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Can Germany Provide Leadership to Europe?

Berlin’s ability and willingness to lead Europe cannot be taken for granted. Any new coalition will first have to overcome major internal differences on climate, foreign policy, and defense before tackling the EU’s future direction

By: EBR - Posted: Thursday, September 30, 2021

"The outcome of the German election points to two possible three-party coalitions, depending on which one between the Social Democratic Party’s (SPD) Olaf Scholz and Christian Democratic Union’s (CDU) Armin Laschet the liberal Free Democratic Party (FDP) and the Greens will support as chancellor."
"The outcome of the German election points to two possible three-party coalitions, depending on which one between the Social Democratic Party’s (SPD) Olaf Scholz and Christian Democratic Union’s (CDU) Armin Laschet the liberal Free Democratic Party (FDP) and the Greens will support as chancellor."

by Judy Dempsey*

CORNELIUS ADEBAHR/ NONRESIDENT FELLOW AT CARNEGIE EUROPE

Of course, it could—just like in the land of the blind, the one-eyed man is king. So it wouldn’t be Germany actively grasping the mantle of leadership but rather donning it because no other member state does so.

On Sunday, Germans voted for careful change, strengthening the political center rather than the extremes without much of a fuss. That’s more than can be said of France (the other potential leader of Europe going to the polls next, in April 2022) or Italy (voting again… whenever).

Still, it would take a federal government coalition that is ready to tackle all the burning issues for domestic reasons, not because the next chancellor wants to be a leader in and for Europe.

The effects of climate change have now reached the German countryside. And pensions are an issue precisely because of the obvious demographic trends. Tax reform is needed not only to cover the rising cost of the pandemic but also to lessen the gaping inequalities, even in a country that is better off than many others. In that sense, Germany can provide leadership not out of ambition but rather as a side effect of good governance at home.

RICCARDO ALCARO/ RESEARCH COORDINATOR AND HEAD OF THE GLOBAL ACTORS PROGRAMME AT THE ISTITUTO AFFARI INTERNAZIONALI (IAI)

The outcome of the German election points to two possible three-party coalitions, depending on which one between the Social Democratic Party’s (SPD) Olaf Scholz and Christian Democratic Union’s (CDU) Armin Laschet the liberal Free Democratic Party (FDP) and the Greens will support as chancellor.

If it is Laschet, the combined weight of the CDU/CSU and fiscally prudent FDP would likely result in Germany dragging its feet on loosening the Eurozone’s tight fiscal rules once the coronavirus emergency fades.

While that would be a welcome outcome for self-styled frugal EU member states, an inability to build upon the innovation of Next Generation EU—especially the greatly expanded borrowing powers of the European Commission—would dent the German government’s leadership capacity, as France, Italy, and other EU countries would hardly acquiesce to that without a fight.

If the FDP and the Greens were to back Scholz and the SPD instead, there would be greater room for Germany to embrace a reform agenda of the Eurozone’s macroeconomic handbook, although no major breakthrough can be expected due to resistance from the FDP.

Neither coalition option is likely to result in major changes to Germany’s foreign and security policy, even if both the FDP and the Greens will push for a harder approach to Russia and China and deepen intra-EU defense cooperation.

Either way, climate would be higher on the agenda than it has been so far, and that could bolster the EU Green Deal and make the EU a stronger player in global climate politics.

THORSTEN BENNER/ CO-FOUNDER AND DIRECTOR OF THE GLOBAL PUBLIC POLICY INSTITUTE

“Those who request leadership from me should know that they will indeed receive it.” This is one of the most memorable expressions of Olaf Scholz, the man best placed to succeed Angela Merkel.

Those calling for German leadership in Europe might do well to reflect on this phrase. Is their call for Berlin’s leadership nothing more than a shorthand for “Germany should do what I think is best”?

Might they not be well advised to be careful what they wish for in case the German leaders in question have different plans?

The good and bad news is that the new coalition government is unlikely to pursue radical policies for Europe.

Most observers will likely continue to be disappointed with German leadership. But we may well be surprised that a new government can pull off some improvements: a China policy that breaks with Merkel’s defeatism, a more principled stance on defending the rule of law in the EU, in particular against Hungarian Prime Minister Viktor Orban’s illiberal state project, plus an ambitious industrial, innovation, and climate policy that is tied into an EU-wide agenda and cares not only about the fate of German companies but also about advancing the European innovation base as a whole.

KRZYSZTOF BLEDOWSKI/ SENIOR COUNCIL DIRECTOR AND SENIOR ECONOMIST AT THE MANUFACTURERS ALLIANCE FOR PRODUCTIVITY AND INNOVATION

It will be difficult. But even if Germany does step up to the challenge, it might not succeed.

