Prospect Theory and German Foreign Policy:
A comparison of German policies towards the Russia-Georgia and
the Russia-Ukraine crises
Maarten Kolle (s2092980) Final Master Thesis MSc Political Science: International Politics
Leiden University First Reader: Dr. N.R.J.B. Blarel Second Reader: Dr. C. Jentzsch
Word Count: 9.054 20-01-2019
Image on front page: The logo of Leiden University, retrieved from universiteitleiden.com
Abstract
This article analyses Germany’s foreign policy vis-a-vis Russia during two crises. It attempts to explain why Germany supported sanctions against Russia following the Ukraine crisis in 2014, while it refrained from doing so after the Russo-Georgian war of 2008. Breaking with traditional approaches to German foreign policy that employ constructivist and commercial realist explanations, this research identifies Chancellor Angela Merkel as Germany’s decision-maker and applies prospect theory to explain the variance in her decisions in both cases. It is argued that Merkel was in a domain of unacceptable losses in 2014, whereas she was not in 2008. This caused her to become risk-acceptant, which may explain the high-risk decision to impose sanctions on Russia - a policy she otherwise would not be willing to adopt.
Introduction
The Ukraine crisis, which culminated in Russia’s annexation of Crimea in March 2014, caused Germany to take up a “leading role” in imposing EU sanctions on the Russian Federation (Shagina, 2017, p.82; Fix, 2018, p.1). This leadership is in sharp contrast with Germany’s response to the Russo-Georgian war of 2008 when its “reluctant position” (Shagina, 2017, p.77) prevented the EU from imposing sanctions on Russia, while soon after Germany and Russia returned to “business as usual” (Adomeit, 2015, p.2) and agreed to resume EU-Russia talks on a new partnership agreement (Stelzenmüller, 2009, p.95). While both crises caused a “shock” in German foreign policy, the disparity in Germany’s response is considerable (Eberle and Handl, 2018, p.11).
Challenging Russia is associated with high risks, especially as Germany’s reliance on Russian imports for its oil consumption has remained around 40% over the years in discussion (Dyson, 2016). Moreover, in other sectors such as trade and science, Germany’s bilateral relationship with Russia has long been “cooperative” and “mutually beneficial” (Forsberg, 2016, p.22, Bundesregierung, 2014b). Consequently, aversion to take any risks has been the traditional explanation of Germany’s reluctance to sanction Russia in 2008 (Shagina, 2017). However, although such risks were present in 2014, Germany’s foreign policy changed markedly from accommodating Russia to imposing sanctions. As such, in
2008, Germany was risk-averse and accepted violations of international law, whereas in 2014 Germany was risk-acceptant in its resolve to confront Russia. It is unclear why this change in policy came about.
Both crises show more similarities than differences, suggesting that there is no obvious explanation for the change in Germany’s behaviour. Also, there were no significant changes in German politics or in Germany and Russia’s bilateral economic relations that corresponded with the shift in foreign policy. On both occasions, Russia intervened in a neighbouring post-Soviet State, where a secessionist conflict initiated by pro-Russian minorities had recently escalated (Livingstone, 2016). In both crises, Angela Merkel and Frank-Walter Steinmeier occupied the offices of Chancellor and Foreign Minister respectively. Also, a coalition of the CDU/CSU and the SPD was in power in Germany in both cases. Economically, German exports to Russia had remained constant (controlling for the effects of the crisis) between 2008 and March 2014 (OEC, 2018a). There were no substantial changes in Germany’s reliance on Russian gas exports either, considering that both countries had been partners in the construction of Nord Stream I and II continuously from the early 2000s onwards (OEC, 2018b; Seibel, 2015, p.69).
Since the foreign policy change between 2008 and 2014 cannot reasonably be attributed to variations in any of the factors discussed above, there is no clear answer to why Germany supported sanctions against Russia following the Ukraine crisis in 2014, while it refrained from doing so after the Russo-Georgian war of 2008. The aim of this research is to provide an answer to that question.
As it is clear that the dominant approaches to explain German foreign policy do not account for the contrast in action, this study applies an “ignored” perspective and focuses on Angela Merkel’s decision-making in 2008 and 2014 (Brummer, 2012, p.274). Based on findings from prospect theory, it is argued that changes in Merkel’s perception of gains and losses incurred by the two crises match with Merkel’s risk-taking propensities, and consequently with Germany’s support for the imposition of sanctions.
Understanding Germany’s foreign policy is important in order to comprehend the EU’s foreign policy. After a slow start following Germany’s reunification in 1990, German policies have been increasingly shaping EU policies, and especially the EU’s relationship with Russia (Siddi, 2016). In both 2008 and 2014, Germany had a crucial role in determining the EU’s attitude towards Russia (Shagina, 2017). The change in Germany’s approach has been
widely described as “surprising” and has yet to be fully explained (Eberle and Handl, 2018). By analysing Merkel’s decision-making, this paper attempts to formulate a new explanation to this inherently interesting research question. As such, this paper contributes to the academic debate on Germany’s foreign policy and the relation between Germany and Russia in particular. Additionally, the validity of the application of prospect theory to foreign policy analysis is reaffirmed.
The structure of the paper is as follows. In the first section, the academic literature relevant to the subject of the thesis is discussed and a research gap is identified. After that, a theoretical framework that focuses on the individual decision-maker is built based on the insights of prospect theory, and two hypotheses are derived from the framework. Thirdly, the research design is discussed, starting with the case-selection strategy, the operationalisation of the variables, the data-selection strategy and, finally, a discussion of congruence method. In the fourth section the two case studies on the 2008 and 2014 crises are examined. The final section summarizes the findings of the study and the implications for future research.
