Leveraging Germany’s turn to the Indo-Pacific
Photo Source: Japan Times
Germany has proved to be quite an indispensable nation today. Despite the challenges posed by reunification in the wake of the end of the Cold War, it has since then become a strong and dynamic democracy with a prosperous economy and substantial foreign policy successes. By relying on the country’s so-called political culture of reticence, which is characterized by restraint and accommodation, and using the “methods of commerce within a logic of conflict,” it has undoubtedly emerged as a geo-economic power.
The combination of pragmatism and a focus on economic matters is precisely what drew Germany to boost its ties with China. Both saw each other as trading partners with minimal emphasis on political or normative discrepancies. However, considering China’s growing tendencies towards authoritarianism in Xinjiang and in Hong Kong, continuing assertiveness in the South China Sea, intensifying competition with the United States, not to mention its widespread use of economic coercion against many countries, it is not much of a surprise for Germany to take a firmer stance via the release of its Indo-Pacific Guidelines in September 2020. Framed as a reiteration of its commitment to the multilateral foundations of a rules-based international system, the Guidelines definitively puts the Indo-Pacific in Germany’s crosshairs and underscores the importance of maritime security in the region. While its bilateral relationship with the Philippines remains largely hinged on development cooperation, there are areas that can be maximized as entry points for deeper collaboration in the maritime domain.
In view of this, domestic dynamics shape Germany’s external relations. Angela Merkel, whose tenure as chancellor ends following the country’s September 2021 elections, started the ball rolling by consolidating Germany’s strength, which then jumpstarted its leadership role in the European Union and thereby solidified the EU’s role in the world. The economic turmoil in the early years of reunification propelled the country to implement reforms, many of which were consolidated under Merkel’s leadership. Her pragmatic management style may be characterized as tactical rather than strategic, but her deft maneuvers in crisis situations demonstrate a deep commitment to serving Germany’s national interests.
China has been Germany’s most important trading partner since 2015 with total trade volume worth US$247 billion (EUR213 billion) in 2020. In terms of exports, China accounts for US$111 billion (EUR96 billion), second only to the United States at US$120 billion (EUR104 billion). Meanwhile, Germany’s top import partner is China at US$135 billion (EUR117 billion). These numbers highlight China’s critical role in the continuation of the German economy’s upward trend.
Big German corporations like Siemens, Volkswagen, and BASF invested in China in the 1980s and has since then flourished. One of the drivers of growth is that these German companies produce locally in China. For example, BASF announced its US$10 billion project, the largest single investment of the company, to open a factory in China. In short, the fact that China is Germany’s top trading partner for several consecutive years now, and the fact that the large German corporations have longstanding and deep commitments with the private sector in China, indicate Germany’s reliance on China. If this is not managed well, these economic entanglements may end up as the proverbial Gordian knot for Germany. Hence, even as the EU (under Germany’s EU Council presidency) signed the Comprehensive Agreement on Investment (CAI) with China in December 2020, the latter is seen as both a partner and a rival.
While the relationship with China is focused heavily on economics, Germany took a cautious approach following China’s assertive diplomacy and coercive measures. Of course, President Xi Jinping has his own decoupling agenda for China, while ensuring that the global supply chains remain dependent on Chinese products. The wake-up call for Germany came in 2019 when the Federation of German Industry (BDI) published a report calling for a tougher approach to China. The BDI described the challenges posed by systemic competition between Europe’s liberal economy on one hand, and China’s state-dominated one. To level the playing field, the BDI urged the strengthening of the EU’s competitiveness by investing in research, development, education, infrastructure, and innovative technologies.
The asymmetrical dependence spelled bad news for German industry, especially small cities in the rust belt like Duisburg, which recorded high levels of unemployment when Germany’s steel and coal industries collapsed. Under China’s Belt and Road Initiative (BRI), Duisburg is the end point of the rail link and as such brought the city back to life. Every week, between 35 to 40 trains traverse 11,000 kilometers carrying Chinese goods to European markets. Duisburg is the continental distribution hub for Central and Eastern Europe. China subsidizes trains and tracks, while big companies like Alibaba provide direction and demand. This arrangement benefited Duisburg tremendously: 23,000 jobs in the North Rhine Westphalia region were created and more than 1,000 local companies have invested in China. This then led to a 70 percent increase in trade in 2020 and a new rail terminal partly built by China’s Cosco Shipping can expand trade to a further 40 percent with around 100 trains a week. Hence, an effective China policy should be at the heart of the new administration’s foreign policy.
