Source: Eurostat

Still, for all the concern, some of the countries with the largest – and older – immigrant communities have yet to see any immediate political effects. In the United Kingdom, where attention is currently focused on immigration in general rather than refugees in particular, the staunchly anti-immigrant UKIP seems to be driving voters away by focusing on the issue. Meanwhile, in France, Front National continues to grow in size and clout – but no faster now than at any other point since Marine Le Pen took over party leadership in 2011.

That said, there have been sharp shifts in the domestic politics of the countries hit hardest by the recent tide of refugees. And it is no longer the border countries that are most affected; though Greece and Italy have often been points of ingress, they have generally not been their final destination. Instead, Sweden, Hungary, Austria, Malta, Denmark, and Germany have taken the lion’s share of the refugees proportional to their populations, with Sweden currently hosting 8.4 asylum applicants per 1,000 people (compared to 1 in France and .5 in the UK).

The political effects in Sweden have been immediate. According to a poll carried out by YouGov in August, the Sweden Democrats, an anti-immigrant party with neo-Nazi roots, is now the largest party in Sweden with 25.2 percent of the vote. This represents a dramatic increase from their fortunes just a few years ago: in 2010 the Sweden Democrats entered parliament with only 5.7 percent of the popular vote, while their support was only 12.9 percent last year. The party’s head, Jimmie Åkesson, described the 2014 election as “a choice between mass immigration and welfare.”

Meanwhile, in Hungary, the government of Prime Minister Viktor Orbán has been using increasingly aggressive rhetoric when discussing the refugees passing through the country’s borders, saying on September 3 that the influx of refugees threatened Europe’s “Christian roots”. The country has been erecting a barbed wire fence on its border with Serbia to deter migrants from entering from the South.

Germans have been among the most willing to take in more refugees. A poll conducted by ARD DeutschlandTrend between August 31 and September 2 showed that 37 percent of Germans think that the number of refugees the country is currently taking in is appropriate, while 22 percent believe Germany could accept even more; only 33 percent said that Germany should take in fewer refugees. An overwhelming majority – 88 percent – would be willing to personally donate money for the wellbeing of refugees, while 67 percent said they would be willing to volunteer to help, numbers supported by visible demonstrations of support in Frankfurt and Munich for refugees arriving from Hungary.

But there is also a visible backlash. Over 200 attacks against refugee shelters have been committed in 2015 so far. While Germany does not have a populist anti-immigration party with national reach, a high number of the attacks have been perpetrated in regions (notably Saxony) where the Dresden-centered anti-immigrant PEGIDA movement (short for “Patriotische Europäer gegen die Islamisierung des Abendlandes”, or “Patriotic Europeans Against the Islamisation of the Occident”) or the neo-Nazi NPD party have footholds.

Germans themselves are particularly concerned about the rise of right-wing attacks. A YouGov poll conducted in August found that 68 percent of Germans believe that there are more crimes connected to the extreme right-wing than ten years ago, and 57 percent said that they wanted more money invested in combating right-wing extremism.

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© REUTERS/Vasily Fedosenko

The economic situation is indeed frightful, with GDP dropping by 17.2 percent in annualized terms in the first quarter and 14.7 percent in the second quarter – and though the decline in output is beginning to level off, forecasts for the year as a whole predict a decline of 9-12 percent. Annual inflation peaked at 61 percent in April before dipping to 55 percent in July.

But much has gone right, more than Ukrainians usually realize.

Soon after the democratic breakthrough in February last year, Ukraine carried out presidential and parliamentary elections. Pro-European reformers won both, laying a political base for serious democratic and market economic reforms. Until the parliamentary elections on October 26, 2014, the old vested interests dominated the parliament, blocking most reform legislation; now reform has a political mandate.

