twilight of her premiership, a dramatic example of the competing political and economic priorities Germany faces is playing out on her doorstep. Just across the river from her office in the Chancellery building, Russian opposition politician Alexei Navalny is convalescing in the Charité hospital after being transferred there from Russia. Her government has led the charge against the Kremlin, first claiming incontrovertible evidence that Navalny had been poisoned with a nerve agent in the Novichok class, and then calling on Russia for an explanation.

However, at the same time, Merkel has overseen a colossal expansion in economic partnerships with the country that she has so often painted as a threat to Europe. As Russia’s second largest trade partner, Germany is a key partner in the €10 billion Nord Stream II project. This will expand infrastructure to export natural gas from Russia through the Baltic Sea and into German energy markets.

Merkel has recently come under fire for allowing this to take place under her watch. Eastern European countries have opposed the project over fears that Moscow could limit their gas supplies without affecting Western markets. The United States has also tried block the project, concerned about Russian influence and hoping to export its own shale gas to the continent. But, despite all of these pressures, Merkel has held firm in support of the scheme.

The conundrum exemplifies Merkel’s two-track approach to foreign policy. On one hand, she knows the value of leading political opposition against countries like Russia, placating her domestic supporters and Russia sceptics in her own party, the CDU-CSU. On the other, it is clear that she knows the importance of Russia to the German economy and is reluctant to jeopardise their trading relationship by cutting diplomatic ties. Her approach has been successful, at least so far, in allowing the Chancellor to have her cake and eat it. This has only been possible because Russia, accustomed to being vilified in the West, is also prepared to put economic partnership ahead of political animosity.

When it comes to the other great Eurasian power, however, things aren’t as simple. Relations with China are crucial for almost every country across the world, and Beijing is significantly more sensitive to criticism than Moscow. For the most part, the Chinese Communist Party takes a dim view of any perceived attacks on its domestic issues, such as human rights, political activism and territorial claims. Countries like the United Kingdom, which has clashed with Beijing over the status of Hong Kong, has found that this can lead to potentially lucrative trade and economic partnerships drying up. Given China is Germany’s main trading partner, this is far from an ideal outcome for Berlin.

This likely goes some way towards explaining Merkel’s reluctance to speak out on issues like Hong Kong and alleged human rights abuses of ethnic Uighur Muslims in China’s western Xinjiang province. While the Chancellor did make some muted comments on these issues, she is notably absent from her usual place as the flag-bearer of liberal internationalism. Notably, she made her remarks after facing sustained criticism for her silence. She may be Europe’s leading statesman, but she is also the Chancellor of Germany.

Only Merkel, with her reputation as a champion of European values already secure, could have balanced all these competing political and economic imperatives. For years, she has justified the two tracks of her foreign policy – divorcing political problems from economic ones – with her rallying cry of “Wandel durch Handel” – or “Change through trade’.

Soon, however, that might not be enough. Domestic pressure is growing on the German Government to take a tougher stance on China. Last month, a coalition of lawmakers used a visit by China’s foreign minister to urge his German counterpart, Heiko Maas, to raise a range of issues around human rights and the “breach of international laws.” The group included at least one member of Merkel’s own Christian Democratic Union. One Foreign Office Minister has even gone as far as to write an op ed in Der Spiegel urging Germany to “stand up to China’s power” and lock the country’s enterprises out of new telecommunications projects.

Public attitudes are changing as well in the wake of coronavirus. A recent poll found that more than three in four Germans thought that China was at least partially to blame for the pandemic, with the vast majority believing that the country had falsified its infection statistics. Crucially, only one in ten Germans said that they actually wanted closer relations with the country. This pattern has spread rapidly across European states, and it poses an existential threat to policies that increase ties with the world’s second-largest economy.

This presents a particular problem for Chancellor Merkel this year of all years. Her country has taken up the mantle of the Presidency of the Council of the European Union and an upcoming grand summit with China is set to be its defining moment. While China will be aiming to secure closer co-operation and access for its state-owned enterprises, it is becoming increasingly unlikely that even Merkel can ignore the clamour for putting humanitarian and political questions on the agenda.

These challenges will only be more pronounced for whoever succeeds Merkel as Chancellor next year. As a result, it is becoming increasingly clear that Germany’s two-track approach to political and economic issues will, sooner or later, come unstuck. With voters increasingly feeling unsure about relations with China, there will be a growing temptation for the next Chancellor to combine political and economic priorities, and to score points by treating Beijing with the same tough line which Merkel has taken with Moscow over the Navalny affair.

Yet unlike with Russia, when it comes to China this probably won’t mean business as usual.

Gabriel Gavin is a London-based policy consultant and an analyst of Eurasian politics.