Seven years after she became German chancellor, Angela Merkel has ended the Schröder era in German policy toward Russia.

Merkel’s predecessor, Gerhard Schröder, had developed a very close personal relationship with Vladimir Putin and, after being defeated by Merkel in 2005, immediately started to play a leading role in the Gazprom-sponsored Nord Stream pipeline project, which links Russia and Germany—a project he had helped to bring on its way at the end of his chancellorship. Angela Merkel, who grew up in communist East Germany, and Putin, who spent the years before the fall of the Berlin Wall as a KGB agent in Dresden, never developed similar personal chemistry. But Merkel never challenged the cozy relationship with the Kremlin that Schröder and his chief of staff, Frank-Walter Steinmeier—who became Merkel’s foreign minister in a “grand coalition” from 2005 to 2009—had put in place . Even if it was clearly visible that Merkel did not feel comfortable in the presence of Putin, she followed the choreography that had been laid out by Schröder and Steinmeier, and was supported and promoted by an influential pro-Kremlin German business lobby. Strong and growing business ties were embedded in regular high-level meetings between governments and officials. And the way Berlin talked and walked did not contradict the perception that Germany was the Kremlin’s best friend in Europe. 

Not anymore. Merkel’s appearance with Putin in Moscow last week, at the Petersburg Dialogue, was a clear break with this tradition. By openly criticizing Putin’s crackdown on the Russian opposition, and by lecturing the Russian President on the workings of a democracy, the German chancellor sent a clear message: It’s time for a reset in German-Russian relations. 

The clash in Moscow was the result of several developments

First, Merkel is fed up with Putin. Berlin had hoped, as had Washington, that Putin’s protégé Dmitry Medvedev would morph into a real leader and start to move the country towards political and economic liberalization, slowly but steadily weakening Putin’s iron grip on power. Like Obama, Merkel had invested in this relationship. But when it became clear, in 2011, that Medvedev was only a placeholder for a Putin who had never ceded power, the German—and American—approach was left in tatters. Western leaders felt fooled and betrayed. Putin appeared to rejoice. 

Second, Putin’s soft power has faded in Germany. Mass demonstrations in Moscow and the emergence of a strong opposition movement have revealed the authoritarian nature of Putin’s regime. The Kremlin branded dissidents as enemies, sponsored by hostile foreign powers. The security apparatus cracked down on protests. All this has been broadly reported by German media in an increasingly critical tone. Der Spiegel, the influential weekly, featured an image of the young, innocent looking anarcho-feminist group Pussy Riot, locked in a cage, on its cover, and has followed this story closely. 

Third, modernization did not happen. Those advocating a Kremlin-friendly policy in Germany have argued for years that while Putin may be a little tough, his ultimate goal was to bring the country on track—towards the rule of law, a market economy, and finally democracy. Embracing and supporting Putin would therefore be the best way to encourage reform. But this approach has failed. The business climate remains dire, paralyzing corruption has not been tackled. Energy resources remain the basis of the economy, diversification has not made much progress. In short, Berlin’s “partnership for modernization”—Modernisierungspartnerschaft—did not fulfill its promises. After twelve years of Putin’s rule, Russia today looks more like a “rentier state”, closer in its economic and political structure to Middle Eastern autocracies than to Western democracies.

While the German business lobby is still trying to keep the cozy relations with the Kremlin on track, the change in German public opinion towards Putin—caused by his autocratic turn—has prepared the ground for Merkel’s turn. The direct confrontation was only the second step. The first step was a resolution introduced in the German Parliament, the Bundestag, by Andreas Schockenhoff, coordinator for German-Russian civil society relations, on behalf of the governing majority. In uncharacteristically critical language, lawmakers called on Merkel to voice German concern about political developments in Russia, and to foster more engagement with the country’s opposition and civil society. Schröder and Steinmeier’s social-democratic SPD party introduced a separate resolution calling for a deepening of relations with the Russian government, while the Greens, in their resolutions, called for Berlin to focus all attention on Russia’s opposition and civil society. 

All of the German parties are still talking about Modernisierungspartnerschaft. But it is now clear that Putin is not a partner for modernization. Quite to the contrary, his government is a major obstacle to political and economic reform. It was inevitable that, over time, Berlin would have to acknowledge and adapt to this reality. What is left now is an economic relationship based on solid mutual interests: Germany is buying Russian energy, and Russians are buying German exports. Following their public clash last week, both Merkel and Putin went on to sign contracts worth billions of euro.  

But of course the goals underlying Modernisierungspartnerschaft remain essential. Germany, and the EU, would benefit in many ways from having a politically and economically modernized Russia as a closely associated neighbor. This would considerably enhance European stability, prosperity, and freedom. Therefore the big question now is: what can and should Germany do to make such a development more likely in the future? If Putin is not the agent of modernization, as has become clear, Berlin must connect with the forces that may drive modernization in Russia. Berlin must open a second track. It must on the one hand keep the relationship with Putin stable. But it must at the same time engage with the opposition and build relations with civil society. 

This leads to the following recommendations:

  • Criticize problematic developments in Russia without sounding aggressive. Merkel set the right tone in Moscow last week. Criticizing Putin sends two signals. It emboldens the opposition and denies Putin the possibility of scoring points at home by showing himself to be in tune with Western partners. Fears that Moscow might retaliate by downgrading economic relations are overblown, as these relations rest on the very solid foundations of mutual interest. And even if there is some freezing in the relationship in the short term, longer term interests in Russia’s modernization must be kept in mind.

  • Talk with the opposition. Last week in Moscow Merkel not only met with Putin, but also with members of the opposition. In its resolution, the Bundestag called on the government “to put the cooperation with Russia on a broader social foundation and to strengthen contacts with the liberal and opposition-minded elites”. This should be translated into action.

  • Engage with civil society. The biggest hope for chance in Russia is Westernization. The more Russians become socialized with personal freedoms, the rule of law, human rights, and a working market economy, the bigger the chances that they will push for something similar at home. Visa-facilitation, student exchange programs, cooperation in science and culture—there is ample room to develop closer relations with Russian society.

  • Amplify national strategy by lifting it to the EU level. Whenever Berlin speaks not only on behalf of Germany, but on the behalf of the EU, it multiplies its weight. Germany has a leading role in the EU vis-a-vis relations with Russia. It should regularly sit down with Warsaw, Paris, London, and Brussels, and other Central and Easter European EU member states and agree on a common approach. Consistency and unity is as important as the message itself. Moscow must be denied the opportunity to play divide-and-rule with the EU.

  • Make sure that Russia plays by the rules. The European Commission launched an anti-trust case against Gazprom, because it found evidence that the state-owned company “may be abusing its dominant market position”. This case must be not allowed to be weakened. Russian interaction with the EU must become an integration into a rule-based system.