Introduction

After French President Emmanuel Macron’s visits to Ukraine and Russia, German Chancellor Olaf Scholz embarked on visits to Ukraine and Russia as well. Scholz had visited the US last week and discussed the Ukraine issue with Biden.

The timing of Scholz’s visits to Ukraine and Russia were important, given that the Biden administration has said that Russia could attack Ukraine at any point in time (significantly, only last week, Putin had assured Macron that Russia had no plans of escalating conflict, and would not like to escalate tensions). In a media interaction on Monday, Pentagon Spokesperson John Kirby had said:

This is a military that, that continues to grow stronger, continues to grow more ready. They’re exercising, so we believe that he has a lot of capabilities and options available to him should he want to use military force.

The US has pulled out its diplomatic staff from Ukraine, while EU and NATO member states, including Germany, have urged their citizens to leave Ukraine. 

Economic repercussions

The US and other members of the G7 have issued a stern warning to Russia, saying that it would face strong economic repercussions if Moscow invades Ukraine. During his conversation with Vladimir Putin, on February 12, 2022, Biden had conveyed that any aggression by Russia would result in strong measures, and G7 Finance Ministers also reiterated the same in a statement on Monday, February 14, 2022.

It would be important to point out that apprehensions with regard to a Russian invasion of Ukraine have also impacted global markets and oil prices. European indexes, including the UK’s FTSE 100, Germany’s Dax, and France’s CAC 40, dropped significantly on Monday, February 14, 2022, along with US and Indian markets. Apart from this, crude prices went up to a seven-year high, crossing $95 a barrel.

Differences between the US and France and Germany

One of the reasons cited for Russia’s aggressive stance is US support for Ukraine’s membership in NATO. France and Germany have, however, differed with the US on this issue. In 2019, then Ukrainian President Petro Poroshenko signed a constitutional amendment which made a commitment towards making Ukraine a member of both the EU and NATO.

During his visit to Ukraine, Chancellor Scholz said that membership is not such an important issue, and that it was “strange that Russia makes this the subject of major political problems.”

The Ukrainian President, Volodymyr Zelenskiy, also said that for Ukraine, “NATO membership is not the absolute goal.”

It would be pertinent to point out that Ukraine’s Ambassador, Vadym Prystaiko, in a media interview, had made remarks indicating that Ukraine may consider giving up its stand of joining NATO, in order to avoid war, but later denied the same.

Before embarking upon his visits to Ukraine and Russia, Scholz had warned that Germany would be compelled to impose sanctions, and that the Nord Stream 2 Project, which runs from Western Siberia to Germany, would be shelved (Russia accounts for 40% of Germany’s energy supplies). During Scholz’s US visit, Biden had also said that if tensions rise then the $11 billion project owned by Gazprom would not go ahead. Said Biden:

The notion that Nord Stream 2 is going to go forward with an invasion by the Russians — that’s not going to happen.

The role of both France and Germany has been important; while on the one hand they have kept the channels of communication with Putin open, and conveyed the reservations of the US and its allies, on the other their stand vis-à-vis Ukraine membership in NATO is different. 

Biden’s focus on working with allies has been beneficial, but at the same time the reality is that there are differences between the approach of the EU and the US vis-à-vis the Ukraine issue. EU countries, especially Germany, can not overlook their economic interests and the logic of geography. It is not just France and Germany, but many other allies which would be concerned over escalation of conflict and the likely economic consequences – specifically the rise in oil prices.