The New Ostpolitik

They're Europe's odd couple. At a time when much of the continent is scrambling to find strategies to contain, avoid, and punish a resurgent Russia, Germany is pushing ahead with the most important and surprising post–Cold War alliance in Europe. Once titanic enemies, Germany and Russia are embracing a slew of big business deals that aim for everything from a joint resurgence in the world's nuclear-energy market to taking over a big chunk of GM's European empire. German technology will upgrade Russia's vast railroad network—and while much of Europe seeks to free itself of energy dependence on Russia, Germany's E.On is buying up Russian gas fields.

The stream of agreements reflects the depth of what has become Europe's most powerful new partnership. Based on a history of close ties, a decadelong surge in trade and investment, and massive German imports of Russian natural gas, Germany has become not only Russia's most important trading partner, but its principal advocate in the West. Germany has vetoed an EU-wide energy market that would reduce Europe's dependency on Russian supplies, and stayed cool on U.S. plans for missile defense. Mikhail Margelov, chairman of the foreign-affairs committee in the upper house of Russia's Parliament, says Germany was Russia's "biggest helper" in its successful attempt to block the eastward expansion of NATO.

Their friendship has survived wars and crises, from Russia's cutoffs of gas supplies to Eastern Europe to the continuing occupation of Georgia. It has also endured Chancellor Angela Merkel's recalibration of relations following the somewhat sinister Russophilia of her predecessor turned Kremlin lobbyist, Ger-hard Schröder, who pushed through a controversial pipeline for Russian gas that will increase Germany's dependence on the state-controlled Russian gas company Gazprom. Merkel—who speaks Russian and whose East German background has made her more skeptical of Russia than her predecessor—has made a point of meeting with Russian dissidents and cultivating closer ties to Germany's East European neighbors, whom Schröder largely ignored. She has also excised from Germany's foreign-policy lexicon the Paris-Berlin-Moscow axis that Schröder promoted. But because Russia's relations with the rest of Europe have deteriorated since the Ukrainian gas wars and the Georgian conflict, Germany is now arguably closer to Russia, relative to the rest of the continent, than it was under Schröder. Merkel has dialed back in tone and substance—yet remains one of the most pro-Russia leaders in Europe.

For Germany, the continued relationship is about more than money. In the diplo-speak of the German Foreign Ministry, Berlin's policy of "rapprochement through interdependence" is an attempt to bind a resurgent Russia into the European order with a tight web of economic, political, and social ties. This view of Germany's historical mission goes far beyond pro-Russian Social Democrats like Schröder. "We Germans have a closer connection and affection for Russia than any other country," says Andreas Schockenhoff, deputy whip in the Bundestag for Merkel's conservative Christian Democrats. "We can build a bridge between the West and Russia, and end Russia's isolation."

Germany's special relationship to Russia goes back decades, if not centuries. Some trace it back to the arrival of German settlers who colonized great swaths of the Volga plain in the 17th century. Others point to the policy of Ostpolitik in the 1970s that sought closer relations to the Soviet Union, including the financing and construction of the first Russian-German gas pipeline against Washington's vehement objections. In its own complex and tortuous history, Germany, like Russia, has veered between Western and Eastern orientations politically, culturally, and intellectually. Perhaps this historical kinship is why, to this day, there is a widespread feeling, expressed in statements like Schockenhoff's, that Germans have a special affinity to the Russian "soul."

More recently, the driving force behind this relationship has been trade, which has quadrupled in the past decade, from €15 billion in 1998 to €68 billion last year (though it is down by 30 percent this year due to falling energy prices and canceled orders for German machinery). While Germany trades less with Russia than with Belgium or Switzerland, business is concentrated in a few strategic industries, and for many companies in these sectors, Russia is the fastest-growing and potentially most lucrative market—more important than China for German companies like E.On, Siemens, and Dresdner Bank. For instance, while Royal Dutch Shell and Britain's BP were squeezed out of lucrative oilfield-development projects in Russia, E.On—connected to Gazprom through a web of interlocking businesses—this June won a 25 percent share of the Yuzhno-Russkoye gas field, one of the world's biggest.