The Telegraph
Wednesday , March 5 , 2014
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Germany crucial to ending crisis

March 4: In the face of the diplomatic manoeuvering over how to confront a bellicose Russia in Ukraine, one country appears to hold the key to any long-lasting entente: Germany, Europe’s economic powerhouse and one of Russia’s primary trading partners.

Whether it is importing fuel from Gazprom or selling Mercedes-Benz to billionaire oligarchs, trade with Russia has played an important role in Germany’s emergence as an economic superpower over the last decade. Germany is now heavily reliant on Russia for its energy needs, importing more natural gas from Russia than any other country in Europe.

But Germany’s enhanced status on the world stage — combined with the end of the commodity boom and the onset of economic stagnation in Russia — has also shifted the balance of power. Some analysts argue that it is Russia that has the most to lose if economic sanctions are ever imposed.

This dynamic could offer insight into the role that the German chancellor, Angela Merkel, will play in any negotiations with the Russian President, Vladimir V. Putin.

So far, German diplomats have tacked away from a plan, pushed by the US, to impose sweeping sanctions and remove Russia from the Group of 8 developed economic nations. Instead, the German chancellor has called for a more diplomatic solution, preferring more limited actions like many of her European counterparts.

But Merkel, a champion of closer ties between Ukraine and the EU, has also shown a willingness to take a hard line with Putin. In recent months, Merkel has been particularly forceful on human rights issues. For example, she played a crucial part in the release of the jailed oil executive, Mikhail Khodorkovsky.

“The German attitude towards Russia has changed in a very substantial way,” said Anders Aslund, an economics expert on Russia, Ukraine and Europe in Washington. “The tables have been turned.” Ten years ago, Aslund points out, it was Russia that was in ascendance.