On December 2, a new government was appointed. It is younger and more qualified than any previous Ukrainian government. Tellingly, in the last government of ousted pro-Russian president Viktor Yanukovych only two ministers spoke English; now only two ministers in the current government do not. The typical new minister is a 38-year old investment banker with a Western MBA. Most are clearly not corrupt, and are strongly committed to sensible reforms. The sort of radical anti-corruption reforms Ukraine needs are usually carried out by young, well-educated outsiders without connections to the old regime. Of Ukraine’s 20 new ministers, only five had been ministers before December 2014, and only the prime minister served under the old regime. Ukraine finally has a credible reform team.

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© REUTERS/Gleb Garanich

One thing that has already been partly achieved – with the strong support of the International Monetary Fund – is that Ukraine has regained macroeconomic stability, and returned to a sustainable model. The current account deficit is much smaller now, laying the foundation for future growth in years to come. This is something far too few people talk about: despite an ongoing war in the east, Ukraine’s economy has been re-adjusted, partially undoing a legacy of poor macroeconomic management.

Where to Start?

Reform can be broken down, in our view, into five promising areas – banking, energy, FDI attraction, export promotion, and the attraction of project financing from official outside sources.

The banking sector provides an example of how reform is proceeding in general. Reform has thus far been driven largely by the central bank, the National Bank of Ukraine, which has made real progress in tackling structural problems. The central bank has intervened in more than 50 banks out of around 180. And it has taken a particularly tough approach towards banks that are not fulfilling regulatory requirements, curtailing the deposit decline, at least for the time being.
What remains to be done is a much more comprehensive rebuilding of the sector to make it function like a Western banking system, which means that vested interests need to be tackled – and this will be no easy feat. Past attacks on the National Bank of Ukraine have ostensibly centered on its devaluation of the currency, but were in reality the actions of vested interests afraid of losing assets they had invested. With the support of the IMF, the central bank has been taking a strong stand against vested interests, and already a number of oligarchs have practically lost their banks. Several have been shut down, even among the top ten.

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© REUTERS/Oleksandr Klymenko

Ukraine is not only fighting for full control of its national territory while also having to reform the country economically. Ukraine is also in the midst of a search of identity, finishing the process of independence that started 25 years ago. What is it really about: building or rebuilding, state building or nation building? Both. If you want to talk about “nation building”, I would prefer the word “rebuilding”. In terms of “state building”, I would go with “building”. It’s essentially about predominantly Russian-speaking territories under separatists’ control and the debate, with constitutional ramifications, about Russian as a second official language. And about the fact that people, whether ethnic Russians or Ukrainians, used to coexist peacefully but now define themselves in mutual opposition. In that instance, we are definitely talking about “nation rebuilding”.

Can “nation building” be fostered and supported from the outside? Based on our various experiences in Afghanistan and other places, I tend to be skeptical. It’s a challenge to be met by the states themselves and really a question of ownership. Quite often it is impossible to penetrate the cultural conditions and internal differences of a nation or state. It can only really work if the communities of a country actually want to come together and if the majorities are willing to provide minorities with rights that deserve to be called that. From the outside, it is more reasonable to focus on state building: to see to it that some basic conditions exist conducive for nation building within that state and its citizens.

Especially in western Ukraine there seems to be such an ownership and a tremendous commitment among the civil society to building a functional state largely free of corruption? Absolutely – but I don’t think the idea of “state building” in western Ukraine necessarily has a beneficial influence on those we call separatists in Eastern Ukraine. In Kiev there are certainly movements that believe it would be best to try to realign a part of Ukraine with the West and leave behind the part that claims it does not want to go that way. That is certainly not our policy, not the Ukrainian government’s, and, interestingly, not Russia’s. Putin has repeatedly emphasized that those territories should remain part of Ukraine, but under conditions that are now being negotiated, that we defined in Minsk and that are interpreted differently and that are, therefore, disputed.

I think that it has to be our task, as much as is feasible, to get the fighting down to zero, to continue mediating between both conflicting parties through the Trilateral Contact Group, to build a stable framework for future political processes without loss of face for either side, and to help Ukraine reinstate sovereignty over its whole territory. It involves constitutional reforms and the status of the territories currently controlled by the separatists. It involves facilitating people coming together.