Seventy-six percent of voters cast their ballots for the four reliably pro-European parties in the recent election. Thus, regardless of the future government’s composition, its political compass will orient toward supporting European integration. In fact, it’s hard to overstate how blessed the EU has been over the years with German political stability.

And yet, those longingly looking up to the country as the biblical “City on a Hill” might be disappointed.

The price of forming a stable coalition will be a diminished internal capacity to develop cogent external policies. German politics is unlikely to coalesce around pushing European policies to, say, reach the digital frontier or convince the EU to push back decisively against an aggressive China and Russia.

And even if Germany did find the will to act strategically, the rest of Europe might not play along. Closing ranks with the friendly Joe Biden administration in the United States on critical issues, such as World Trade Organization reform or a transatlantic trade deal, would benefit the EU. Yet, Germany may not possess the soft power needed to serve as a credible transatlantic broker.

In the end, the best that Europe can hope for is for Germany to form a stable coalition, fast. Providing leadership is a long shot.

HEATHER CONLEY/ SENIOR VICE PRESIDENT FOR THE EUROPE, EURASIA, AND ARCTIC AT THE CENTER FOR STRATEGIC AND INTERNATIONAL STUDIES

As the largest economy and population within the EU, Germany leads Europe but through its own unique form of self-interested, persistent leadership.

This contrasts sharply with the demands, made by mostly non-Germans, who want Berlin to lead very differently.

Germany leads by pursuing its national interests wrapped in European or multilateral policy approaches—a key reason why so many German officials lead so many important EU institutions.

There are three primary German interests:(1) internal and external stability; (2) fiscal thrift and low inflation; and (3) ensuring the continued strength of the German export economy.

Germany will persistently pursue these inwardly focused interests until it is forced, frequently in response to a dramatic event, to quickly—and likely without consultation—alter its policies.

Sunday’s election was a reflection of Germany’s quest for political stability and its avoidance of discussing important issues.

Because there are growing internal divisions about the way forward on German and European fiscal and monetary policy that have yet to be resolved, the status quo will be preserved and there will be no leadership on this front.

There is strong German national interest and therefore leadership on strengthening economic ties with China and Russia, but these interests are opposed by some EU members and the United States, which makes them more problematic.

To remain economically competitive in a digitalized and climate-transformed world, Germany will have to make significant adjustments to its current economic model and it will need do so persistently.

The EU must also adjust accordingly. Germany leads, but on its own terms.

CAROLINE DE GRUYTER/ EUROPEAN AFFAIRS CORRESPONDENT FOR NRC HANDELSBLAD

This is the wrong question. The Europe we have cannot be led by one country, not even its most powerful member state, and not even by a coalition of two powerful ones. EU member states are diverse in size and interests, and they tend to be wary of the big ones. Showing too much leadership elicits revenge.

Germany needs to support the leadership of the union, not provide it. The EU has leaders and member states need to let them do their jobs and support them. In a system of complex balances, when one player tries to lead, it weakens the whole. Angela Merkel understood that very well. Let us hope her successor does too.

Merkel always tried to prevent conflicts, in Europe and on the world stage, and she often took decisions based on her moral instincts. This needs to continue. It may not be direct leadership, but a steady hand doing the right thing helps tremendously. That is something Germany can provide.

FEDERICO FABBRINI/ PROFESSOR OF EUROPEAN LAW AT THE SCHOOL OF LAW AND GOVERNMENT AND PRINCIPAL OF THE BREXIT INSTITUTE AT DUBLIN CITY UNIVERSITY

The uncertain outcome of the German federal parliamentary election—with the potential for months-long negotiations on the formation of a new government and the resulting power vacuum in the German chancellery—has once again exposed the unsustainability of the current system of governance of the European Union.

The EU functions too much as a union of national democracies rather than a democratic union. Yet, in this institutional regime, the problem of a member state automatically becomes the problem of the entire EU. And if there is paralysis in one country, then the EU seems poised to be paralyzed too. Clearly this is not sustainable, as election cycles never end across the twenty-seven EU member states.

While it’s understandable that pundits now focus on what leadership Germany can provide to Europe, the real question is what Europe can do to become less dependent on the contingencies of its member states’ leadership.

Looking ahead, the impasse in German politics is yet another reason to reform the EU system of governance by separating national democratic processes from the EU democratic process, and making the latter more self-sufficient.

The ability of the EU to deal with the enormous challenges it faces—from climate change to global instability and an uncertain economic recovery—cannot simply depend on the timeframe of the coalition’s negotiations in Germany, or in any other member state for that matter. It’s time for the EU to have its own democratic union—and the Conference on the Future of Europe should quickly be deployed to achieve this constitutional goal.

ROLAND FREUDENSTEIN/ POLICY DIRECTOR AT THE WILFRIED MARTENS CENTRE

This is what I would call the “new German Question” because it will go a long way to determine the future of the European Union—and because it has no obvious answer for the moment.