Literature Review
In this section, the principal theories accounting for Germany’s foreign policy are discussed and their pertinence in analysing post-Cold War German-Russian relations is assessed. It is argued that these theories are unable to account for the inconsistency in Germany’s behaviour in the two cases of interest.
Constructivism and commercial realism are the two dominant theoretical perspectives employed to analyse Germany’s foreign policy and its role in Europe after its reunification in 1990. Based on these approaches, three concepts relevant to this research are used to explain and describe its policies: the constructivist Zivilmacht and Ostpolitik-concepts, and the commercial realist idea of Germany as an embedded hegemon.
Firstly, the constructivist classification of Germany as a Zivilmacht, or ‘civilian power’, is discussed. Germany’s ‘civilian power’ foreign policy puts a strong focus on multilateralism, European integration, international law, and human rights and “strives to civilise international politics” (Fix, 2018, p.500; Stelzenmüller, 2009, p.93). Within this framework, Germany is seen as a ‘reluctant hegemon’ – not feeling comfortable in taking the lead in multilateral affairs, as it would rather follow than take the lead (Seibel, 2015, p.68). The constructivist paradigm has been useful to account for most of Germany’s decisions in the 1990s but has been less successful in explaining Germany’s decision to participate in NATO’s OAF campaign against Yugoslavia in 1999 (Brummer, 2012). Similarly, Germany’s preference for a cooperative and export-intensive relationship with Russia in 2008, rather than a preference for “disciplining states that break [international] rules,” contradicts the expectations of the theory (Fix, 2018, p.500).
Another constructivist view is expressed by the idea of Ostpolitik. Ostpolitik, as introduced by then-Chancellor Willy Brandt in 1969, is a flexible concept that is based on the normative idea in Germany that relations with Russia should be based on cooperation, dialogue, diplomacy, mutual trust, economic interdependence and multilateralism (Szabo, 2014b, p.11; Forsberg, 2016, p.22). Their cooperation was at times so strong that Germany has frequently been portrayed as Russia’s best friend in Europe, putting itself at an “equidistance” from both the US and Russia (Stelzenmüller, 2009, p.97). Adherence to the idea of Ostpolitik regarding Russia entails promoting cooperation and economic interdependence. However, the path of confrontation that led to economic sanctions, which Germany pursued in 2014, invalidates Ostpolitik as a useful explanation for the change in
Germany’s policy towards Russia. Siddi (2016, p.674) observed that “in German foreign policy circles,” Ostpolitik “is still seen as a long-term objective that could be achieved when the current crisis is resolved,” but it needs to be revised to be able to explain the actions of 2014. Another author even suggested that under Angela Merkel relations with Russia had turned towards a Frostpolitik (Forsberg, 2016).
Imposing a different perspective, Crawford (2007) has described Germany as an ‘embedded hegemon’, embedded in “institutionalised cooperation” but with a strong focus on its “national economic interests” (Fix, 2018, p.499-501). Building on this framework, Kundnani (2014) and Szabo (2014a, 2014b) have labelled Germany as a ‘geo-economic power’. According to Szabo, Germany expresses its “national interest largely in economic terms,” while “export-oriented commerce” plays “a dominant role” in shaping foreign policy (Szabo, 2014a, p.119). However, Szabo’s idea of a geo-economic power has been criticised for its inability to explain why in 2014 Germany chose to impose sanctions on Russia at the expense of German business interests (Flake, 2015, p.648-649; Gould-Davies, 2016, p.220).
The considerations above show that the prevalent theories used to analyse Germany’s foreign policy, constructivism and commercial realism, have proven to be unsatisfactory in explaining or predicting Germany’s foreign policy in both the 2008 and 2014 crises. The two constructivist approaches fall short as Germany chose to protect its trade interests instead of upholding international law in 2008, while Germany’s clear opposition against Russia - illustrated by supporting sanctions - contradicts the expectations of a foreign policy based on the principles of Ostpolitik. Also, the decision to impose sanctions on Russia in 2014 at the expense of its own economic interests does not match the expectations of Germany acting as a geo-economic power.
Breaking with these approaches, this paper applies a different perspective to Germany’s foreign policy. It introduces Kahneman and Tversky’s (1979) prospect theory and aims to focus specifically on Chancellor Angela Merkel’s decision-making. By applying an agency-based theory, explanatory variables are highlighted that have been ignored by the theories discussed above. The application of such an agency-based theoretical framework to German foreign policy, and to this research question in particular, has been suggested by Brummer (2012) and Forsberg (2016) respectively, but has not been looked into before.
Theoretical Framework
In this section, the focus on the individual level of analysis is accounted for and prospect theory is introduced as a possible answer to the research question. Following this, the relevance of the application of prospect theory is described, and its key assumptions, as well as the implications of Welch’s (2005) theory of Foreign Policy Change, are analysed. The application of Khong’s (1992) analogical reasoning is subsequently introduced as an addition to prospect theory. Two testable hypotheses to address the research question are then formulated.
The aim of this research is to explain a deviation in Germany’s foreign policy by focusing on Germany’s Chancellor, Angela Merkel, as decision-maker. This focus is justified as “even in a country such as Germany, whose foreign and security policy is regarded as highly circumscribed by structural constraints, individual decision-makers can and do make a difference” (Brummer, 2012, p.272). Among German foreign policy makers, the potential for disagreement is traditionally “mitigated by institutions that encourage the Chancellor and her ministers to present a united front” (Livingstone, 2017, p.38, Rittberger, 2001). Moreover, within the German cabinet, the Chancellor had assumed “a superior position” (Rittberger, 2001, p.97) and could be regarded as the individual with the “final say” (Welch, 2005, p.49). The structure of German foreign policy decision-making is thus fit for an analysis at the individual level and as such, focusing on Angela Merkel is legitimate.
