By Jim Geraghty
Tuesday, April 30, 2024
President Biden, in public remarks with Chancellor Olaf
Scholz of Germany, back in February:
It was about two years ago you and
I met here, and you said the United States and Germany have to act together and
— and do what’s necessary together. And we’ve been doing that. . . . I want to
thank you, Olaf, for your leadership from the very beginning. And you’ve done
something no one thought could get done: You’ve doubled Germany’s military aid
to Ukraine this year. . . . You and I helped put NATO together in a way it
hadn’t been a long time.
All smiles, right? Eh, the truth is a little more
complicated.
Problem one: A new analysis by the Financial Times concluded
that the seven largest Western banks that remain in Russia paid the Kremlin
more than $3.2 billion in taxes last year, “a fourfold increase on prewar
levels, despite promises to minimize their Russian exposure after the
full-scale invasion of Ukraine.”
The seven banks are Raiffeisen Bank International
headquartered in Austria, UniCredit and Intesa Sanpaolo in Italy, ING in the
Netherlands, Commerzbank and Deutsche Bank of Germany, and OTP of Hungary.
The Financial Times concluded:
Those profits were three times
more than in 2021 and were partly generated by funds that the banks cannot
withdraw from the country. . . .
The taxes paid by European banks,
equivalent to about 0.4 per cent of all Russia’s expected non-energy budget
revenues for 2024, are an example of how foreign companies remaining in the
country help the Kremlin maintain financial stability despite western
sanctions.
Just under 17 percent of the publicly traded shares in
Commerzbank are owned by . . . the German government.
As for American banks, the FT also
reported that Citigroup earned $149 million in profit and paid $53 million in
taxes in Russia in 2023, and J.P. Morgan earned $35 million and paid $6.8
million in taxes, but added that J.P. Morgan “has been trying to leave since
2022. The bank is now stuck and facing a multimillion-dollar lawsuit from its
former partner in Russia, VTB.”
Problem two: There are $300 billion in frozen
Russian assets sitting in banks, mostly in Europe. (Of that sum, just $6 billion is sitting in U.S. banks.) The U.S. wants
to get every country to hand over these assets to Ukraine; this would amount to
five times the recently passed U.S. military- and financial-aid package. This
would effectively make Russia’s oligarchs and elites pay for Ukraine’s defense.
But the Wall Street Journal reports
that the Germans don’t want to go along with the idea:
Berlin has emerged as one of the
fiercest opponents of the U.S.-led push to commandeer some of the nearly $300
billion of Russian central-bank assets that were frozen at the start of
Russia’s war on Ukraine. Germany fears that seizing, rather than freezing, the
funds could create a precedent and inspire new claims against them for WWII-era
crimes.
The misgivings risk the fate of
the initiative. The U.S. and U.K. say its success is crucial for a Ukrainian
victory, but there is little chance of progress without wider European support.
The funds, several times the size of the recently approved $61 billion U.S. aid package for Ukraine, would
bolster Ukraine’s ailing armed forces and help rebuild the country. . . .
Berlin argues international law
prohibits individuals from making claims against states in foreign courts and
that state assets are immune from seizure. Violating this principle in Russia’s
case would undermine Germany’s longstanding legal position, Berlin officials
said.
Russia’s Foreign Ministry has said
that confiscating Russian assets would be “21st-century piracy.” Some Russian
officials have warned they would retaliate. . . .
German Chancellor Olaf Scholz, a
jurist who once managed his own legal firm, is unwilling to take the risk,
according to German officials. One of the officials said the move could open
other European capitals to claims over slavery and colonialism.
Scholz has said he’s willing to use the profits — interest collected on the
deposits — “to financially support the purchase of weapons for Ukraine.” But
he’s not willing to seize the assets themselves.
Oh, and as for that $6 billion in Russian assets in U.S. banks:
There’s little expectation that
the U.S. will act unilaterally even though the new law gives that power to the
president. The Biden administration has signaled its desire to take joint
action with allies in the coming months.
Biden likes to say that the U.S. will “do whatever it takes
to give [the Ukrainians] the capacity to defend themselves.” But Biden’s
policies always turn out to be more like Meat Loaf: He would do anything, but
he won’t do that.
Problem three: We’re providing long-range
weapons to the Ukrainians, as are the British. But the Germans refuse to do
so, contending that the use of their long-range missiles would be
different:
The answer is still nein.