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© American Jewish Committee

The ceremony is part of a project called “Protecting Memory: Preserving and Memorializing the Holocaust Mass Graves in Eastern Europe.” “Since I became mayor, I have waited for 17 years for this moment,” said Oleh Parhomei, Mayor of Ostrozhets. Hundreds of townspeople congregated at the foot of the hillside gravesite, waiting patiently for hours for a delegation of dignitaries and visitors to arrive and dedicate the Holocaust memorial site, where approximately 800 people were murdered. “We knew it was not right to leave this mass grave untended, but what could we do? We were waiting for someone to come and create a proper burial site. What took you so long?”

In fact, there is no easy answer to this question. In the reams of books, lectures and exhibitions that have been created about the Holocaust, relatively little has been written about the horrific mass shootings of Jews committed by Nazi killing squads throughout Eastern Europe. The mayor is right to ask why. What has kept us from visiting these sites and erecting memorials to honor those whose lives were so cruelly extinguished?

Western Ukraine, formerly eastern Poland, was part of the region where the systematic murder of Jews by German occupiers, with help from local auxiliary forces, began. Following two years of harsh Soviet occupation, German forces marched into this heavily Jewish populated area in June 1941, accompanied by Nazi mobile killing squads sent to murder alleged regime opponents, chiefly Jews, Romas, Communists, and Soviet prisoners of war. In the course of the following three years, entire Jewish communities were destroyed; historians estimate that from 1941 to 1944, Nazi mobile killing squads, supported by local police units, murdered up to one and a half million Jews in the area of today’s Ukraine.

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Artwork: Dominik Herrmann

Yet on a sunny morning in late July 2012, its chandeliered splendor was not the backdrop to a speech supporting British business. Instead, Mario Draghi, president of the European Central Bank, came to shore up the euro. In dramatic, even brilliant, style, he succeeded. The steps he outlined, however, and the many repercussions of the actions that they called for, opened up a string of questions about the role of the ECB in helping to complete what is still only the half-finished construction of economic and monetary union in Europe.

Draghi, a former senior official at the Italian Treasury and head of the nation’s central bank, the Banca d’Italia, took over from French monetary technocrat Jean-Claude Trichet in November 2011. He immediately stamped his mark on the central bank with his own combination of pragmatism, determination, and dry humor. The ECB boss is less ceremonial and more precise than Trichet, more attuned to the financial markets, and has strong links to the United States (he studied at the prestigious Massachusetts Institute of Technology and worked for a while as managing director at Goldman Sachs). Draghi combines a wry turn of phrase and a penchant for intrigue (which some say stems from his Jesuit upbringing) with an impressive set of responsibilities, some of which are mutually contradictory. Several of these characteristics were on show in his London address.

Draghi opened his short speech with a joke, comparing the euro to a bumblebee. “This is a mystery of nature because it shouldn’t fly but instead it does.” But he had a serious message: At the height of international capital market gloom concerning the fate of the single currency, speculators had been selling the euro and dumping bonds from countries like Italy and Spain. The central bank president thought anti-euro action had gone too far, and said so: “Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough.” His words echoed around the world, propelling sharply higher bond prices for the countries that had previously been under attack and winning some essential breathing space for the single currency.

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© REUTERS/Philippe Wojazer

In Germany itself, distinguished commentators such as Jürgen Habermas and Joschka Fischer also bemoaned the apparent loss of the country’s European vocation. “I fear that the German government … has gambled away in one night all the political capital that a better Germany had accumulated in half a century,” Habermas lamented in an interview with The Guardian.

Yet the reality is both more complicated and less gloomy than Berlin’s critics seem to believe.

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© REUTERS/Joe Klamar/Pool

In fact, the common thread linking Germany’s recent diplomatic successes lies in one of the fundamental guidelines of German diplomacy: a firm adherence to principles, matched with a willingness to talk – and to accept a price to achieve success.