Prospect Theory
To analyse Merkel’s decision-making during the two crises, prospect theory is employed. Prospect theory is specifically suited for decision-making under risk (Brummer, 2012), and was introduced by Kahneman and Tversky in 1979. Since then, it has replaced the expected utility hypothesis as the most prominent theory of individual decision-making. It is more suitable to explain decision-making because it “accounts for discrepancies between the normative ideal and people’s actual choice behaviour” (Welch, 2005, p.41-43). According to expected utility theory, “actors try to maximise their expected utility by weighing the utility of each possible outcome of a given course of action by the probability of its occurrence, summing up all possible outcomes for each strategy, and selecting the strategy with the highest expected utility” (Levy, 1997, p.88; Brummer, 2012). The application of expected utility theory to explain the policy outcomes in 2008 and 2014 would not be instructive,
because the expected gains and losses in both crises were very similar. Utility maximisation would thus predict equal outcomes. Prospect theory, however, explains diverging decisions in the face of equal gains and losses. According to prospect theory, the way in which actors interpret their choices will affect their decision. The willingness to take risks depends on how actors frame their current situation, or domain (Mercer, 2005).
Confronted with losses, actors do not respond the same as when confronted with gains. When given the choice between an 85% chance to earn 100 euros and a 100% chance to earn 80 euros, most people choose the guaranteed 80. But when asked to choose between an 85% chance to lose 100 euros and a sure loss of 80 euros, respondents rather take a chance and choose the former. When faced with losses, we are more willing to accept risks, while we are risk-averse in the face of gains (Kahneman and Tversky, 1979). Risk is defined as outcome uncertainty and not as a chance of something normatively bad happening (Vis & Kuijpers, 2018).
These gains and losses are assessed in relation to a reference point. Actors ask themselves: “How will each choice leave me with respect to a reference point defining what I consider to be an acceptable outcome?” (Welch, 2005, p.41). The “reference point serves as the zero point of the value scale” and deviations from that reference point are expressed either as gains or losses (Kahneman and Tversky, 1979, p.275). Choices are thus reference dependent. If actors perceive themselves to be in a situation that is incurring losses or gains relative to the reference point, they are in a loss respectively gain domain. Consequently, this affects their inclination to take risks: acting in a gain domain leads to risk-aversion while acting in a loss domain leads to higher acceptance. Behaviour that is atypically risk-acceptant could thus be explained by the loss domain the actor is in.
Foreign Policy Change
However, Welch (2005) has argued that the application of prospect theory alone is not sufficient to explain foreign policy changes. Not only is it necessary for the actor to act in a domain of losses, the perceived losses need to be unacceptable to the actor as well. Building on organisational theory, Welch (2005, p.31, 45) posited that bureaucratic decision-makers are insensitive to small changes in expected gains or losses: “Interorganisational dynamics combine with structural, cultural, and procedural considerations to reinforce policy stability” and “policy inertia.” A regime that is highly bureaucratic and democratic will have fewer
policy changes. As such, in a state with high levels of democracy and bureaucracy, the “default policy expectation at time tn is the policy at tn-1” (Welch, 2005, p.47). Thus, small
changes in perceived gains or losses are insufficient to provoke foreign policy changes, and yesterday’s policy will be the same as today’s. This observation applies to German politics as well. Based on the Polity- and Executive Constraints-variables provided by the Polity project data set, Germany is considered a highly bureaucratic and highly democratic state (Center for Systemic Peace, 2010; Welch, 2005). As a result, it is expected that Merkel, as a decision-maker in a highly bureaucratic and democratic regime, needs not only to act in a domain of losses, these losses are also needed to be perceived as “unacceptable” for foreign policy to be changed (Welch, 2005, p.231).
However, determining the actor’s domain is problematic when prospect theory is applied outside laboratory experiments, and to foreign policy decision-making in particular (Shafir, 1992, Mercer, 2005; Welch, 2005; Vis and Kuijpers, 2018). Specifically, determining an actor’s domain, and thus determining how actors frame their choices, can be problematic (Mercer, 2005; Welch, 2005; Vis and Kuijpers, 2018). Whether actors perceive their current situation as incurring either gains or losses hinges on the location of the neutral reference point. However, prospect theory provides no clear insight in how actors determine that reference point. In the words of Levy, prospect theory thus is “a reference-dependent theory without a theory of the reference point” (Levy, 1997, p.100). In the original formulation of prospect theory, subjects were confronted with choices already formulated in gain or loss frames, leaving no room for further editing the frame to ensure the reliability of the outcome. This makes the application of prospect theory outside the laboratory, when actors frame their own choices and the domain is not specified, problematic. It is hardly possible to distinguish the reference point when analysing foreign policy. A theoretical approach that circumvents the necessity to identify such a reference point is developed in the next section. Analogical Reasoning
Mercer (2005) has addressed the problem of the reference point at length, emphasising that prospect theory can be employed without knowing the reference point, since “prospect theory demands identifying an actor’s domain but not the source of that domain” (Mercer, 2005, p.9). If it can be established that an actor is in the domain of losses, it is no longer necessary to know with reference to what actors perceives their actions to incur losses.
