High Expectations - Meagre Results...


The year 2020 was supposed to be the moment for Germany to show leadership in the EU. In fact, it was considered very fortuitous that it was Angela Merkel’s Germany that took over the rotating presidency of the Council of the European Union, especially when considering that in May, the French President succeeded in convincing the Chancellor to sidestep the corona-bonds impasse and support a proposal to fund recovery budget with debts issued by the EU itself rather than member states, and distribute a large share of the funds in the form of grants, rather than loans. This move, combined with high popularity of Chancellor Merkel enjoyed in the spring, many believed would allow Germany as President of the Council of Europe to attempt a qualitative leap forward for the EU. In that respect, it was also felt that Germany could draw from its experience in 2007, when it succeeded in rescuing the Constitutional Treaty of 2004 by carefully managing its incorporation into the Treaty of Lisbon.

Glass facade

However, and only a month before the end of Germany’s Presidency, it is clear that Angela Merkel did not attempt to begin a debate or develop a vision for the European integration project in the years to come. She muddled through the major and urgent issues on agenda of the EU, some of which might be shifted onto the agenda of the next presidencies. Not only does a no-deal Brexit remain a reality, but Hungary and Poland are also blocking the EU budget — and a crucial coronavirus relief plan— over a clause linking the funds to the rule of law. In addition, Franco-German quarrels over “European autonomy” have not ceased, with the German Defense Minister stressing that the USA should remain the backbone of the EU’s security and defense policy and not vice-versa as President Macron has suggested. Last, but not least, the deadlock on migration and asylum continues. Although Germany has agreed to the reception of minor refugees (about 1500) from Greece, the Commission’s New European Pact for Migration and Asylum, has slipped further down the political agenda, not only because of the Corona pandemic, but also because the Presidency of the Council of the EU did not take the lead by prioritizing it on the policy agenda.

Why is this case? Why is Germany not able to deliver? Why Germany is not well placed to build consensus on the above-mentioned issues and provide vision for the future of the EU?

First, the Covid pandemic, one may argue, dominates all plans and agendas. In addition, it has also created problems with regard to logistics and the structure of the presidency (as most negotiations and meetings are held online, virtually). This becomes all the more important when considering that rotating Presidency of the Council of Europe is (just six months) and that the EU agenda is diverse and unwieldy. This reality, when combined with the consequences of Covid, do not allow for any Presidency to suggest and negotiate for bold reforms.

Second, and as the Brexit negotiations illustrate, Britain’s withdrawal has not increased Germany’s role, but has isolated Germany. Not only has it hurt the German economy, but it has also moved power to the so-called “frugal” member states of the EU. Their resistance to issue a common bond to finance the economic recovery from the coronavirus, not only resembles British positions back in the 1980s, but also underlines a significantly different view on the future of European integration. The same can be said of President Macron, who is positioning France to become the leader of the EU. However, even if Germany and France agreed to renew and forge Franco-German leadership in the post-Brexit EU, they would be challenged. This is clear not only in the case of the “frugal four”, but also in the case of the so-called Visegrád group (Czech Republic, Hungary, Poland and Slovakia), who perceived the UK to be the countervailing force against Germany and France and therefore are not hesitant at all at obstructing further integration in key EU policy fields, such as immigration or Eurozone reforms. If Germany or France want to avoid this, it is important that they coordinate their positions and policies with the smaller states of the EU, and in so doing avoid the kind of exclusive practice of bilateralism that characterized their efforts to manage and deal with the debt crisis.

Beyond these reasons, however, one also has to come to terms with the fact that Germany is not yet willing to supply the leadership the EU needs. It lacks what may be described as strategic thinking, as it has yet to discover its true role in Europe. The German government during the last 10 to 15 years has spent most of its energy opposing positions and policy proposals regarding the future and saliency of the EU, especially on the eurozone. Despite Angela Merkel’s and Germany’s government constant calls for “more Europe”, no attempts were or have been made to define what this means or providing the resources for this to happen. In fact, one may argue that Germany shares the same views as the “frugal four”, but does so more diplomatically, doing just enough to prevent the collapse of the EU or the eurozone, but never what is required to fix the underlying problems.

