American statesmen have long regarded Germany with frustration: They wanted Europe’s economic giant to stop being a political dwarf. Today, there is at least a chance that their wish will be granted. In a world of increasingly assertive autocracies, Germany’s potential transformation is a welcome prospect. There are three elements to watch.
The first sign of the new Germany involves defense. Over the past dozen years, German military spending has averaged around $40 billion annually, or a bit over 1 percent of gross domestic product. To put that in perspective, in 2021 the U.S. defense budget was about 14 times bigger. But three days after Russia invaded Ukraine in February, German Chancellor Olaf Scholz announced that his country would henceforth exceed the NATO military spending target of 2 percent of GDP — and that it would do so “year after year.” As a down payment, Scholz committed $107 billion to upgrading Germany’s military capacity, a sum almost equivalent to the annual defense expenditures of Japan and France combined.
Scholz is a workhorse, not a show horse, and he could have delivered faster. But five months into the war, Germany published a detailed list of its arms shipments to Ukraine: some 3,000 antitank weapons, 3,200 portable air-defense systems and much more. Meanwhile, Germany has announced additional deliveries, including 100 howitzers and 16 bridge-layer tanks. Despite the pacifist roots of his Social Democratic Party and his Green coalition partner, the chancellor is making good on his promise to turn Germany into Europe’s leading military power.
Then there is Germany’s energy U-turn. In 2011, when a tsunami hit Japan’s nuclear facilities in Fukushima, the government of then-Chancellor Angela Merkel experienced the policy equivalent of a breakdown. Merkel immediately decommissioned about half of Germany’s nuclear generation capacity and declared that the rest would be shuttered by December 2022. In 2017, Merkel’s government passed a law that more or less banned fracking, even though Germany had been safely using this technique for years to exploit its considerable natural gas reserves.
The outcome has been a dangerous dependence on gas imports from Russia, which accounted for 55 percent of German gas consumption on the eve of the Ukraine invasion. A long Cold War tradition of “Ostpolitik” — the policy of softening the Communist East by trading with it — made this folly feel acceptable. But Russia’s assault on Ukraine served as a wake-up call. For the past five months, Scholz has been scrambling to develop alternative energy sources. Russian gas now represents just 27 percent of German consumption. Scholz has begun talking about extending the life of Germany’s three remaining nuclear plants.
Germany’s third transformation relates to its neighbors. A decade ago, Berlin’s rigidity during the euro crisis exasperated the Obama administration, which wanted a stable commercial and geopolitical partner in Europe. Germany fanned populism in the weaker Southern European economies by forcing too much austerity on them. It sniped at the European Central Bank’s efforts to assist them with monetary easing. It rejected the idea of common European bonds, closing off another channel of crisis-fighting aid. It refused even to invest adequately in its own economy, depriving German industry of digital infrastructure and the rest of Europe of a useful fillip to demand.
Today, Germany is thinking differently. As part of its response to the covid-19 pandemic, Berlin approved more than $800 billion worth of jointly guaranteed euro-zone bonds. Meanwhile, confronted by the latest financial tremors on Europe’s periphery, this time in too-big-to-fail Italy, Germany has gone along with a prompt ECB pledge to backstop the debt of governments that get into trouble. And domestic austerity has gone out the window. Germany’s budget deficit stands at 3.7 percent of GDP, a big shift from the consistent surpluses before the covid pandemic.
Of course, Germany has stirred before — and then fallen asleep again. In 1999, it summoned the fortitude to back a military response to ethnic cleansing in Kosovo; over the next decade, however, its defense spending actually fell. But today’s German awakening is less about a war of choice and more about self-preservation. Russia has proved itself to be far more dangerous than the Germans had imagined. Thanks to the once and possibly future presidency of Donald Trump, the United States has shown itself to be a far less reliable ally. China, shaking its fist at Taiwan, looks like an increasingly poor candidate to be Germany’s main trading partner, though that is what it has become.
Scholz has recognized these shifts and is responding, demonstrating the value of a leader with a plodding, empirical style. People in the former East Germany are nervous about antagonizing Russia, but a majority of the country backs the chancellor’s stand. So do Scholz’s fellow Social Democrats. As Lars Klingbeil, the co-leader of the party, put it recently, “Germany must lay claim to be a leading power.”