To identify a domain, it suffices to establish how a crisis is framed, as the framing of the situation makes up the domain (Mercer, 2005). Determining how actors frame a situation can be done by assessing their language (Welch, 2005), by analysing invoked analogies (Mercer, 2005; McDermott, 1992) and by consulting so-called “thermometer”-indicators (McDermott, 1992). The latter indicator is introduced in the methods section. The actor’s language is of importance as “often it is only via their choice of nouns and adjectives that decision-makers provide us with explicit reports of assessments […] of perceived or prospective gains and losses” (Welch, 2005, p. 55). Similarly, analogies that are employed by an actor can be helpful in establishing if the actor frames the situation as incurring gains or losses, and in what domain the actor is operating in (Mercer, 2005; Levy, 1997).
Analogical reasoning, as introduced by Khong (1992), is the study of how actors understand a new situation by comparing it to a recent event or a personal experience. Analogical reasoning notably occurs in crisis situations, when stakes are high, and time and information are limited, such as the Russo-Georgian and Russo-Ukrainian crises (Khong, 1992). In such cases, analogies are “often called upon by policymakers to perform a set of diagnostic tasks relevant to political decision-making” – analogies define a situation, assess the stakes, and offer a policy prescription (Khong, 1992, p.20; McDermott, 1992; Brummer, 2012). The chosen analogies indicate how the decision-maker processes information and they “influence a decision-maker’s definition of the situation” (Brummer, 2012, p.276). As such, “analogies can tell us a lot about an actor’s domain” (Mercer, 2005, p.9).
Despite some methodological limitations, especially regarding their source (“do analogies influence beliefs, or do beliefs influence analogies”, (Mercer, 2005, p.9)), analogies are an effective way to determine an actor’s domain and have been used frequently in the implementation of prospect theory. Moreover, analogies that frame the decision-maker’s situation as loss incurring have convincingly been linked to high-risk decisions (McDermott, 1992, 1998; Mercer, 2005; Brummer, 2012). As McDermott (1998) has shown, U.S. President Jimmy Carter perceived the Iranian hostage crisis as another ‘Bay of Pigs’, framing his own situation as incurring heavy losses, and consequently he became more risk-acceptant to solve the crisis. The same mechanism was also identified in a study on the Suez crisis, when British leaders perceived Nasser as another Hitler, and thus quickly undertook a high-risk attack (Mercer, 2005). To determine the German Chancellor’s domain in 2008 and 2014, analogical reasoning is thus applied alongside prospect theory. While analogies are not
equally prevalent throughout both case studies, due the absence of a theory of the reference point, the inclusion of analogical reasoning in the theoretical framework is necessary to successfully implement prospect theory in the analysis of foreign policy.
Hypotheses
As established in the literature review, existing theories have not been able to account for the different German foreign policy outcomes in 2008 and 2014. Building on theories of individual decision-making and prospect theory in particular, it is predicted that there is a negative relation between Merkel’s domain on the one hand, and Germany’s support for the imposition of sanctions against Russia on the other hand. To explain the variance in the two cases, it is thus expected that Angela Merkel was acting in a domain of losses in 2014, whereas she was not in 2008. Moreover, due to the bureaucratic and democratic nature of German politics, Merkel had to consider these losses as unacceptable as well. To test this theoretical expectation, two hypotheses are formulated.
H1: During the Russo-Georgian war of 2008, Merkel did not act in a domain of losses with the
prospect of unacceptable losses.
H2: During the Ukraine crisis of 2014, Merkel did act in a domain of losses with the prospect
of unacceptable losses.
As detailed, Merkel’s frame of the situation determines in what domain she is acting. The research must thus establish what frames Merkel employed in either crisis. The three indicators of the nature of her frames are Merkel’s language (Welch, 2005), the analogies she has invoked (Mercer, 2005; Brummer, 2012), and “thermometer”-indicators (McDermott, 1992, p.240). On the basis of these indicators it is determined how Merkel framed both crises, and so, in what domain she was acting. The precise operationalisation of these indicators is further discussed in the methods section.
Hypothesis H1 is confirmed if she did not frame her situation as incurring
unacceptable losses, hypothesis H2 is confirmed if she did frame her situation as incurring
unacceptable losses. In the case that both hypotheses are confirmed, it is very likely that Merkel’s acting in a domain of unacceptable losses drove Germany’s support for sanctions
against Russia, as the change in her domain corresponds with the change in German policy. If either hypothesis is rejected, the application of prospect theory to explain the variance in the two cases concerned has been unsuccessful, as Merkel’s domain can no longer explain the two different outcomes. The research design to test the hypotheses is outlined in the next section of the paper.
Research design
In this section a comparative case study design is introduced and the selection of the two cases is justified. Secondly, the dependent and independent variables are specified, and their measurement strategy is detailed. In the third section, discourse analysis is introduced to establish the relation between Merkel’s language and the measurement of the variables. After that, the data-selection strategy is described. Finally, congruence method is introduced to establish how causal inferences can be made in the case studies.
Case-selection
The chosen methodological approach to test the hypotheses is the case study. A case study is a “detailed examination of an aspect of an historical episode to develop or test historical explanations that may be generalizable to other events” (George and Bennett, 2004, p.27). Two cases “of interest to the investigator” (Bennett, 2004, p.21) have been selected: Germany’s response to the Russo-Georgian war of 2008 and the German response to the Ukraine crisis of 2014. These historical events have been selected on the basis of their variance on the dependent variable, i.e. Germany’s decision to impose sanctions on Russia. The cases represent crucial but least-likely tests for the theory, because no variance is otherwise expected in Germany’s foreign policy (George and Bennett, 2004).
