As Good As It Gets – The EU Policy of Germany’s New Government

Barbara Lippert | 13 February 2018

© 2018 Deutscher Bundestag, Achim Melde

If (and that is a big if) the black-red government finally takes office six months after the September 2017 election in Germany, it will take a pro-European approach. By the EU standards of today, this is in itself remarkable; by German standards, it is nothing special.

Even German chancellors who came into office as non-enthusiastic Europeans – like Helmut Schmidt, Gerhard Schröder and Angela Merkel – swiftly learned to enjoy the European stage and EU summitry. However, the first chapter of the coalition agreement, dedicated to EU affairs, promises not just business as usual, but a new beginning for Europe. The new government (Merkel IV) wants to open up new horizons for the EU.

For the SPD, it is important that the new administration distances itself from former finance minister Wolfgang Schäuble’s stubbornness on financial consolidation and Merkel’s managerial mode of governance. Yet the difference might well be one of style and tone, rather than substance. Putting the EU chapter at the helm of the document is meant to highlight its importance and the joint political commitment of the three parties (CDU, CSU and SPD). However, European integration is not a political leitmotif running through the 177-page document. Neither is the European Union a source of inspiration for domestic politics – nor, in fact, do the CDU/CSU and SPD float fresh ideas for the Brussels’ political arena or take firm positions on specific questions.

That EU issues were almost absent from the election campaigns of all three parties is a reflection of this dire state of affairs. It stands however in stark contrast to the manifold transnational and global challenges that the parties describe at length in their coalition agreement. A lack of ideas and political vision is combined with pragmatism. Judging by the coalition paper and given the chaotic run-up to the formation of the new government, Germany’s future EU policy is as good as it gets.

A post-functionalist constellation in Germany and the EU

Like governments in other EU countries, the new German government must operate in a post-functionalist constellation. This means, on the one hand, that there are still very good reasons to argue for ‘more integration’ – the transfer of competences in specific areas to the EU level, operating through complex modes of governance. The reasoning is to improve problem-solving, spend money more efficiently, pool instruments and multiply resources for effective governance. It therefore makes sense, for instance, to beef up Frontex for better border control or strengthen defence capabilities through permanently structured cooperation (PESCO).

On the other hand, however, reactions in member states to the massive influx of refugees and to the sovereign debt and financial crises have showed that the transfer of competences did not bring a transfer of loyalty to the EU level. Resistance to the functionalist logic and political spillover is spreading across EU member states, both within political parties and among citizens. Rationalist, positive-sum policy making is opposed by a different set of values that are bound to collective identities framed as nation or region, religion, culture or ethnicity. Policy choices based on these values and preferences can hardly be tackled by the standard procedures of bargaining and give-and-take within the EU. One might interpret the British vote to leave the Union as a good illustration of identity politics.

Fuelled by the refugee influx in 2015, this kind of political polarisation and mobilisation peaked in 2016-2017 and turned the Alternative for Germany party (AfD) into the biggest opposition party in the new Bundestag. For the moment and thanks to Brexit, the erosion of the permissive consensus on the EU has slowed down but, across parties and their constituencies, scepticism towards further supranationalisation of the EU is growing in Germany too. Public dissent over traditional EU policy will constrain Berlin’s room for policy making in Brussels and demands extra effort to argue publicly in favour of further integration.

Out of the three promises guiding the coalition agreement – a new beginning, a new dynamic and a new cohesion (Zusammenhalt) – the latter is the most urgent. If there is one theme running through the statements from the coalition parties, it is a fear of divided societies, the unravelling of the EU and an erosion of the institutions of representative democracies.

The creed of the acting and new governments to keep the EU together might be more severely tested in the future. The friendly words on Poland and Hungary in the coalition agreement cannot paint over how slippery those bilateral relationships have become. On the one hand, Germany wants to stand firm on principles, asking the Commission to explore legal possibilities to tie the transfer of structural and other EU funds to rule of law standards. On the other hand, Germany as the staunchest supporter of enlargement for reasons of history and geography, cannot politically afford to lose the Visegrád countries. Berlin counts on a strengthened cooperation with Paris and seeks common positions across the board with regard to EU and international politics. The new Elysée Treaty is just the symbol of a renewed partnership. Areas for French-German dynamism seem to lie more in the field of economy, technology and innovation, but there is less clarity in areas like fiscal policy, eurozone integration or institutional reform.

The coalition agreement – vague considerations with a positive tone

Overall, the agreement combines strategic vagueness with a positive tone and some interesting policy elements. Here is a brief look at some issues:

The paragraphs on economy and finance show an SPD imprint, with some soft rebalancing from the CDU/CSU. It is basically an opening to proposals from France and Southern EU members. It calls for the transformation of the European Stability Mechanism (ESM) into a European Monetary Fund under EU law (not necessarily primary law) with control by the European Parliament, but also not limiting the rights of national parliaments. It also includes modest investment funds for eurozone members, but not necessarily installed as a separate budget. It could be the beginning of new instruments for financial transfers to stabilise troubled members in the eurozone, provided they carry out structural reforms and consolidate domestic budgets in the spirit of the Stability and Growth Pact. Glimpses of a future transfer union are thus embedded in a stability union, with tensions between them lingering on. There is of course no mention of an EU finance minister, but a plea for better fiscal control and economic coordination.

