Europe Is Warming Up to Putin

(Bloomberg Businessweek) -- On his way to Berlin for a meeting with German Chancellor Angela Merkel, Vladimir Putin stopped in the Alps on Aug. 18 for the mountain­side wedding of Austrian Foreign Minister Karin Kneissl. Seated at her right hand at one point, Putin traded toasts with the bride, waltzed with her, and even stuck around for the Cossack singers and dancers he’d brought as guest performers. It was just long enough for Russian official media to tout the appearance as evidence Putin is no longer unwelcome in Europe.

Later that day, the German government tried to play down the significance of his meeting with Merkel, but it was hard to deny the symbolism. It was the Russian president’s first one-on-one meeting on the home turf of his most implacable European opponent since relations froze in 2014 after his annexation of Crimea. If not a breakthrough, it was at least a thawing of the ice.

With Donald Trump upending diplomatic ties around the world, Putin is finding a warmer reception from European leaders who’ve long shunned him. Trump’s decision to pull out of the Iran nuclear deal, plus the billions of dollars in tariffs and sanctions he’s leveled at the European Union and Russia, suddenly give Putin and European leaders a set of common grievances. The U.S. president has added to the pressure with recurrent warnings that he might impose sanctions on a natural gas pipeline under construction from Russia to Germany that Putin and Merkel strongly support.

Although Trump has been a unique catalyst, he’s not the only force behind Europe’s shift toward Russia. Even before he pulled out of the Iran deal and started his trade war this spring, new governments in Italy and Austria were calling for better relations with Moscow. In May, French President Emmanuel Macron attended Putin’s annual economic showcase in St. Petersburg, saying a “strong partnership” could help “anchor Russia to Europe.” The EU has resisted U.S. pressure to add more sanctions on Russia. Speaking in Washington on Aug. 21, British Foreign Secretary Jeremy Hunt appealed for more restrictions in the wake of the March poisoning in the U.K. of a former Russian spy, but European officials remain cautious.

With the U.S. throwing everything from European security to trade deals into question, détente with Moscow is a top priority in Berlin and other capitals. “Merkel is hedging, and Putin is exploiting,” says Josef Janning, senior policy fellow at the European Council on Foreign Relations in Berlin. Trump’s meeting with Putin in Helsinki—just as the U.S. president attacked Merkel and the German economy—highlighted why the chancellor must cultivate her own relationship with the Russian president, Janning says. “She doesn’t want to give up the chance of keeping Putin within a margin that is manageable for Germany.”

Throughout their meeting, Merkel kept a cautious stance, hosting Putin at a government guest house outside the capital and bypassing the press conference that typically follows such a visit. “It’s a working meeting, and one shouldn’t expect any special results,” Merkel told reporters beforehand. “But we’re dealing with so many problems, from Ukraine to Syria to cooperation in the economic sphere, that it is justified to keep up a permanent dialogue.”

In his opening remarks, Putin issued what sounded like a veiled threat about Syria, where he’s seeking European support for rebuilding efforts after Russian military intervention rescued the regime of President Bashar al-Assad. “There are a million refugees in Jordan and a million in Lebanon,” Putin said. “There are 3 million refugees in Turkey. This is potentially a huge burden on Europe, so it is better to do everything possible so that they can return home.” For Merkel, whose authority at home has been weakened by squabbling over her refugee policy, the message must have sounded ominous.

In another sign that Merkel is reengaging with Russia, before going on vacation in July she met in the chancellery with Russian Foreign Minister Sergey Lavrov and General Valery Gerasimov of the Russian army. The general was on the sanctions list and needed special permission to enter Germany. Afterward, the Russians said, the three talked about the possibility of returning Syrian refugees, something the German government didn’t confirm.

Trump’s threat to impose sanctions on the €9.5 billion ($11 billion) Nord Stream 2 pipeline also strikes a nerve. Stretching beneath the Baltic Sea, the pipeline would double Russia’s capacity to ship gas directly to Germany. The U.S. has long opposed the project as solidifying Russia’s hold on the Continent’s gas supply. Merkel’s commitment to Nord Stream has impressed the Kremlin. In a meeting with Russian diplomats in July, Putin stressed the importance of her support as evidence of her willingness to assert Europe’s independence, say three people who attended. Merkel argues it’s primarily a matter of economics, since Russian gas is cheaper than U.S. supplies.

While the Kremlin welcomes warmer ties with Europe, the relationship that matters is the one with Washington. For Putin, Trump remains a tantalizing opportunity to improve relations. Even after sanctions imposed earlier this month pushed the ruble to a two-year low, the Kremlin is still holding out hope that Trump may yet deliver. With the personal rapport between the leaders warm and contacts expected to continue, Russian officials are confident Trump genuinely wants to rekindle ties if he can get a political window of opportunity in Washington.

That opening seems to be narrowing, however, as evidenced by a litany of events on Aug. 21. Microsoft Corp. said that morning it had shut down websites created by hackers linked to the Russian military to mimic conservative think tanks critical of Russia. Hours after that news broke, the U.S. Department of the Treasury sanctioned owners of six Russian ships for violating international prohibitions against doing business with North Korea.

That afternoon, the U.S. Senate Banking and Foreign Relations committees held simultaneous hearings at which lawmakers from both parties expressed frustration that the Trump administration hasn’t acted more strongly against Putin’s government. Senator John Kennedy, a Louisiana Republican, asked Treasury officials how Russia’s economy could be “brought to its knees.” With that kind of talk, it’s hard to see how things can get much better between the White House and the Kremlin. —With Margaret Talev

To contact the editor responsible for this story: Matthew Philips at mphilips3@bloomberg.net

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