The center-left coalition under Olaf Scholz, which currently looks most likely, may well be more accommodating than Angela Merkel to EU partners about deficit spending and pragmatically extend the temporary debt mutualization of the pandemic. It may well be even more active in climate policy. But on defense and security, I don’t see any light at the end of the tunnel for German inactivity.

If NATO’s jointly decided 2 percent goal on defense spending flies out the window, nuclear sharing with the United States is effectively terminated, and German troops don’t get direly needed modern equipment such as armed drones, there will be no progress toward a more responsible EU within the transatlantic alliance.

Our French partners will be even more frustrated. The Greens as the second coalition partner may push for a more solid response to Russian and Chinese authoritarian threats, but without a new appreciation for hard power, this will come to nothing.

“Speak loudly and carry a small stick” is a dangerous combination. Any remedy of this situation requires tough personal leadership, a little rhetorical help from our friends, and unfortunately probably some painful security crisis that will hopefully wake up German public opinion.

JACEK KUCHARCZYK/ PRESIDENT OF THE EXECUTIVE BOARD OF THE INSTITUTE OF PUBLIC AFFAIRS, WARSAW

The German election has demonstrated the remarkable stability of German democracy at a time when Europe is haunted by the twin threats of nativist populism and malign influence of authoritarian powers such as Russia and China.

Whatever the outcome of the coalition negotiations, the future government in Berlin should make countering authoritarianism and promoting democratic renewal within the EU an essential part of its agenda for Europe.

In particular, democratic backsliding in Poland and Hungary needs to be seriously addressed at the European level and by European institutions, but this will not happen without sustained German leadership and support.

Germany should ensure that the rule-of-law mechanism, which makes the disbursement of EU funds conditional on observing European legal standards, will not be put on hold to allow democratic backsliders to consolidate their power using the EU Reconstruction Fund.

Germany should also show leadership in pressing for the introduction of qualified majority voting in EU foreign policy, which would make it possible for Europe to adopt a united stance toward Russia and China as well as lesser authoritarian powers.

Last but not least, Germany must pull its weight in the European institutions to address the humanitarian crises on EU borders perpetuated by the policies of the likes of Belarusian President Alexander Lukashenko and Turkish President Recep Tayyip Erdogan, but also by fearmongering populists in some member states, such as Poland. All the above will require leadership.

OLIVIA LAZARD/ VISITING SCHOLAR AT CARNEGIE EUROPE

For the first time in German and European elections at large, climate change took center change. For this, we have the German electorate to thank for pushing so hard to get politicians to address the climate crisis in the campaign. While this is good news, only one in seven votes went to the Green Party, even within an electorate that broadly understands the dangers of slow and incremental climate action. This demonstrates risk aversion at a moment when risk-taking is needed for true leadership on the green transition. Voters want credible change within the confines of stability.

The first climate leadership test will be the energy crisis in Europe. This crisis connects the German political economy with foreign policy issues, especially with regard to Russia.

Finishing the Nord Stream 2 project may provide short-term gains, but it will translate into a longer-term dependency on fossil gas with high methane emissions and a highly destabilizing relationship with Russia, especially if Moscow uses energy as a political instrument.

The transition requires colossal investments in energy, mobility, and industrial infrastructure as well as social safety nets. We will need to look at the policy mix between foreign and fiscal policy to evaluate Germany’s ability to lead by structurally reforming its own political economy. The latter will have far-reaching consequences for European autonomy and stability.

The formation of the next government will give some indication about what to expect from German leadership: conservative stability—which will lock Europe into a faulty emission pathway and divide European politics—or structural transformation, where leadership will first be slow and quiet but will help place Europe on a stronger path toward climate neutrality. The ministries the Greens obtain as a junior coalition partner will give a hint of Germany’s direction.

CLAUDIA MAJOR/ DIRECTOR OF THE INTERNATIONAL SECURITY DIVISION AT THE GERMAN INSTITUTE FOR INTERNATIONAL AND SECURITY AFFAIRS (SWP)

Germany is unlikely to provide leadership and the other Europeans are unlikely to want it.

First, there is a time element: until the next government is formed—maybe before Christmas, maybe after—Germany will be in strategic hibernation: a caretaker government will hardly take strategic decisions.

Then, the new government’s noble goals will be hit by the harsh reality, for example when trying to regulate arms exports, which will be a difficult moment for Germany and its partners alike (though admittedly European competitors might enjoy it). Hence potential leadership will not be ready quickly.

Second, there is only so much strong leadership you can get with a political system dominated by the need for consensus and compromise. Three political parties need to agree on a government program. Then, in everyday politics, ministries will be run by different parties who need to agree again. Compromise and leadership don’t always team up.