As established in the introduction, the two cases are analogous on a number of important dimensions, such as Germany’s political situation, Russia and Germany’s bilateral relations and the nature of the two conflicts. While there are differences between the two cases (such as between Georgia and Ukraine’s economy, location, and size) these variances do not undermine the comparison’s validity (Livingstone, 2016). As such, the cases are compared in a Most Similar Systems Design (MSSD). MSSD is applied when two cases are “as similar as possible, except with regard to the phenomenon, the effects of which we are interested in assessing” (Anckar, 2008, p.389). The advantage of a MSSD is that when it is applied to cases that “differ with respect to the independent variable whereas all contesting variables are kept constant” (Anckar, 2008, p.393), it can explain the differences in the outcome of the cases, and as such the value of the dependent variable.
The case study on the Russo-Georgian war extends from August 7, 2008, when Georgian forces invaded South-Ossetia, up until September 1 that same year, when an EU summit dedicated to the crisis was held. During this summit, the decision whether or not to sanction
Russia was taken, marking the end of the decision-making process. The second case study regards the Ukraine crisis, and starts at the beginning of the Ukrainian revolution, on 18 February 2014, after which the Ukrainian government took a pro-Western stance, definitively marking Russia as its adversary. It ends March 17th, when the first round of
sanctions was imposed. The case studies are conducted after the research design is concluded.
Variables
As discussed above, the two case studies have been selected on the basis of variation in the dependent variable (DV). Variation in the DV can be measured as a binary change in German foreign policy regarding the imposing of sanctions against Russia. The DV’s value is determined by establishing whether or not Germany supported or rejected imposing a regime of diplomatic sanctions against Russia in the European Council. The independent variable (IV) that is empirically examined in this research is the actor’s frame of a situation, representing the domain. Such a frame can take five values: a great gain frame, a moderate gain frame, a neutral frame, a moderate loss frame, and an unacceptable loss frame. The value of the IV is determined by how Merkel describes her situation. A frame is, for example, considered a great gain frame when the situation is described as incurring great gains to the actor’s present situation. It is expected that the relation between the DV and IV is negative and that, observing Welch’s requirements, only the two extreme values of the IV are sufficient to cause a change in the DV’s value.
As discussed, the two primary tools to determine the value of the IV are to qualitatively analyse Merkel’s language and the analogies she employs. However, because it is acknowledged that these are “not always [a] precise indicator[s]”, additional (“imperfect”) indicators are used. These indicators include “the resources [decision-makers] devote to achieving their objectives; the costs they appear willing to pay to achieve them; how much time they devote to the issue in question; its position on their foreign policy agenda; and the degree of material pain and suffering, or social and political stress, for which the gap appears to be responsible” (Welch, 2005, p. 55). McDermott (1992, p.240) describes such indicators of the actor’s frame of a situation’s value as “thermometer”-indicators. Imperfect, but a good guess if you need to know if someone is cold when you are not able to ask them. In
sum, a value is attributed to the IV on the basis of Merkel’s language, her invoked analogies, and by gauging thermometer indicators.
These indicators of the independent variable’s value are operationalised in Table 1. A concise definition of each value is provided in the middle column and the measurable aspects of all three indicators (language, analogy, thermometer) are made explicit in the right column. The specification of the ‘language’ indicator is guided by earlier operationalisations by Welch (2005) and Brummer (2012), the ‘analogy’ indicator by the works of McDermott (1992, 1998), Mercer (2005) and Brummer (2012), and the ‘thermometer’ indicator based on McDermott (1992, 1998) and Welch (2005).
Table 1: Operationalisation of the Independent Variable Independent Variable (IV) Definition Indicators Great gain frame Merkel consistently discusses Russia and its actions in the crisis in a very positive manner.
Language: Russia is repeatedly called an essential partner for cooperation in international affairs, and the bilateral
relationship is hailed as very beneficial. Russia’s role in the current crisis is characterized as important and positive, while the crisis is referred to as completely in line with her policy goals.
Analogy: The situation is compared to a crisis event that was solved in a very positive and sustainable way.
Thermometer: Both the situation and Russia’s efforts are consistently mentioned by Merkel over a prolonged period, and resources to improve relations with Russia are committed. Moderate
gain frame
Russia’s actions in the crisis and Germany’s relationship with Russia are discussed in
primarily positive terms.
Language: Russia is described as a trustworthy partner in international affairs, while Germany’s bilateral relationship with Russia is called
important. Critique on Russia is possible, but only as a mere side-note to the overall positive references. She regards the crisis as in line with her policy goals.
Analogy: A comparison is made with a crisis that was solved in a decent way.
times the crisis is discussed and it is suggested that cooperation with Russia should increase in the future.
Neutral frame
Merkel describes the situation in neither very positive, nor very negative terms.
Language: Positive and negative references to Russia and its behavior in the crisis are
balanced. Criticism on Russia’s actions is paired with mentions of Russia’s good intentions or its importance as a partner in the region.
Analogy: The situation is compared to an event that had no significant negative or positive effects.
Thermometer: The crisis and Russia’s role in it play no significant role in Merkel’s speeches, nor in her actions.
Moderate loss frame
Russia’s actions in the crisis and Germany’s relationship with Russia are discussed in
primarily negative terms.
Language: Russia’s actions are criticized
repeatedly, with references to breaches of trust and law. Mentions of Russia as a valuable partner are only a side-note to the overall negative references. The crisis is regarded as contradicting her policy goals.
Analogy: The situation is compared to a crisis that had negative consequences.
Thermometer: Russia is mentioned frequently but the crisis is not consistently a top-priority or the main subject of Merkel’s speeches.
Germany’s resolve is mentioned, but no resources are committed.