Lesson 1: Minsk

The conflict in Ukraine offers a perfect example of the role Germany can play in the EU neighborhood. US President Barack Obama, unwilling to consider American military intervention and unable to play the role of honest broker in the region himself, left the field to the Europeans, above all German Chancellor Angela Merkel. The chancellor had a double mission: she had to convince the Ukrainian government as well as the US, Eastern Europeans, and NATO partners concerned by Russian aggression that military escalation would achieve nothing, as the Russian army would always prevail; and she had to make it clear to Russia that such a breech of international taboos would carry consequences.

Over the months preceding the Minsk meeting in February 2015 her government attempted to maintain this balance. Merkel undertook delicate talks with Russian President Vladimir Putin in Milan and Brisbane, and, along with French President François Hollande, redoubled her commitment to a diplomatic solution when it threatened to escalate to open warfare in January. During the marathon negotiations on February 12 in Minsk, it was Merkel who played the lead. She stressed that military escalation must be avoided at all costs; echoing Christopher Clark’s book on the outbreak of the First World War, she said she was determined not to be a “sleepwalker”, watching helplessly as countries drifted towards war.

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REUTERS/Fabrizio Bensch

How does this affect Europe? In the EU, we often forget that our most important trading partner, the United States, is a Pacific country as well as a Transatlantic one, with strong ties to Asia. US President Barack Obama’s so called “pivot to Asia” was complemented by a strong Asian trade strategy. With the Trans-Pacific Partnership (TPP), the US and eleven countries in the Pacific Rim are currently negotiating a comprehensive, mega-regional trade agreement encompassing about 40 percent of global GDP and 26 percent of global trade. Obama wants to conclude said deal in 2015.

Contrasted with America’s ambitious Asian trade agenda, the EU’s trade strategy towards Asia is miniscule. The EU currently is negotiating with Japan. But it has failed to reach a regional deal with the ten ASEAN countries. A bilateral deal with Singapore was finished in 2014, but still needs to be ratified along with an agreement with Vietnam (concluded in August 2015); bilateral deals with Thailand and Malaysia are currently in progress, while talks with India have stalled. Any present agreements are small in comparison to TPP or the Regional Comprehensive Economic Partnership (RCEP), which, unlike TPP, includes China (and not the US) and is scheduled to be completed by the end of 2015; the RCEP will account for 49 percent of the world’s population and 30 percent of world GDP, and make up 29 per cent of world trade.

Rather than strengthening its trade ties to Asia, Europe has focused its efforts on the Atlantic. The Transatlantic Trade and Investment Partnership (TTIP) with the US is the largest and most important trade agreement currently in the works for the EU. Together, the EU and US represent the largest economic market, covering around 45 percent of global GDP and 44 percent of global trade in goods and services.

Trade and growth dynamics in Asia far exceed the Transatlantic and European economic outlook. Nevertheless, TTIP could serve as a stepping stone for a strategic European trade policy, one that preserves European influence in global trade; without it, Europe is at risk of falling behind and being eclipsed by growing economies elsewhere.
Setting Standards

TTIP is of course important for generating growth. But more importantly, it could help determine where future global standards are set – in the EU and US, or in Asia. The EU needs the US as a partner to create new regulations and promote high global standards. If both regions are able to agree on common standards, they have a first-mover advantage that other countries and regions will have to follow, as was the case when the EU and US agreed on common standards in e-mobility.

To that end, TTIP negotiations cover many new areas beyond WTO rules, including rules in the area of sanitary and phytosanitary measures (SPS) and technical barriers to trade (TBT), as well as new areas such as sustainable development, competition, trade facilitation, energy, raw materials, and small and medium enterprises (SME).

In an article titled “A Comeback Strategy for Europe”, former Swedish PM and foreign minister Carl Bildt and former EU High Representative Javier Solana summed this up: “If the TTIP stalls or collapses, while the TPP moves forward and succeeds, the global balance will tip strongly in Asia’s favor – and Europe will have few options, if any, for regaining its economic and geopolitical influence”. The EU and US are still the world’s dominant trading partners. Without this strategic agreement, the EU will jeopardize its competitive position in the world.

Why TTIP is Lagging

If the strategic advantages of TTIP seem to be so clear, particularly for the EU – why are the negotiations taking so long as TPP progresses so quickly?

