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Saint Angela of Europe

How Angela Merkel could effectively operate at the just-concluded European Summit on the basis of a well-hedged position

By: EBR - Posted: Wednesday, July 22, 2020

"If the deal had passed as envisioned, Merkel could claim full credit. And if it passed, as has now happened, with significant conditions attached, she can claim that she tried to be very generous, but that there simply was too much determined opposition."
"If the deal had passed as envisioned, Merkel could claim full credit. And if it passed, as has now happened, with significant conditions attached, she can claim that she tried to be very generous, but that there simply was too much determined opposition."

by Stephan Richter*

Ever since the arrival of Donald Trump in the Oval Office, there has been an understandable desire in the international realm toward the “sanctification” of Angela Merkel.

An experienced leader and strong advocate of global cooperation, Merkel represents the opposite of Trump — both in terms of his bottomless pomposity and extreme nationalism.

But even admirers of the German Chancellor — both at home and abroad — have long been concerned that she has often tended to act in a rather timid fashion.

In particular, they have found her commitment wanting when it came to the EU’s financial and economic infrastructure.

Legacy talk

At the same time, with Merkel facing her last 15 or so months as German Chancellor, the suggestions became ever stronger for her focus on shaping her European legacy.

So it was with a great deal of relief that the advocates of more financial integration in Europe in late May heard the news of a deal between French President Emmanuel Macron and Chancellor Merkel.

The Merkel-Macron deal

Appearing in a joint video conference, the two leaders announced their commitment to the establishment of a 500 billion euro EU recovery fund to deal with the economic fallout of the Coronavirus crisis.

Here it was at last, the reformers rejoiced: A clear commitment of Germany to doing much more financially. And what a wonderful testament to the cause of European solidarity. As well as a true capstone for Merkel’s legacy.

A wonderful testament to European solidarity?

After the just-concluded, four-day marathon European Summit, it basically worked out that way.

Evidently, the key battles about the establishment of the EU post-corona relief fund concerned two questions:

1. How much of the money is made available to the affected countries as a loan and how much as a grant?

2. And what kind of conditions will be attached?

No strings attached for Italy?

The Italians, of course, wanted only grants and no conditions. Interestingly, the Spaniards were not so absolutely opposed to some form of conditionality. No big surprise here: They actually have a much better track-record — not only on accepting advice from the European level — but also acting upon it.

Moreover, it bears pointing out that the oft-heard argument that the EU countries needed to be especially generous to Italy in order to prevent a right-wing government there stands on some shaky grounds.

Even though the country will get generous disbursements from the EU recovery fund, a right-wing government is unfortunately still in the cards in Italy.

In addition, doubts about Italy’s ability to implement meaningful reforms are still very much apropos. If past experience repeats itself this time around, it is safe to assume that Italy will no longer be able to count on much forbearance from its EU partners.

Merkel’s fortunate European Summit constellation

Not that Angela Merkel or the German government for that matter would ever admit it, but there was a very effective division of labor at work during the past months’ discussions.

In the past, the German government would likely have made arguments along the lines of the “frugal four” (or five, counting in Finland in addition to the governments of the Netherlands, Austria, Denmark and Sweden).

In particular, Merkel knew that she could count on the stubbornness and experience of Mark Rutte, the Dutch prime minister, to play tough guy.

Germany’s hedged position

It is fair to assume that at least most MPs representing the CDU/CSU, the majority party in the German government, subscribe to Rutte’s views for the most part.

Moreover, opinion polls indicated that most German voters are in favor of a largely loan-based, not a grant-based, EU recovery fund.

All of which allowed Angela Merkel to have her country play the role of the EU presidency. She could agree with Emmanuel Macron and rely on Rutte playing the pre-Brexit role of the British (as well as that of the proverbial, usually German, “Swabian housewife” looking after her pennies).

As a protestant herself, Merkel knew from experience that the three very “protestant” governments (Netherlands, Sweden, Denmark) plus the Catholic outlier Austria would fight very hard to structure the recovery fund in a balanced manner.

Merkel can’t lose

Hence, there was no need for the German government to line up in that corner. Instead, it was happy to let the Dutch take the blame for what traditionally has been the German position in the EU.

That is why the Merkel team, thanks to the “Frugal Four,” was in a no-lose position.

If the deal had passed as envisioned, Merkel could claim full credit. And if it passed, as has now happened, with significant conditions attached, she can claim that she tried to be very generous, but that there simply was too much determined opposition.

That’s what, in political terms, one calls a fully hedged position.

*publisher and editor-in-chief of The Globalist
**first published in: www.theglobalist.com

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