Unacceptable loss frame
Merkel consistently discusses Russia’s actions and its relationship with Germany in a very negative manner.
Language: Russia is only referred to in negative terms. She calls Russia untrustworthy and its actions unlawful. She regards the crisis as a serious threat to German foreign policy goals and as at odds with her norms and values. Analogies: The situation is compared to an event with catastrophic consequences. Thermometer: On several occasions in
succession, speeches are started by discussing Russia and its actions at length. Resources to challenge Russia are committed.
Discourse analysis and data-selection
Guided by these indicators, discourse analysis is employed to determine how Merkel frames a situation. Discourse analysis, the study of language in social context, regards language as performing a function in the construction of an actor’s social realities (Potter and Wetherell, 1987). The way Merkel thus uses her language, and what context she employs it in, is regarded as a representation of her perceptions. As such, by studying Merkel’s language, her frames can be analysed – and so the IV’s value can be determined.
To conduct the research, various speeches by Merkel on the two crises have been selected. These speeches include direct quotes by Merkel that directly regard either crisis in a relevant way. Moreover, the selected speeches come from the period leading up to Merkel’s decision whether or not to impose sanctions on Russia. This is due to the focus of prospect theory on framing during the decision-making process, rather than on ex-post justifications of decisions. As a result, the research is interested in Merkel’s statements in which her view on the situation during the decision-making process is reflected as closely as possible. Consequently, while still considered, speeches that do not fall within this period are not the primary focus of the study.
Based on these criteria, the data sample is made up of three types of primary sources that include Merkel’s statements on the two crises: (1) Regierungserklärungen - Merkel’s periodical statements to the Bundestag; (2) press conferences - Merkel’s statements to the press, typically after a political summit; and (3) travel reports - the official reports issued by the Chancellor’s press office after a visit to a head of state or a political summit. All documents have been provided in German by the Chancellor’s press office. The statements quoted in this research have been translated to English by the author after careful comparison with official translations.
All statements in the research sample are classified as “politics from above” (Fetzer, 2013, p.9). This entails that the statements were made by “leading politicians” in “discourse such as in press releases, speeches, and declarations” (Livingstone, 2016, p.37). As such, all analysed statements are regarded as being directed towards the same audience. Interviews with Merkel have been excluded from the data sample, because interviews relevant to the research were not sufficiently available for the 2008 Georgia war. Statements made in interviews are regarded to have a different audience than ‘politics from above’-statements (Fetzer, 2013). On the basis of the case studies’ most similar systems design, requiring that
as many factors as possible are kept constant, interviews, while possibly a rich source of data, have thus been excluded from the sample.
Furthermore, it is acknowledged that, in general, relying on public statements is an imperfect manner of uncovering decision-making considerations. For instance, more so than being a mirror of Merkel’s perceptions, her statements could have had strategic intentions to impose a certain frame on her audience. Treating Merkel’s language as a mirror of her domain, the assumption underlying this approach, is thus inherently problematic. However, it is a necessary trade-off to make in order to conduct this research. Nonetheless, it should be taken into consideration when the results of this research are assessed.
Research method
The selected cases are analysed through congruence method. The advantage of applying congruence method is that it requires relatively little data, because it does not establish a causal process (George and Bennett, 2004). As such, it is suitable for application to the limited data presented in the two case studies. Congruence method tests whether the historical outcomes of the case studies, i.e. the values of the dependent and independent variables, are consistent with the predictions of the theory (Bennett, 2004). If that is the case, a causal relationship is suggested (George and Bennett, 2004). This entails that if both hypotheses are confirmed, a causal relation between Merkel’s domain and Germany’s decision to impose sanctions on Russia may be present.
Case Studies
In the following section, the two case studies are discussed. Firstly, an introduction is given and the role of Germany in the respective crises is highlighted. After that, the statements of Merkel are discussed, and it is assessed how Merkel perceived her own situation. In the conclusion of the case studies, the value of the variables is determined.
The 2008 Russo-Georgian War
On August 7, 2008, after provocations from all sides, Georgian president Mikheil Saakashvili launched an attack on the secessionist province of South-Ossetia with the aim to take back control over the province. Russia had supported the South-Ossetian and Abkhazian provinces for several years and responded immediately by pushing the Georgian forces back into Georgia proper. On August 12, a ceasefire was signed and a Six-Point plan for peace was brokered by the French President Nicolas Sarkozy. Ten days later Russia withdrew most of its forces. On August 26, Russian president Dimitri Medvedev signed an order recognising the independence of South Ossetia and Abkhazia (King, 2008). From the perspective of Germany and the EU, the episode was concluded on September 1st, when a special EU
Caucasus-summit was held. While the EU sided with Georgia, both Russia and Georgia were condemned for their overreactions. The EU expressed its discontent with Russia’s recognition of the breakaway republics and postponed the talks on a new EU-Russia agreement, but no sanctions were imposed. Only a civilian monitoring mission was deployed (Shagina, 2017; Livingstone, 2016).
Germany’s reluctance to impose sanctions was “crucial” in the “EU’s final decision not to sanction Russia’s aggression in Georgia” (Shagina, 2017, p.78). Together with France, Germany opposed countries that were vehemently pro-sanctions, such as the UK and Poland (Livingstone, 2016). After the crisis, Germany quickly returned to business as usual. Already by October, bilateral talks focusing on cooperation in trade, energy and health were held. While reminding Russia of the disproportionality of its actions and the “non-negotiability” of Georgia’s territorial integrity, Merkel emphasised the importance of keeping the conversation going, especially on difficult subjects such as the recent crisis and reminded the media of the many cultural similarities between their countries (Merkel, 2008a). To
Germany, the Georgia crisis has been significant, but the priority lay on continuing cooperation.