First of all, TPP is a high priority for President Obama. He wants TPP as a legacy of his presidency. Asia is seen as a “fresh” and growing region, especially in comparison to “Old Europe”, with her slow growth and aging population. TTIP is still important for the US, but it is definitely not the highest priority in Washington right now. And even though the July 2015 TPP meeting in Hawaii ended without an agreement (due to differences in automobile regulations, dairy market access, and patent and regulatory data protections for biological drugs), progress was made. A second meeting of the TPP partners to conclude a final deal is planned for this fall.

TTIP was supposed to be finalized by the end of 2015 too, but progress has been slow – which is due more in part to TTIP’s complexities rather than a lack of ambition. The US and the EU already have deep, long-standing economic, trade, and investment relationships, thus the negotiation issues at the heart of TTIP are far more delicate than other agreements for younger relationships. Both parties underestimated this. TTIP mainly covers non-tariff trade barriers which also impact health, consumer, and food safety standards as well as environmental and labor concerns. All of these are politically sensitive issues, many remain unresolved, and big political decisions still must be made regarding investor-state dispute settlement (ISDS), genetically modified organisms (GMOs), and public procurement on all state levels, just to name a few.

In July 2015, the EU and the US concluded the tenth negotiating round in Brussels. These were the first deliberations since important legislation had been passed by both sides: in June, the US Congress passed the Trade Promotion Authority (TPA), and in July, the European Parliament adopted a TTIP resolution and signed a series of recommendations. The endorsement by the European Parliament and the US Congress was an important step forward, as both parliaments will have to ratify the final treaty, a point EU chief trade negotiator Ignacio Garcia Bercero stressed, when he said that negotiators were working “with strong political wind in our sails.” During the negociations, both sides were able to accelerate their talks on services market access, a major issue in TTIP where both the EU and US stand to gain quite a bit. Chief US trade delegate Dan Mullaney emphasized that this was “a welcome step forward.” Despite these positive developments, it remains unclear whether TTIP will be concluded before President Obama leaves office in 2017. At the G7 summit in June in Elmau, G7 leaders called on both TTIP parties to “immediately accelerate” their work and to deliver an outline of a possible agreement at the end of 2015.

German Hostility

Despite Germany’s strong export focus, a large part of the German public sees TTIP as a threat to its values and way of life and has become increasingly hostile to the project. Concerns center on the overall transparency of the negotiations, as well as fears of lower food safety and environmental standards. Many also fear that the investor-state dispute settlement (ISDS) process will serve as a way for US corporations to circumvent democratic procedures and the “right to regulate”, allowing them to lower standards through a backdoor. The anti-TTIP movement, which consists of a large group of NGOs and trade unions at its core, has called for a nationwide “Stop TTIP/CETA” demonstration in October.

To counter the growing tide of public distrust, it is not enough for German business leaders to repeatedly point out the technical advantages of increased market access, mutual recognition, and common regulatory processes. Instead, Chancellor Merkel must make a specific economic and also (geo)political case for TTIP and push for genuine progress in the negotiations. To alleviate the fears of the opposition, it is important to have transparency with as many TTIP position papers and documents as possible. Furthermore, the European Commission and the German government should make a convincing and detailed case, outlining where concessions and liberalizations are possible and what is non-negotiable.

Present trade agreements (e.g. the EU-US veterinary equivalency agreement from 1999 or the FTA with South Korea or Canada) could serve as good examples. Regarding ISDS, there is a broad consensus on the EU side that the existing provisions need to be reformed. The proposal made by German Vice Chancellor Sigmar Gabriel to reform the present system of ISDS and eventually establish an international investment court is a step in the right direction.

Germany is the largest national economy in Europe and is one of the world’s leading exporters. Because of its size and economic performance, it has a strong influence on the TTIP negotiations and the final agreement. TTIP needs support from the German population, which has become complacent with its status quo economic performance and competitiveness.

