Germany, Russia and the legacy of Rapallo

One of the most perplexing elements in the run up to the Russian invasion of Ukraine was the posture of Germany. Both outgoing Christian Democratic Chancellor Angela Merkel and newly installed Social Democrat Olaf Scholz appeared to be in a state of denial regarding the geopolitical ambitions of the Putin regime.

Given that decades of German energy policy have resulted in the federal republic today importing 55 percent of its gas and 45 percent of its oil from Russia, that outlook was not entirely unpredictable.

Ever since Chancellor Willy Brandt launched his Ostpolitik initiative toward the Soviet Union 50 years ago, Germany has seen itself as a special emissary to the East, hoping that economic ties might nudge whatever regime sits in Moscow toward political moderation. In the case of Russian President Vladimir Putin, Berlin clung to those vain hopes until his forces crossed the Ukrainian frontier.

Germany has now closed ranks within NATO in opposing the incursion. But will it return to business as usual with Russia when the Ukrainian crisis is resolved? 

To gain even more perspective on that strategic conundrum, it’s worth looking back a century to when those two nations, then considered pariahs by the international community, concluded their first alliance of the modern era: the April 16, 1922, Treaty of Rapallo.

British Prime Minister David Lloyd George had convened a 1920s version of a G-20 meeting in Genoa on April 10, with a focus on pan-European economic recovery. His ambitious agenda included lessening the burden of reparations imposed on Germany following World War I and resolving the claims of Allied nations over their Russian assets confiscated in the Bolshevik revolution.

But neither Berlin nor Moscow was confident the conference would offer them a satisfactory settlement. Despite mutual suspicion, these wartime adversaries now saw a peacetime relationship as leverage against economic domination by the U.K., France and the U.S.

For Germany, Russia was a source of raw materials and a market for exports, while the fledgling Soviet regime was eager for German investment and technical expertise. And as early as 1921, Germany had secretly begun developing rearmament capability on Russian soil, in violation of the 1919 Treaty of Versailles. 

The German negotiator at Rapallo, Foreign Minister Walter Rathenau, was a remarkable character. A Jew, he was chairman of the electrical giant AEG and had played a major role in managing his country’s industrial output during the war. Not the first German to put his faith in trade over ideology, he ultimately saw Russia reverting back to capitalism and the treaty as a stepping stone toward what would become German domination of its economy.

For their part, Vladimir Lenin and the Soviets hoped to detach Germany from a Western consortium that might otherwise have the power to dictate Russia’s economic future and threaten to reverse its revolution.  

As Genoa unfolded, Lloyd George was unable to get the French in line with his vision. After much diplomatic back and forth, Rathenau and Soviet foreign minister Georgy Chicherin concluded it was time to withdraw to a resort 15 miles down the Italian Riviera and cut their own deal — one that left Lloyd George’s program in tatters. 

Under the Rapallo terms, Germany was the first major country to fully recognize the Bolshevik regime and abandoned any claims to confiscated property. The Soviets in turn renounced their rights to wartime reparations from Germany. The two also agreed to conduct trade under what we would today term most favored nation status. The illicit military collaboration would continue.

For his efforts, Rathenau was castigated by Germany’s extreme right for selling out to Bolshevism, and he fell victim to assassination by a death squad two months later. His was one of 354 such proto fascist killings that were chronicled in Germany from 1919 through 1922. He remains to this day the only Jew ever to serve in a German cabinet.

Throughout the interwar years, the “specter of Rapallo” and the potential threat of deeper German-Russian ties, was on the minds of British and French governments, even as they crafted their appeasement policy vis-a-vis Hitler. Remarkably, the cooperation engendered by Rapallo endured through various treaty updates and regime changes, ending only with the Nazi invasion of Russia in June 1941. 

Following the destruction of World War II and the Cold War division of Europe, Willy Brandt began his Nobel Prize-winning efforts at detente with the Soviet bloc. Between 1970 and 1972, he concluded a non-aggression pact with Moscow, and treaties that formally recognized Poland and East Germany, the latter agreement formally acknowledging the division of his country. 

Brandt’s government also initiated an energy supply scheme, facilitating the first 20-year contract between the Soviet foreign trade ministry and Ruhrgas. The larger “gas for pipe” initiative was one in which Soviet gas exports were exchanged for German steel pipe financed by German banks and the Bonn government — the initial phase of a relationship that evolved into the position of German dependence on Russia that so impacts geopolitics today. 

Some feared that Ostpolitik might result in a “new Rapallo ” that would detach West Germany from the West. But in the face of the existential threat posed by the Soviet Union, Brandt and his Social Democrats never deviated from their commitment to NATO and the Western Alliance.  

Die Zeit’s Joseph Joffe once described Rapallo as “a diplomatic four letter word” standing for “Germany’s betrayal of the West, and for its sudden and sinister collusion with the despotism of the East.” As bombs rain down on the people of Ukraine, it’s worth asking how Germany’s commitment to the North Atlantic community can coexist with the 21st century version of despotism in Moscow. The legacy of Rapallo is one that should haunt policymakers in Berlin.   

Paul C. Atkinson, a former executive at The Wall Street Journal, is a contributing editor of the New York Sun.