Framing the Russo-Georgian war
Between the start of the crisis and September 1st, Merkel made five public statements
regarding the situation in Georgia. All statements were made after the August 12 ceasefire, during press conferences with foreign heads of state. Merkel made no public statements during the conflict. On August 15 and 17, Merkel visited Georgia and Russia respectively to meet both presidents. The other public statements were made after meetings with Baltic, Nordic, and EU leaders. She did not address the Bundestag in a Regierungserklärung, as the Bundestag was on summer recess.
In the press conferences, Merkel discussed two long-term policy goals: firstly, to support the creation of a stable and peaceful situation in the Caucasus; and secondly, the preservation of Georgia’s self-determination in international affairs (and a possible future NATO-accession). Furthermore, three themes are recurring in the speeches: an emphasis on the urgency of Russian troops to withdraw, the non-negotiability of Georgian territorial integrity, and the need that all parties are involved in the creation of a stable and durable solution for the region. Gradually, her growing concern with the slow retreat of Russian forces becomes apparent. On August 17, in her second address, Merkel related Russia’s reluctance to retreat its forces to “the credibility of all parties” (Bundesregierung, 2008b). This could imply that a further delay of the withdrawal, the first point of the Six-Point plan, should have implications for Merkel’s perception of Russia as a trustworthy partner in international affairs. At the time of Merkel’s fourth speech, on August 26, Russia had retreated most of its forces but in the meanwhile had recognised the two republics. She made it absolutely clear that by this action a red line had been crossed which endangered her policy goals. She called the recognition “a violation of international law” and “completely unacceptable”, as it complicated the peace-process in the Caucasus, an explicit objective of the Chancellor (Bundesregierung, 2008c).
To Merkel, the red line Russia had crossed by recognising the two republics was perceived as the only element of the situation that incurred serious losses. Regarding culpability for the conflict, Merkel had remained neutral throughout and pointed at historical tensions as the source of the conflict. While initially discontent with Russia’s slow
retreat, Russia’s compliance was deemed satisfactory. While no specific analogies were used in the studied documents, Merkel’s language and all thermometer-indicators point at Merkel’s perception of losses not being too extreme. While the crisis featured prominently in her public statements, it only did so for three weeks, and since then this episode is mentioned only a few times. In addition, Merkel chose not to recall the Bundestag for a debate – something she did on several occasions: for instance, when a decision on humanitarian aid to Iraq was necessary in 2014, and also regarding the various decisions on financial aid to Greece (Deutscher Bundestag, 2018).
Based on her statements, Merkel perceived the situation directly after the cease fire in a neutral frame, especially as both sides were cooperative, and a durable solution seemed feasible, the slow withdrawal of Russian forces notwithstanding. Only when Russia recognized South-Ossetia and Abkhazia, did Merkel explicitly voice her discontent and framed Russia’s actions as impeding her policy goals. This indicated that she perceived the situation in a moderate loss frame. However, while Merkel literally called the situation unacceptable, it is not right to conclude that she was acting in an unacceptable loss domain. This is due to the relatively modest attention she had devoted to the crisis and its aftermath, with the overall emphasis on the necessity of cooperation from all sides, and her conviction that a future NATO accession by Georgia was not endangered by the crisis. As such, it is argued that Merkel framed the situation in a moderate loss frame, causing Merkel to act in a moderate loss domain. As Germany did not support sanctions and Merkel acted in a domain that was not incurring unacceptable losses, hypothesis H1 is confirmed.
The 2014 Ukraine crisis
After Ukraine’s president Viktor Yanukovych rejected a trade agreement with the EU, preferring closer cooperation with Russia, a domestic revolution broke out in Ukraine in February 2014. While a new pro-EU government was eventually installed in Kiev, unidentified armed forces took strategic points on the Crimean-peninsula in Eastern-Ukraine. By February 27th, the Crimean Parliament installed a new government and on
March 1st, it requested the Russian government for military assistance to gain independence
from Ukraine. Despite international protests from among others the EU and the US, a referendum on the independence of Crimea and subsequent annexation by Russia was held on March 15th. After the referendum overwhelmingly favoured independence, Crimea was
de facto annexed by Russia the following day (Shagina, 2017; Livingstone, 2016). In response, the EU adopted the first round of sanctions on March 17th targeting 21 individuals
that had been involved in undermining the sovereignty of Ukraine, imposed travel bans and froze financial assets. In later phases of the crisis, the EU imposed two more rounds of sanctions. Russia was also expelled from the G8, and bilateral NATO- and EU-Russia initiatives were suspended (Livingstone, 2016).
Throughout the entire crisis, Germany kept communications with Russia open in an attempt to solve the crisis. German efforts eventually resulted in the Minsk I and II Agreements, signed in September 2014 and February 2015. Meanwhile, Germany firmly sided with Ukraine. After Merkel’s failed attempt to persuade Putin to cancel the Crimea referendum, Russia annexed Crimea, and Germany advocated sanctions, while firmly ruling out military action (Forsberg, 2016; Bundesregierung, 2014a).
Framing the Ukraine crisis
Between the start of the Ukrainian Revolution on 18 February until the imposition of the first round of sanctions on 17 March, Merkel made seven public statements regarding Russian involvement in Ukraine. Six of these statements were press conferences and travel reports after meetings with foreign heads of state. The only statement before the Bundestag in this period was delivered on March 13th. Merkel delivered a second Regierungserklärung three
days after the first round of sanctions was imposed, on 20 March.
