On September 26, Germany’s center-left Social Democratic Party (SPD) claimed victory in the election with 25.7 percent of the vote, closely followed by the center-right CDU-CSU at 24.1 percent. But the election results are muddled and building a new ruling coalition will not be easy. As coalition negotiations are underway, we could see changes in German-Caspian relations. With one of the world’s largest economies and significant political clout, Germany has approached the Caspian region with caution. While many experts forecast no major changes in the overall thrust of German foreign policy, decisions made in forming the new government in Berlin could mean shifts in how and on what Germany engages the South Caucasus and Caspian.

Stability in the South Caucasus directly affects European security along its Black Sea flank. Developments in the South Caucasus and Central Asia are increasingly shaping EU-Russia, EU-U.S., and EU-Turkey relations and vice versa. Germany has been a key figure in the region, taking a leading role in engaging Russia on Ukraine, opposing Turkey’s actions in the Eastern Mediterranean, and as a party to the Joint Comprehensive Plan of Action (JCPOA) with Iran. Moving forward, Germany will also need to pay more attention to the role and ambitions of China, as well as to how Germany will deal with Afghanistan in terms of its domestic development and the risk of terrorism and other destabilizing impacts on Eurasia. German assets, whether in terms of development assistance or political clout, are essential as the world works to address both these high-profile matters. Germany’s weight in the international trading system gives it further leverage, including when engaging with China.

Germany’s involvement with the South Caucasus, both bilateral and in the context of the EU or the OSCE, is directly tied to its interests in the region’s overall stability and prosperity, as well as the countries’ self-determination. German economic ties to the region are also important. Azerbaijan is Germany’s 6th largest oil supplier and the top recipient of German foreign direct investment in the South Caucasus. Germany is also Armenia’s principal trading partner in the EU and one of the most important foreign direct investors in the country. Moreover, even as it aspires to be a leader in fighting climate change, Germany is interested in Caspian energy resources and pipelines to Europe, as they are vital for Europe’s energy security. However, the outgoing German government’s support for the Nord Stream II pipeline, bringing gas from Russia to Germany and bypassing Ukraine, has raised serious doubts about Germany’s commitment to ensuring European energy security and to confronting Russian actions to weaponize gas supplies. Moving forward, some experts suggest the Greens might take a stronger stance against Nord Stream if they are to join the coalition, even if only because of their deep focus on environmental concerns. 

Germany engages with the South Caucasus through the OSCE and NATO as well as via its direct bilateral relations. The 2016 OSCE Chairperson-in-Office was German Foreign Minister Frank-Walter Steinmeier, who looked to reenergize efforts to address the Nagorno-Karabakh conflict and open opportunities for peace talks. After the April 2016 four-day war, Steinmeier met with the Armenian and Azerbaijani leadership. While no significant breakthrough occurred during Steinmeier’s leadership, Germany remains a member of the Minsk Group with a strong interest in the health and success of the broader European security architecture.

Furthermore, Germany supports Armenia moving closer to the EU and NATO and has advocated for closer EU-Georgia political and trade ties, especially considering tensions between Russia and the West over Ukraine. At the same time, as a key NATO partner and looking at Georgia’s inclusion in the alliance, Chancellor Angela Merkel has in the past ruled out any fast-track NATO membership for Georgia. Berlin has argued that a deal to bring in Georgia would lead to Russia being less willing to work with the U.S. and NATO on missile defense and disarmament issues. Problems surrounding Abkhazia and South Ossetia and the repression of opposition movements have also made Germany wary of accepting Georgia’s application. Depending on the makeup of the new government coalition, Germany may take a harder stance towards Russia, and warm up to the idea of more security integration with the South Caucasus. While both Scholz and Laschet have signaled that they would not veer far away from Merkel’s approach to Russia, which separated diplomatic criticism from economic cooperation, the Greens are significantly more hawkish. If the party regains the foreign ministry, it could mean a much more critical position on Russia. FDP has echoed similar criticisms against German engagement with Russia, especially criticizing the Nord Stream 2 pipeline. Which parties join the new coalition and which ministries they win may also affect how Germany approaches human rights and democratic development questions; in recent years Germany has preferred to address these issues quietly rather than through public statements.

With no one party gaining a majority in the Bundestag, a coalition government is inevitable. The question of which parties will lead the government, and what compromises will have to be made, is still unclear. The main contenders for chancellor, the SPD’s Olaf Scholz and CDU-CSU’s Armin Laschet, are in negotiations with other parties to try and form a government. Right now, both the SPD and CDU-CSU see the Greens and the liberal FDP as the parties to target as coalition partners. But with the Greens and FDP having such different philosophies on Germany's climate strategy, the outcome of coalition negotiations could well have an impact on Germany’s future stance on energy and climate matters, including the future of the contentious Nord Stream 2 gas pipeline and developing energy sources. Such policies could have a large effect on energy exports coming from the South Caucasus as well as on western policies towards climate and future energy systems more broadly. Even if there are no fundamental policy shifts, changes in tactics and tone in terms of German engagement will have important impacts.