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The Business of Statecraft and the Abandonment of Ukraine

The news in Ukraine gets bleaker, but a Rubicon of sorts has been crossed. What has turned into a civil war in eastern Ukraine cannot go back to its designation as a series of “protests,” nor can Vladimir Putin’s Russia plausibly go back to feigning nonintervention. Pro-Russian forces have reportedly shot down two Ukrainian government helicopters, at least one of them with shoulder-fired missiles.

The Ukrainian intelligence service is claiming that those “separatists” probably didn’t have shoulder-fired missile launchers stocked away in the linen closet for a rainy day, a sentiment based on some pretty sound logic. This is not Occupy Slavyansk. And yet, the West–especially Europe, quelle surprise–is acting as if it were. As Angela Merkel meets today with President Obama in Washington to discuss the next steps in the synchronized frowning that has characterized the response to Russian aggression thus far, the Wall Street Journal reports she is delivering some bad news for Kiev, with a predictable explanation.

“Angela Merkel is carrying a clear message from Germany’s business lobby to the White House: No more sanctions,” according to the Journal. “Several of the biggest names in German business,” including Siemens, Adidas, Volkswagen, and Deutsche Bank, “have made their opposition to broader economic sanctions against Russia clear in recent weeks, both in public and in private.” The Journal goes on to explain that, essentially, we have a new answer to Henry Kissinger’s famous question. If you want to talk to Europe, call the CEO of Adidas:

In most countries, it would be highly unusual for corporate executives to inject themselves into geopolitics and matters of national security with the forcefulness that a number of German business leaders have. But many of Germany’s largest companies have substantial Russian operations, built in some cases over decades, and worry that tough economic sanctions would rob them of a key growth market when their home market—Europe—is stagnant.

That has led to intense pressure on Berlin. Germany’s chancellor has repeatedly criticized Russia for its actions in Ukraine and warned the Kremlin it would face serious consequences if it doesn’t change course. Yet Ms. Merkel has stopped short of endorsing broader economic sanctions, opting instead to impose travel bans and asset freezes on individuals with close ties to the Kremlin.

It’s easy to begin, at least, with some sympathy for Merkel. Thanks to the EU’s fiscal troubles, Germany has taken the role of Europe’s financial backstop. It’s a mostly thankless job that earns the German government, when they try to fix the messes caused by other reckless European countries, obnoxious and offensive Nazi comparisons. This resistance to German hegemony is, for obvious reasons, coded into the continent’s DNA. Germany’s response has often been resignation to the role: to simply sign the checks while letting France command Europe’s military decisions.

Because of all that, Germany’s economic policy does not exist in a vacuum. Whether as penance for past sins or a paternal responsibility to Europe’s wayward sons, Germany must consider others when setting policy, ever mindful that Berlin can absorb losses others cannot.

However: there’s a limit to such excuses, and it’s not clear that long-term this would even be the right economic approach, let alone the right moral approach, which it plainly is not. After all, is constant political and military turmoil in major energy producers good for global markets and trade in the long run? And how will it affect European markets for expansionist powers to continue encroaching on Europe’s borders? (There are concerns Russia could target Moldova next, which is west of Ukraine.)

The state system in place is far from perfect, but allowing it to be undermined is unlikely to be good for business. After all, Merkel surely remembers how Germany came to be economically successful and the EU common market broadly integrated, and it began with throwing off the yoke of Russian tyranny and imperialism.

Merkel knows this not only because she is the head of government of the country that has basically become Europe’s central banker. She knows this because she grew up in East Germany. And here is where the moral and the material meet. It can’t be good for Europe’s economic future to yawn at Europe’s steady destabilization. But it certainly isn’t right. Merkel is where she is because there is no more East Germany, no more suffocating control by Moscow. Other independent states with sovereign borders deserve the same, no matter what the management at Adidas thinks.


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