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Issue #77

Issue #77

Guten Morgen!

Unsurprisingly, EU and German affairs are once again filled with news related to the war in Ukraine, but nonetheless, we hope we can bring you some new and interesting insights with this weekend’s edition of the Krautshell. Happy reading and we hope you have a magnificent start into your weekend!



Anna                                Christian


EU Summit in Versailles: Split Opinions and Unhappy Campers

This week, Leaders of the EU countries got together in the Palace of Versailles (!) to combat the various metaphorical fires raging in Europe at the moment. The first topic du jour was Ukraine’s application to join the EU, and like is very often the case in EU matters, a strong East-West divide emerged in the discussion. Countries like Latvia, Poland, and Slovenia underlined that admitting Ukraine sends a strong political message. Meanwhile, Mark Rutte, Prime Minister of the Netherlands and probably voted “most likely to tell a child Santa Claus isn’t real” in High School, reminded everyone that the accession process is lengthy, and there are no shortcuts. Slovenia’s Prime Minister Jansa responded with, “[There are those] who think that .. Ukrainians are fighting for their lives and (deserve) a strong political message … and those who are still debating the procedures.” So, the two sides met in the middle by agreeing on increased assistance for Ukraine, and labeling it, as the Lithuanian President put it, “Ukrainian eurointegration.” It’s all about the marketing.

Then came round two of disagreements, but this time the divide was less East-West focused. Rather, in the blue corner you had Germany, Austria and Hungary. In red corner: Latvia and Poland. The latter called for an immediate end of energy imports from Russia, as an estimated 742 million euros in gas and oil money flows from the EU to Russia daily. German Chancellor Scholz sprinkled in a dash of reality, making it clear that there is simply no alternative to Russian supply at the moment. As energy prices continue to spike, Commission President von der Leyen said she is looking for ways to limit the impact on everyday citizens by, for example, implementing temporary price caps. So, like on the previous issue, the solution was somewhere in the middle.

Are Crises Green Opportunities?

After Chancellor Olaf Scholz upended decades of German defense policy due to the Russian invasion in Ukraine by committing an additional 100 billion euros to the armed forces and promising further spending increases, now the German Finance Minister Christian Lindner and Economy Minister Robert Habeck have announced another radical shift.

In order to decrease Germany’s dependence on Russian fossil fuels, the coalition has pledged to invest 200 billion euros in renewable energies in the coming five years. During the days prior to the announcement, the traffic light coalition had outlined plans to increase the use of LNG, extending the use of outdated coal power plants, and even discussed extending the life of power plants (a taboo in German politics following the disaster in Fukushima). Therefore, particularly the members of the Green party breathed a sigh of relief at the announcement of massive renewable energy investments, although examining the details of the commitment takes away some of its bombshell-like quality.

The previously governing coalition of CDU and SPD had already pledged to spend 115 billion euros by 2027, decreasing the seemingly new investment to 85 billion euros. Furthermore, the traffic light coalition already pledged an additional 60 billion of unused corona emergency funds to Germany’s energy transformation, which are also included in the 200 billion of “new” green investments. Most of the remaining 25 billion euros of added spending will come from already passed legislation that taxes emissions. Thus, the grandiose announcement is not as impressive as it may initially seem.

Watership Seized

As the invasion of Ukraine continues, Europe and its allies have ramped measures to punish those close to the Kremlin: the oligarchs. Late last week a headline went around the world that Germany has begun confiscating the luxury yachts of oligarchs in its territory, including a 156 meter long ship.

This news was followed by further reports that other EU countries were also not standing still. Italy has reportedly begun confiscating the villas and yachts of Russian billionaires together worth more than 140 million euros. The UK followed suit, freezing the assets of various Russian oligarchs, including the Chelsea football club owner Roman Abramovich. However, political activists argue that the sanctions do not go far enough and are now taking aim at the close relatives of Putin’s inner circle. For example, the Russian investigative journalist Maria Pevchikh is advocating for the seizure of various luxury apartments in London, one of which is owned by the step daughter of Russia’s Minister of Foreign Affairs Sergei Lavrov.