The United States and the United
Kingdom have said they will send fresh batches of long-range cruise missiles to
Ukraine this week, but while Germany ramps up pressure on its allies to donate
air defense systems to the embattled country, there’s no sign Chancellor Olaf
Scholz will budge on sending the German military’s available Taurus long-range
missiles. . . .
Scholz has come under attack by
Germany’s conservative opposition, and well as from some inside his three-party
coalition, over his refusal to send Taurus missiles. His explanation
has evolved over time, but Scholz has repeatedly underscored the dangers of
escalation, warning the move could lead to direct military conflict with
Russia.
During his television interview
late Wednesday, Pistorius suggested the true reasons are secret.
“There are aspects of such a
decision that are so important for national security that you don’t discuss
them publicly. . . .”
“Scholz is not betting on a
Ukrainian victory but on negotiations with Putin,” said Norbert Röttgen, a
senior lawmaker with the opposition Christian Democrats. “By denying Ukraine
Germany’s most effective weapon, he sends exactly this signal to Putin.”
And that, a suspicious mind might conclude, is the true
objective of some within the German government — to be best positioned for an
end to the invasion that results in another Russian “frozen conflict” that can
restore the pre-war economic status quo to German–Russian relations. God knows
how many German government officials are looking for a deal like the one former German chancellor Gerhard Schroeder got.
Problem four: It turns out that a big German
company was contracting with the Russians to rebuild buildings in
Russian-occupied Ukraine:
The industrial Knauf group, which
manufactures plasterboard, and WKB Systems, which produces aerated concrete,
have been providing materials for construction in the city that was almost
entirely flattened during the early months of the war, according to the
investigation by Monitor magazine and shown on the public ARD television
channel.
Monitor says it has analyzed
numerous images from construction sites where the Knauf logo appears, as well
as detailed activity reports demonstrating the German company’s presence in the
port city.
Mariupol fell to Russian forces
after a two-month siege that cost the lives of thousands and left the city in
rubble.
The magazine also quotes an
“official distributor” of Knauf’s that is promoting a housing project in
Mariupol, built with Knauf products on behalf of the Russian defense ministry.
Problem five: The good news is that Germany
has caught a lot of spies from Russia and China lately. The bad news is
that Germany has caught a lot of spies from Russia and China lately,
because there are a lot of them operating in the country:
Two German nationals of Russian
origin have been arrested on suspicion of plotting to sabotage Germany’s
military aid to Ukraine while three Germans have been detained for allegedly
planning to pass on advanced engine designs to Chinese intelligence. . . .
A particular low point was the
leaking in March by Russian sources of a phone call between top generals
discussing supplying long-range Taurus missiles to Ukraine.
Months earlier a high-ranking
official in Germany’s BND foreign intelligence service called Carsten L went on
trial, accused of leaking classified information to the Russians in exchange
for payments of some €400,000 (£343,000).
Former U.K. Defense Secretary Ben
Wallace expressed the frustration of many allies when he said Germany was
“pretty penetrated by Russian intelligence” and “neither secure nor reliable”.
Problem six: If you’re a Ukrainian in Germany, you’re not safe from the
Russians:
Two Ukrainian servicemen were
stabbed to death at a shopping center in southern Germany Saturday evening, by
a suspected Russian national, German and Ukrainian authorities say.
German police say a 36-year-old
man died on the scene in the city of Murnau, and a 23-year-old man died later
that evening at a nearby hospital.
Both Ukrainian men were residents
of the district of Garmisch-Partenkirchen and had been in Germany undergoing
medical rehabilitation.
A 57-year-old suspected Russian
national was arrested at his home not far from the scene, according to German
authorities.
A criminal investigation is
underway for the suspected double murder.
So, to sum up, German banks, including one partially
owned by the German government, are still paying taxes to the Russian
government; the Germans refuse to seize Russian assets; the Germans won’t send
long-range missiles to the Ukrainians; German companies are getting paid by the
Russian defense ministry for reconstruction projects in occupied territories;
the country is full of Russian spies; and injured Ukrainian soldiers who go to
Germany for medical treatment are getting murdered in the street by Russians.
But other than that, Germany is doing everything it can
to help win the war.
To hear President Biden tell it, Chancellor Scholz and
the German government continue to stand with us, shoulder to shoulder, against
Russian aggression.
But as the late Norm MacDonald would say, “or so the
Germans would have us believe.”
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