It is in this context that the shift of focus to the Indo-Pacific can be seen as a function of Germany’s disentanglement and diversification from overdependence on China. By making the Indo-Pacific a priority and recognizing shifting geopolitical structures in the region, Germany is taking a step in actively shaping the international order.
Apart from the Guidelines, another demonstration of Germany’s commitment to the Indo-Pacific is the recent deployment of frigate Bayern. The move is a mere show of flag to some, but the choice of ship is relevant. Bayern’s route is through the South China Sea and was supposed to dock in Shanghai. China, however, denied the port visit and claimed that other countries were “provoking incidents” and “creating contradictions.”
In this context, its bilateral relationship with the Philippines is broad-based and echoes its values and priorities, not least of which are the environment, disaster risk reduction, and the peace process. Despite the pandemic in 2020, the first session of the German-Philippine Joint Economic Committee (JEC) convened with the aim of facilitating trade and investment cooperation. Development cooperation is another strong area in the Germany-Philippine bilateral relationship. Germany supports the ongoing peace process in Mindanao, specifically on disarmament and social reintegration of former militants. Germany likewise supports the strengthening of the Bangsamoro Autonomous Region in Muslim Mindanao (BARMM) through funding from the Federal Ministry for Economic Cooperation and Development (BMZ). The Philippines is one of the focus countries for climate protection, biodiversity, and adaptation to climate change. Funding for the achievement of this goal is estimated around US$35 million (EUR30-35 million) with funding from the International Climate Initiative (IKI). Germany has also signified its interest in further intensifying and expanding the international support network in the Indo-Pacific in the cross-section of business and human rights (existing networks include the German Chamber of Commerce (GIZ)).
Maritime assistance and cooperation are in their early stages. This is likely to change, given the new leadership in Germany, the EU Strategy for Cooperation in the Indo-Pacific, and the ripples caused by the formation of the Australia, United Kingdom, and United States (AUKUS) alliance. Changes may also be forthcoming following the national elections in the Philippines in 2022. In the meantime, Germany and the Philippines signed a Letter of Intent (LIO) in 2017 to strengthen bilateral ties in maritime transport. Another indication of Germany’s intent to boost its maritime cooperation with the Philippines is German Ambassador Anke Reiffenstuel’s visit to the Philippine Coast Guard (PCG) in February 2021. In the visit, both sides discussed the need to safeguard maritime domains, ensure maritime security, counter terrorism, and conduct humanitarian assistance in the Philippines, an area where the potential acquisition of more advanced aerial assets for humanitarian assistance and disaster relief (HADR) is badly needed. Previously, the Philippines acquired two H145 twin engine helicopters from Germany that were vital to HADR operations during Typhoons Rolly and Ulysses in 2020.
Clearly, the Philippines welcomes deeper relations with Germany. Germany’s Indo-Pacific Guidelines is likewise a welcome development as it reinforces the EU’s position in the region. This signifies that Philippine interests are aligned with Germany’s and by extension, Europe. There is agreement about Germany’s end goal in drafting and releasing the Guidelines: if the end goal is the containment of China, then the entry point for closer cooperation between Germany and the Philippines is the economic sphere. A spate of German companies operates in the Philippines, such as Continental, Zama Precision, Bayer, and Lufthansa. The best way to decouple from Chinese dominated global supply chains is to broaden economic engagements with other countries beyond the official channels of foreign direct investments and trade relations.
This is feasible even in the maritime domain as the Philippines is a source of seafarers, the very human resources who can ensure that shipping operations worldwide proceed smoothly. Investing in coastal development and fisheries is another entry point in the economic sphere. In short, Germany and the Philippines can exercise economic leverage to achieve common strategic goals.
Charmaine Misalucha-Willoughby is Associate Professor in the International Studies Department of De La Salle University. Her areas of specialization are ASEAN's external relations, security cooperation, and critical international relations theory.