As the crackdown continues, the oligarchs appear to be sending their ships out of EU waters in order to avoid further financial damage. Yet they don’t seem to have to worry about their German assets for now. After making international headlines, it turned out that Germany has not in fact seized any assets, including the extravagant yachts. These assets will only be targeted by the German government once the Russian oligarchs attempt to sell or set sail with their in-country assets. Therefore, the luxurious yachts will likely remain in Germany until further notice.


THE HOUSE’S VIEW: Fool Me One Time, Shame on You…

: by Mats

Putin’s War: Throwing Germany under the Bus?

Over the past few weeks, I have heard and read many accounts like this podcast, this opinion piece, and this article, which all, to varying degrees, attribute part of the responsibility for Putin’s War in the Ukraine to Germany. Placing blame for international conflict on Germany is a very sensitive topic for obvious reasons, and one needs to view the situation in a more nuanced way to draw a final conclusion. Therefore, I wanted to give some background on the situation beyond the reporting of the last few months.

Round 1: Gerhard Schröder and the SPD

Without going too far back in history, it’s fair to say that Germany’s Social Democratic Party (SPD), is shaped by former Chancellor Willy Brandt’s policy of “Ostpolitik” or “Eastern Policy,” advocating for an open dialogue and certain rapprochement between the West and the Soviet Union during the 1970s. Given Germany’s pacifist streak, the idea was that stable peace in Europe could only be achieved through close ties with Russia. This mentality has persisted in the SPD (and other parties, too) for decades, and only recently have we seen a clearer divide between younger and older party members on Russia. Gerhard Schröder (SPD), Germany’s Chancellor from 1998 to 2005, embodied this mentality, as he formed a close bond to Putin during his time in charge. As former SPD-Chairman Martin Schulz pointed out, this was nothing to be alarmed about at the time. Around the turn of the millennium, everyone was extremely impressed by Putin, who seemed like he would bring much-needed reform to Russia. Having said that, it was Schröder’s actions after leaving office that seem to raise a few eyebrows.

Cancellarius Non Grata: Schröder as an Emblem of Germany’s Russia Policy

A few short months after being voted out, he secured a seat on the supervisory board for the Nord Stream I pipeline project. Similar positions at two other Russian companies, Rosneft and Gazprom, followed. These decisions made him wildly unpopular, and even a sort of a meme among many Germans. Why am I telling you this? Well, because Schröder is emblematic of a certain type of mentality towards Russia, best summarized in a statement by Eggert Voscherau, former chairman of BASF: “Energy rich Russia and technology-rich Germany just fit together well.” Essentially: business interests reign supreme. Therefore, Putin was given the benefit of the doubt by many in German politics and industry.

Angela Merkel, Towing the Line

By the time Merkel came into office, or by 2008 (Russo-Georgian War) at the latest, it was clear that Putin was not all smiles and reform. Merkel, who speaks Russian, and won Putin’s respect, did not change Germany’s foreign policy course when it came to Russia though. Yes, she approved sanctions in response to the occupation of Crimea, and yes, she pissed off Putin by bringing Navalny to Germany after he was poisoned, but overall, she didn’t move the needle much. While more and more voices chimed in, saying that Putin could not be reasoned with, Merkel chose her strategy: always keep the line for dialogue open.

The House’s View

What really struck me was that Merkel was given all but a standing ovation from the international community when she left office for the way she dealt with Putin. Three months later, the international community is up in arms about Germany’s lack of a hard line towards Russia.