Throughout her statements, Russian involvement in Ukraine was described as unconstitutional, as an infringement of Ukraine’s sovereignty, and as a violation of international law. Merkel frequently stated that Russian behaviour that defied international norms stood against a united and resolute EU. The actions Merkel was prepared to take were threefold: (1) “gain an objective picture of the situation on the ground” and establish “a channel of communications between Kiev and Moscow”; (2) provide Ukraine with (humanitarian) assistance; and (3) impose sanctions when all talks have failed. From the outset, Merkel made it clear that military intervention was out of the question (Bundesregierung, 2014a).
When sanctions were first mentioned by Merkel in early 2014, she did not discuss those sanctions as being directed at Russia, but at the Ukrainian government, for refusing to sign the trade agreement. Only in early March, when Russia’s involvement became
increasingly clear notably through its pledge of military assistance to Crimea, sanctions were discussed in relation to Russia. Already by March 6th, Merkel had agreed to the possibility of
imposing sanctions: “Of course we have mutually beneficial relations with Russia, but its actions in Ukraine, and especially in Crimea, demand a response” (Bundesregierung, 2014b). This response was again threefold: talks with Russia on various agreements were to be suspended directly; secondly, the first-round of diplomatic sanctions, which included travel bans and asset freezes, were presented; and thirdly, as a possible next measure, economic sanctions were mentioned. The only way to prevent diplomatic sanctions was by finding a solution to the conflict before March 17th, when the next European Council meeting was to
take place (Bundesregierung, 2014b).
In her March 13 Regierungserklärung, Merkel described the Ukraine conflict as a direct threat to the EU and peace in post-WWII Europe. Inspired by the 100-year anniversary of World War I, Merkel referred to the horrors of the 20th century, notably both World Wars,
the Shoah, and the partition of Europe. Directly after that, she mentioned the “conflict about spheres of influence and territorial claims,” that “we thought we had left behind in the 19th
and 20th century,” “first in Georgia, and now in the heart of Europe” (Bundesregierung,
2014a). Russia did not behave as a “partner for stability” in Ukraine, but it exploited weaknesses, with a disregard for international law (Bundesregierung, 2014a). Because Merkel invoked the same analogy by comparing the conflict in Ukraine “to the bloody conflicts” of a “painful history” in a 27 February speech to the UK Parliament, the analogy is not an ex post justification for her decisions, but actively considered in the phase preceding the decision to impose sanctions (Bundesregierung, 2014c).
By comparing the Ukraine crisis directly with 20th Century catastrophes, Merkel
indicated that she perceived the situation as incurring serious losses. The comparison to the Shoah, especially for a German head of state, was an unequivocal indication of the extent of her loss frame, which was completely unacceptable. The comparison with the 2008 Georgia crisis places both conflicts within a broader pattern of Russian aggression. This implies that Merkel did not rule out future incidents like the Georgia- and Ukraine crises, framing the situation firmly as incurring losses. In that context, she reaffirmed Germany’s support to other Eastern European states, such as Georgia and Moldova. Furthermore, the Ukraine crisis featured very prominently in all her speeches over a prolonged period, serving as its main subject and opener on all occasions. As such, it is argued that Merkel perceived the
situation in an unacceptable loss frame, justifying her support for sanctions and confirming the H2 hypothesis.
Conclusion
The main objective of this paper was to provide an explanation why Germany supported sanctions against Russia following the Ukraine crisis in 2014, while it refrained from doing so after the Russo-Georgian war of 2008. The theories of constructivism and commercial realism, put forward by observers of German foreign policy so far, have not been able to satisfactory account for the change in Germany’s foreign policy. By these approaches the individual level of analysis is often overlooked, and the role of Germany’s Chancellor Angela Merkel in the two crises in particular. By applying prospect theory to Merkel’s decision-making, this paper has studied Germany’s change in policy from a perspective that accounts for agency in the analysis of foreign policy.
The case studies provide evidence for the theoretical argument that in 2014 Merkel acted in an unacceptable loss domain, whereas she acted in a moderate loss domain in 2008. As this is congruent with the expectations as formulated in the two hypotheses, both hypotheses are confirmed. An answer to the research question is thus provided: Germany supported sanctions against Russia following the Ukraine crisis in 2014, while it refrained from doing so after the Russo-Georgian war of 2008, because during the Ukraine crisis of 2014, Merkel perceived her situation as loss incurring while facing unacceptable losses, whereas in 2008 she did not. The requirement introduced by Welch (2005) applies as well: a decision-maker needs to be faced with unacceptable losses, as a loss domain only is not sufficient for a state’s foreign policy to be changed. Summing up, the application of prospect theory to the research question has resulted in a richer and more accurate explanation of Germany’s decision to impose sanctions on Russia.
This paper has shown, as has Brummer (2012) in his study on Schröder’s 1999 decision to participate in the NATO OAF mission, that despite its infrequent application, prospect theory carries explanatory power with regard to Germany’s foreign policy in crisis situations. Moreover, the successful addition of analogical reasoning to prospect theory in order to circumvent the problems posed by the reference point suggests that the challenges posed by “extending prospect theory to explain how political actors make decisions under risk, […] should not be dismissed, but neither should they be exaggerated” (Mercer, 2005, p.18).
The studied cases have provided reliable evidence to support the theoretical argument. Still, further research could expand the data sample with first-hand accounts of
cabinet meetings or with interviews with senior officials from the Chancellor’s office. This way, the empirical base of the argument could be expanded, and a more in-depth understanding of the decision-making process could be acquired.
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