Olaf Scholz’s approach to Europe and China risks leading Germany down the path of old failures

The German chancellor has faced a series of challenges in his first year in office, putting his diplomatic skills and political pragmatism to the test
His efforts to defend German interests and compete for the leadership of Europe have drawn the ire of allies and muddled European policy

Thomas O. Falk

Published: 3:30am, 22 Dec 2022

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German Chancellor Olaf Scholz has been in office for a year. Besides his stoic nature and his reluctance to communicate political plans in detail, his European policy has been subject to criticism including a “Germany First” agenda, unilateralism towards China and disregard for the French.

For the German head of government, who seeks to fill the void Angela Merkel left behind as de facto leader of Europe, it is an indefensible track record and adjustments need to be made.

The Scholz-led government consists of three coalition partners – the Social Democrats, Greens and Free Democrats. For the past year, it has been in power during a period dominated by Russia’s war of aggression in Ukraine and the subsequent energy crisis.

Russian President Vladimir Putin’s war forced Scholz and 26 other European heads of state to quickly look for countermeasures, and for the most part the European Union has acted as a united front. Last week, the EU passed its ninth sanctions package against Russia.

However, Germany all too often stands out as slowing down efforts. For example, Germany only advocated in favour of an oil embargo against Moscow when decoupling from Russian oil appeared safe.

Moreover, Scholz’s opposition to a gas price cap was not received well, either. Neither was Scholz’s €200 billion (US$211.4 billion) “double ka-boom”, with which the coalition seeks to cushion the consequences of the energy crisis with subsidies to households and enterprises. Berlin’s relief package will inevitably affect energy procurement in the other EU countries.

The jetty at the Wilhelmshaven LNG Terminal is seen beyond a German flag on a boat in Wilhelmshaven, Germany, on December 15. The inauguration of the import terminal last week marked an important step for Germany, which has been dependent on Russian pipeline gas for decades. Photo: Bloomberg

French President Emmanuel Macron said at the EU summit in October that, “it is neither good for Germany nor Europe if Germany isolates itself” as a result of the actions taken by Berlin.

Macron, in particular, has not enjoyed Scholz’s tenure thus far. For instance, there was Germany’s purchase of US fighter jets as the Tornado successor model for Nato’s “nuclear sharing” mission. The Franco-German Eurofighter was suddenly obsolete.

Moreover, in Scholz’s quest to lead the EU, he launched the European Sky Shield Initiative, a proposed project to build a better European air defence system, without bringing France on board. Fifteen European countries – but not France – have declared themselves members.

A Lockheed Martin F-35 jet takes part in a flying display at the Farnborough Airshow in Farnborough, England, on July 19. Germany signed a deal to buy dozens of US-made F-35 jets on December 14, part of the country’s military overhaul following Russia’s invasion of Ukraine. Photo: AFP

Then there is the all-important China question. Since 2019, when the EU presented its China strategy, the relationship between Brussels and Beijing has deteriorated. In some way, the EU is inclined to stick to its assessment of China as both a partner and a competitor and systemic rival. However, the latter is increasingly coming into focus.

The European External Action Service – the diplomatic service and combined foreign and defence ministry of the EU – has called for a harder line towards China, viewing it as a competitor with limited areas for potential cooperation.

However, Germany has had good relations with China for decades. Merkel and President Xi Jinping even sought to establish the Comprehensive Agreement on Investment as the highlight of the German EU presidency until the European Parliament suspended it.

With Merkel’s departure, the question of how Scholz would deal with China arose. Although Scholz is a pragmatist like his predecessor, his coalition partners’ harsh remarks towards Beijing hinted at a departure from the usual Sino-German relations.

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However, during his visit to Beijing last month, Scholz showed he also relies on economic partnerships with China and thus does not want to jeopardise Germany’s prosperity. The problem was that Scholz failed to adhere to communicating with one European voice.

For Scholz, being the first Western head of government to pay his respects to Xi after the Chinese president secured his third term as Communist Party leader was far more important than presenting a united Europe. The fact that Macron’s request to represent common European interests with Scholz in Beijing was rejected is a testament to the latter.

China is likely to remain one of the key points of contention for Europeans in 2023. The EU could pursue a two-pronged strategy after 2022 has shown people no longer want to be naive about Beijing but do not want to get into systematic confrontation either.

Meanwhile, Germany will officially present its China strategy next year. The extent to which Scholz’s pragmatic approach will remain in place also depends on the coalition. Under Foreign Minister Annalena Baerbock, the Greens advocate a value-based foreign policy and want to gain a profile on the international stage.

However, the idea that Scholz – a semi-Machiavellian politician – would make concessions to another party that could harm Germany’s economic interests, as well as his profile, remains inconceivable.

How German leader Olaf Scholz walked a fine line in China

At the same time, the lack of a shared German vision of Beijing would inevitably affect the EU’s China approach moving forward. Without Germany, a coherent, goal-oriented strategy towards Beijing becomes almost impossible.

It is pivotal for Scholz to find a balance between national interests and European loyalty while putting an end to the undignified quest for European leadership between him and Macron.

Continuing on the path he’s taken in his first year in office will mean resuming German failures of the past. After all, neither Germany’s natural gas partnership with Russia nor the profit-seeking in China championed as an investment in its gradual democratisation have worked that well for European interests as a whole.

Thomas O. Falk is a UK-based independent journalist and political analyst who is working on a PhD with a focus on German foreign policy during the Kohl and Merkel years