That the German government is ready to contribute more to the next EU budget is a direct consequence of the gap left behind by Brexit. It is also a political signal that the debate should not necessarily start top-down from a fixed ceiling of 1.0%. It seems that the government is willing to look at what is necessary so that the EU can achieve its goals and tasks. In this regard, it is disappointing that a modernisation of the EU budget – shifting money from the CAP and cohesion policy to new policies, such as growth strategies or security, as well as developing new income instruments (such as an EU carbon tax) – is not a priority. On the contrary, it preserves the status quo in regional policy and agriculture. Thus, its reference to European added value sounds a bit hollow.

Migration policy is – for very different reasons – still a battleground in domestic politics. The debate concerns mostly asylum and refugee policy, and the practical challenges of integrating immigrants into German society. Despite the quarrels around family reunion, there seems to be a solid consensus that the processes of migration need better control and steering, and hence restriction, while respecting international and EU law. As far as the EU is concerned, the coalition supports the common European asylum system, wants to reform the Dublin procedure, and will look for a fair distribution of those who need protection. This is spelt out as: preventing secondary migration, as well as harmonising standards of subsistence and housing, so that a race to the bottom is avoided. The government supports a common EU approach for processing asylum cases at the EU’s external borders and returning refugees.

Thanks to PESCO, it is easy to exhibit the EU’s Common Security and Defence Policy as a field showing that the EU is still able to get its act together. Germany is also ready to spend more on the military, however not in the master-student way of President Macron. The compromise formula reads that spending on defence and development should rise in sync. Interestingly, there is little on the European foreign policy and diplomacy – nothing like a leap towards a political reform of CFSP, with an extension of qualified majority voting. Instead, the agreement mentions practical measures such as using the European Defence Fund, advancing the EU Headquarters and PESCO projects, but also establishing a PESCO-like civilian structure. Considering new challenges from the United States, China, and Russia, the coalition agreement reaffirms Merkel’s earlier stance that ‘Europe must take its fate into its own hands more than before’.

Similarly, on enlargement the new government does not go beyond what is already the political status quo, based on the renewed consensus on enlargement of 2007: consolidation of membership perspectives, strict conditionality and better communication. It also repeats that the EU’s capacity to act (its absorption capacity) must be considered. Thus, the membership perspective of the Western Balkan countries is reaffirmed, but Turkey’s is not. The reason given is not the deterioration in the bilateral relationship, but the decline of democracy, the rule of law and human rights in Turkey. Hence, it calls for negotiations to be frozen, and no negotiation chapter to be opened or closed. Visa liberalisation and extension of the customs union – both blocked by Germany and some other EU countries – depend on Ankara fulfilling the political conditions set by the EU. Turkey is thus downgraded to an important partner, with whom Berlin seeks a good relationship.

Germany has always been committed to institutional reform of the EU, formerly called deepening. The word itself and probably the concept is withering away. More important is the uncertainty about the direction of the EU’s political system: further parlamentarisation or presidentialisation, more direct democracy, more majoritarianism and less consociationalism. The focus is, not surprisingly with Schulz as chief negotiator, on strengthening the European Parliament which, put in these vague terms, always sounds good. There is no mentioning of the ‘Spitzenkandidaten’ system or of transnational lists, which are seen more sceptically in the CDU/CSU than in the SPD. The idea of national consultations echoes Macron’s proposals, but without the anti-party and pro-movement twist.

Outlook – no magic moment

Taken together, the coalition agreement is neither a powerful nor clear answer to Macron. But a coalition agreement is not a speech, and even in her first government statement (Regierungserklärung) as chancellor of the so-called grand coalition or of a minority government, Merkel cannot be expected to deliver anything close to the firework of proposals in Macron’s Sorbonne speech. Hopefully, she and her new cabinet will further develop the themes of a new beginning, new dynamic, new solidarity and cohesion. Possible EU projects are the security union and modernising the budget through investment in new policies and policy instruments – with readiness to put in fresh money and principled realism that at the same time acts against an East-West divide on values.

Merkel likes to quote a verse from Hermann Hesse’s poem ‘Stufen’ (steps) which says that in every beginning there is some magic. This time it might be different. The black-red coalition starts in a poisoned and suspicious atmosphere. After its majority melted from almost 80 per cent of Bundestag seats to just 56 per cent, the new government does not have a strong political mandate and might not serve for the full term. But its 177-page programme is the best you can get in German EU politics these days.

Barbara LippertBarbara Lippert

Stiftung Wissenschaft und Politik

Dr Barbara Lippert is Director of Research at the Stiftung Wissenschaft und Politik (SWP). Her research focuses on EU enlargement policy and Germany’s approach to European affairs. She is Advisory Board Member of the Scottish Centre on European Relations.