Its European climate policies are a very good example. Thus, and although climate and environmental protection is one of Germany’s priorities during its Presidency, Berlin is not willing to provide the funding needed for the European Commission’s ambitious Green Deal. The German finance ministry has made clear it will not pay more into the EU budget to bolster the Commission’s ambitious €1 trillion Green Deal. German politicians have consistently warned Brussels against any attempt to loosen the EU fiscal rules in a bid to free up spending on green projects, and they have also dismissed the idea of increasing the EIB’s capital to unleash climate funding.

Thus, and despite the economic and other gains the EU has provided for Germany, the future of the EU does not appear to be of vital importance in its policy. Indicative are Berlin’s initial decisions of export bans and border closures during the outbreak of the coronavirus. Thus, Merkel’s reversal by supporting the recovery fund for the EU after the pandemic may be more about her concern for her political legacy. Even if this is not the case, defining the July 2020 agreement on the corona recovery fund as an effort to deal collectively, Germany in fact also defined the limits of the new deal. The agreement on the fund does not resolve any issues of the era of the eurozone crisis, let alone mention them. The challenge was entirely on how new money could be raised by the EU, not the old debts that continue to burden the public accounts of Italy, Spain, Greece. In fact, what was also agreed in the discussions of the European Council was a new control mechanism, a process through which the European nations review and criticize each other’s use of the common funds. As skeptics have observed, and rightly so, this pushes conflict off into the future.

Germany, it is clear, has failed to begin an internal debate about the country’s role and leadership in the EU. It is wrong to focus only on what is “financially desirable”. The challenge is to focus on what is “politically necessary” for a country that depends on a viable, cohesive EU for its economic competitiveness and global influence more than most powers of its size. A solution to this dilemma would be to give the euro area and the EU a proper government, with its own tax revenues and budget powers. Also, Germany should contribute to the development of a credible EU foreign policy, instead, for example, of allowing only France to cover the vacuum of the USA in the Middle East. To do it needs to stop thinking of everything only in terms of economic growth and export promotion. At a moment when Germany’s most important trading partners increasingly extend beyond its close strategic allies, this policy is conducive to empowering Europe.  A clear example is China. With Germany exporting nearly €100 billion worth of goods to China, accounting for more than half of the value of all EU exports, Germany treats China lightly on human rights.

The same can be said for Turkey’s stance in the Aegean and Cyprus. Although Germany condemns President Erdogan’s unilateral actions and pushes for a diplomatic solution, at the same time it also values its economic ties with Turkey and does not want to impose sanctions. These would harm its economy and affect the lucrative military deals (e.g. the delivery of six Type 214 submarines ordered by Turkey).

So, the question is not whether or not Germany’s presidency was a success. A cursory look at what Germany stood for in the last 10 to 15 years should have lowered one’s expectations in order to avoid disappointment.  It would have been more than welcoming if Germany thought out of the box moving forward with a banking union or developing a more aggressive policy to China. Until that happens, and especially by the end of 2020, Germany needs to secure the realization EU coronavirus recovery fund. If it does not, the economies of the EU could enter a free fall which could in turn provide fertile ground for the return of populist parties and eurorejection courses. To many, this problem could be overcome outside the EU’s budget, as an "intergovernmental agreement" between countries. That, however, would not be overly complicated and time-consuming, but potentially could lead to a repeat of the problems the member states faced in managing the eurozone debt crisis. If this was to happen in 2021, which is an election year for Germany, could prove to be the biggest obstacle in meeting expectations abroad for transformative leadership in the EU. In fact, the narrative of Germany undertaking the responsibility of being the “paymaster” of the EU, one that Germany’s establishment fueled since the beginning to the debt crisis, could come back to haunt Germany’s ability to step up at a critical moment for Europe.