The foiled putsch in Berlin may not have widespread support, but is indicative of disagreements about German culture and the country’s relations with Europe, Russia and China
The recent attempted coup in Berlin leaves observers asking three questions: Was this a serious threat to democracy? Is the country suffering a major cultural and identity crisis? Where does this leave Germany as a key European market for investment and financial services?
The ultra-right plotters of the foiled putsch were apparently followers of 71-year-old Heinrich XIII Prince Reuss. The eccentric descendant of minor German royalty, associated with the Reichsburger anti-Republican movement, was among 25 alleged conspirators planning an armed takeover of the Bundestag, Berlin’s federal parliament.
Emboldened by the January storming of the US Capitol, while this German cohort of malcontents are not considered to form a serious force for political change, a closer look at the social make-up of the conspirators is still warranted.
Under surveillance
Among those arrested was Berlin judge Birgit Malsack-Winkemann, slated to become justice minister in the plotters’ post-coup administration. Parts of her far-right Alternative for Germany (AfD) party have been under surveillance of Germany’s domestic intelligence services and political observers stress “she is not your ordinary run-of-the-mill judge”.
While a report from the respected Frankfurt-based Hessenchau website suggests plotters include “members of the Special Forces Command and the paratroopers of the German Armed Forces, as well as doctors and entrepreneurs”, the fact they were caught unawares shows they were not sufficiently connected with state machinery to receive critical intelligence from authorities.
“There was no coup attempt, just a network of delusional right-wing extremists whose plans were cut short by Germany’s police force long before coming into fruition,” says Dominik Meier, founder of Berlin-based government relations consultancy Miller & Meier. “German citizens appreciate their stable liberal society and have no penchant for popular uprising. Germany in 2022 is an open-minded, pluralistic country – and this won’t change anytime soon.”
Divided society
Popular dissatisfaction does not translate into widespread support for the band of ideologues involved in the conspiracy, he says. But it does reflect an undeniable division in German society about how to deal with Russia’s aggression against Ukraine. Moreover, the inner clique of government is also split on whether trade relations with China have become too close, leading to potential national security implications.
Internal discussion about German culture and identity is similarly polarised. “Currently, there is a passionate and emotional debate taking place about what it means to be a German with respect to reform of immigration law,” says Mr Meier. “Germans disagree about whether their country should make immigration easier and whether their law of citizenship should be one of ius sanguinis or ius solis.”
These two, key terminologies in German law are championed by rival camps propagating the ‘law of blood’ versus the ‘law of soil’ respectively, “but only a few very misguided Germans are longing to return to the days of the Kaiser,” confirms Mr Meier.
There is agreement from other sources that while the arrests are connected to a “fringe movement”, it must be placed within a broader context.
A failing integration project, involving some transfer of sovereignty from Berlin to Brussels, has fed resentment in Euro-sceptic parts of German society, believes Raphael Gallardo, chief economist with the multi-asset team at investment house Carmignac.
But some investors see a positive story, despite Berlin’s litany of political problems and a trade system seeking to redefine its geopolitical orientation.
Backing the new paradigm
“I think this was a real shock for them, but I would say they didn’t feel the democracy of the country was in any danger,” says Vincent Lecomte, CEO of BNP Paribas Wealth Management, responsible for overseeing growth of the bank’s German operation, from zero to managing assets worth €15bn, over a 10-year period.
“The real topics of discussion for our clients in the German Mittelstand – including exporters and innovators – are how to adapt to the new paradigm, particularly the trade relationship with China, to keep the show going. We have signed a number of very significant deals in Germany with entrepreneurs on the private side, and credit is always part of the story.”
Many are also swept along by a cultural urgency to invest in residential property and commercial real estate within their local region.
A strategic announcement by Germany’s leading fund manager, DWS, made on the same day as the arrests, did not mention the dramatic events in Berlin, preferring to focus on a “renaissance” of active management, “significant upside potential in the alternatives space” and renewed commitment to the environmental, social and governance (ESG) space.
DWS has previously come under fire for its approach to ESG, particularly clean energy transition, which is of particular importance to the German public, following the government’s commitment to wean the country away from Russian-sourced fossil fuels.
Talking about a “much-needed green transition of the European economy”, DWS CEO Stefan Hoops said: “We remain fully committed to ESG. It is a top priority for our clients and, as one of the largest asset managers in the world, we owe it to society to stick to our commitments.”