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Artwork: Dominik Herrmann

The term – which, loosely translated, means to strengthen, toughen up, or optimize – was introduced to the foreign policy debate by Chancellor Angela Merkel in 2011. Later defined by Der Spiegel magazine as the “Merkel Doctrine”, Ertüchtigung has a winning sound to German ears.

Confusion about an “Ertüchtigungs–Doktrin” sets in quickly, though. For those without an ear for German, the term Ertüchtigung is a complicated term twice over. It’s difficult to pronounce (another one of those Umlaut-U words) and difficult to contextualize. Germans, for that matter, might think of the craze in 1970s West Germany for keep-fit forest trails, devised in the run-up to the Munich Olympic Games of 1972. Or even associate such an old-fashioned term with Friedrich Ludwig Jahn (1778–1852) – better known as “Turnvater Jahn”, Germany’s founding father of sport in the 19th century and a fervent nationalist, Jahn meant to keep German youth fit, not least for the wars against Napoleon Bonaparte. One might therefeore be forgiven for asking: Does “foreign policy responsibility” mean sending sports teachers to Afghanistan?

Far from it. Behind the term is a German proposal to assist partners in global trouble spots who show a readi­ness to engage in regional security themselves. The idea is that Germany should not intervene all over the world directly, but rather train and arm trustworthy partners, if necessary with (German) arms exports. In security policy terms, Ertüchtigung aims at helping countries help themselves.

Sadly, this German policy has already led to misunderstandings. During the Mali conflict, for instance, the French misunderstood the policy as an unfair division of labor. While France engaged in active military intervention to prevent a further advancement of Islamist groups, Ertüchtigung sounded to French ears like Germany trying to have its cake and eat it, too: by merely training Malian soldiers to assume security for their own country.

German left-wingers have difficulties comprehending or coming to terms with Ertüchtigung, too. They see it – falsely – as nothing more than a pseudonym for delivering German weapons to crisis countries along with a push for greater global power. In their view, tanks for Saudi Arabia, frigates for Algeria, and Milan missiles for the Kurds are proof that Berlin is trying to revive the Kaiser’s imperialist policy: “Am deutschen Wesen soll die Welt genesen“ – the world would benefit from the German way of doing things, this time in the form of arms exports.

Despite differences, both the sporting and security policy meanings of Ertüchtigung, both Merkel’s “doctrine” and West Germany’s “keep fit trails”, have one insight in common: an early investment in health is preferable to eventually landing in hospital. After all, timely training of regional partners to prevent conflict breaking out would obviate the need to send in NATO troops on first aid missions. Of course, the right choice of partner is as crucial for today’s Ertüchtigung security policy as it was during the keep-fit Ertüchtigung craze.

Then, as now, it’s better to plan carefully who you sign up with on an Ertüchtigung mission ahead of time. Just as no one would expect their frail grandparents to do pull-ups in the forest, crisis regions, with their authoritarian regimes, weak state structures, and illiberal societies are rather badly qualified for that kind of teaming-up. Neither is one of the key ideas behind Germany’s keep-fit trails – namely, to bring as little equipment, beyond one’s own kit, into the forest – advisable. As modern sports people know, good equipment is decisive for success. In Mali, we saw the opposite: African soldiers had to bring with them everything that they needed for their training in a country where bedding, fuel, weapons, and munition are in short supply.

And so, for its part, Berlin recognizes that the better-off training partner should pay for the equipment, and has already created a special new budgetary item to help out trustworthy partners with equipment and materials.

Despite its ambiguity, Berlin’s Ertüchtigung efforts are neither a German arms export program nor an attempt to wriggle out of responsibility, let alone a new wave of German megalomania.

The policy of Ertüchtigung – thought through to the end, and implemented consistently – raises the promise of an earlier, more decisive, and substantial engagement from Berlin than in the past. For this to work, however, the measures must be grounded in a long-term and sustainable fashion, and must serve crisis prevention.

Making Ertüchtigung work means Germany must play the long game and show strategic patience with training partners. In case a training partner collapses, Ertüchtigung would require Germany providing the correct treatment, and standing by the patient until they are back on their own feet.

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