While I agree that Germany may have been naïve, I don’t buy into the idea that Germany should have dealt with Russia differently. For over 20 years now, Germany has held onto its belief that the world is becoming a safer place through international trade. We know what horrors war causes, and I’m personally thankful that every possible diplomatic and economic avenue was explored before Germany gave the go-ahead for 100 billion euros in military spending. Putin has no regard for the international order, and while we might not see it yet, he has already set mechanisms in motion that will change the world as we know it. Olaf Scholz, his government, and other NATO/EU allies now must swallow some difficult pills, but also use this moment in history to prepare themselves for what’s to come. Now is not the time to point fingers and play the blame game. Now is the time to come up with a robust foreign policy strategy to deal with Russia or any other potential challenger to the world order in the future. As the saying goes, fool me once, shame on you. Fool me twice, shame on me.


  • Get the Cyber Defenses Ready: The Federal Office for Information Security (BSI) is warning that cyberattacks on German critical infrastructure and military installations may begin shortly. In the wake of the sanctions levied against Russia, there appears to be an increased risk of retaliation from the Russian government in cyberspace.
  • Parliament’s Back in Session: We got some insider information that starting Sunday, March 13th, the EU Parliament will be once again opening its doors for visitors and external stakeholders. Just make sure you have your mask and COVID pass!
  • I’ll See You in Court: France’s branch of the Russian Media Channel “Russia Today” has  legally challenged the government’s decision to ban the channel in the country. The Russian channel’s president in France, Xenia Fedorova, has made the rounds on French TV, complaining about the decision.


By Christian, Founder and MD

A German Tank in Moscow 

If it wasn’t so serious, this would be a hilarious Ricky-Gervais-Moment in history: Almost the whole world, led by Poland and Ukraine, want the Germans to:

  • discuss conditions in Versailles on how to sanction Moscow to its knees,
  • build a huge army,
  • get heaviest possible arms through Poland in place to help defeat Russia,

while the head of the “Nazis” that Russia fights against is a Jew and President of the very nation who gave the name to the 1st Ukrainian Front that liberated Auschwitz in 1945.

However, instead of a German “Panzerdivision” (lot of tanks in a German military unit), Chancellor Scholz and Vice-Chancellor Habeck and Foreign Affairs Minister Baerbock are sending excuses. According to them, Putin will not stop the invasion if Germany stops imports of gas anyways and it wouldn’t be possible “within hours or days.” Fine, but can someone then explain to me how Habeck can say that we will safely make it through the winter if Putin cuts off the gas on his end? And, while you’re at it, then please explain what exactly the problem is, otherwise we will have Ukrainians and Poles and everyone else hating us and our EU-partners on GOOD GROUNDS, e.g. for making Putin 600 Million Euros e-v-e-r-y day.

So, I the people, bearer of the costs and consequences – and on behalf of 60% Germans who polled alike – demand:

Scholz prefers to “NO” me back (and let’s be honest here, Merkel would probably also have given the same exact “NO”). Like he did when talking to President Zelensky. The Ukraine Ambassador said, it was like talking to a wall. That’s the Chancellor of that government who phrased the delivery of 5000 military helmets as “strong signal of solidarity” some weeks ago. While Scholz is being pushed by everyone to shove his nuclear rhetoric up the Dnepr river, an auxiliary Chancellor enters the game and he is a real nuclear option: The one and only leader of the world that gets to Putin’s heart:

GERHARD SCHRÖDER!! ….Scholz didn’t know this would happen – of course – or maybe of course – coz maybe he knows but wants to hold onto deniability in case Schröder fucks it up. But what a nice move to have such an asset that made money with Putin, is friends with Putin, has no mandate from Germany or anywhere else, courtesy-non-officially negotiating on behalf of the Ukrainians and the FSB cannot do shit about it! Nice move. Now, Gerhard, please, make it happen! Win back all the honors that you have been stripped of these days. End this misery as a German Tank of Peace in Moscow.

If the current Chancellor can only help with below-strongest-possible sanctions, then it is good to have the elder ones as aces. I hope Schröder nails or – given the unbearable suffering of the Ukrainians – we Germans will suffer the reputational nuclear damage deriving from the current weak bluff about what is and isn’t possible for the strongest economy in Europe