Third, the content. A likely traffic light coalition combines many issues that other Europeans dislike: the liberal Free Democrats for their financial strictness; the Greens for their perceived distance to all things military; and the Social Democrats for their softness on Russia and dislike of defense issues, to name just a few. Leadership against the rest of Europe is unlikely to function.

POL MORILLAS/ DIRECTOR OF THE BARCELONA CENTRE FOR INTERNATIONAL AFFAIRS (CIDOB)

Angela Merkel’s auctoritas and gravitas in the European Council has run in parallel with the transformation of European power along the lines of the German one.

Germany remains a formidable economic player, internally and externally. But it punches below its weight when it comes to embodying a strategic foreign policy. Germany’s leadership in Brussels and the transformation of the global order, thus, go hand in hand with a lack of a strategic position of the EU in global affairs, a deficient security and defense toolbox, and dysfunctional institutional and decisionmaking structures.

For that to change, Germany needs to redefine its problem-solving approach to European affairs in favor of a more strategic one and also come to terms with the renewed centrality of geopolitics in global affairs.

Germany—and Merkel—have been effective EU crisis managers. But Berlin has underperformed when it comes to harnessing the necessary political leadership for pushing through sustainable reforms.

All recent European crises have been overcome, but major reforms linger on. The renegotiation of the Stability and Growth Pact, a permanent common debt scheme, a common asylum and migration policy, and a strategic partnership with the UK are all in the to-do list of the next government.

What is needed is not a “new Merkel” that impersonates her political leadership, but a better set-up for the post-Merkel era. This means a constellation of political leaders, all equipped with political will.

The next chancellor will also realize that European leadership requires a good dose of traditional power tools, including security and defense. A “German Europe,” high on economic power and trade but low on foreign policy, will not suffice for strategic autonomy, not to mention for a “geopolitical” EU. It is probably here where more radical changes involving mental, operational and political will be needed.

CHRISTIAN ODENDAHL/ CHIEF ECONOMIST AT THE CENTRE FOR EUROPEAN REFORM

Yes, it can. The last decade of crises has left Europe with a long to-do list, and two major issues have started to overshadow the German policy debate: climate change and the new—for Berlin, anyway—geopolitical challenges.

That will also shape the next government’s views: the fact that the economic strength of Europe and its unity is a lot more important than low levels of public debt; that fighting climate change in Europe may involve transfers to poorer countries and public support of innovation and investment to reach net zero; and that becoming a robust actor in foreign policy occasionally entails a short-term economic cost for a longer-term strategic benefit that is worth it.

Angela Merkel and Olaf Scholz have already started on that journey toward German leadership in Europe, by putting together the EU recovery fund during the pandemic.

The involvement of the Greens and the Free Democratic Party in government is more likely than not to push Germany further ahead. But Berlin’s leadership role in Europe also involves forging compromise and uniting Europe. It will be a tough balancing act for Berlin to push Europe ahead while keeping it united.

GEORGE PAGOULATOS/ DIRECTOR GENERAL OF THE HELLENIC FOUNDATION FOR EUROPEAN AND FOREIGN POLICY (ELIAMEP)

The next German chancellor will be weaker than their predecessor, lacking the formidable political capital Angela Merkel had accumulated over years of steering Germany and the EU through severe consecutive crises. So if “can” means having a sufficient supply of political resources and will, the answer is probably not. Especially taking into account that a three-party coalition would need to balance competing demands and trade-offs.

The climate crisis and digitization should be a priority, but ambitious initiatives would be weakened if a fiscally orthodox aversion to investment spending prevails.

A strong and united stance toward China and Russia could be undermined by a proclivity to mercantilism prioritizing trade interdependence over the rule of law. Also, a more integrated foreign and security policy needs a willingness to beef up defense capabilities, either to match the ambition of strategic autonomy as rightfully promoted by France or simply meet the higher spending levels demanded by NATO.

In addition, it requires determination to devote political resources to carry along other reluctant EU members, also overcoming national phobias against German military deployment.

So, my answer is: yes, Germany should. But can Germany do it? I very much doubt it.

ZSUZSANNA SZELENYI/ RICHARD VON WEIZSACKER FELLOW AT THE ROBERT BOSCH ACADEMY

The fact that Europe needs significant change to maneuver the next decades successfully is obvious for the foreign policy community in Berlin.

The pandemic and nine months of President Joe Biden’s leadership in the United States pushed Germans to acknowledge the pressing need for more European autonomy. German parties that will form the new coalition government are all pro-European, but this doesn’t mean that the new government will be the engine of EU reform.

First, because all parties have different strategic aims to deliver to their voters. The Greens for example, the most EU-friendly party, aim to put climate-friendly energy and economic policy on track first and foremost.

Second, parties have significantly diverging views on Europe’s strategy on Russia, China, and defense issues. The Greens and the liberal Free Democrats have opposite views on a stronger European fiscal policy. Thus, the new coalition will weaken Germany’s position at the European level, at least in the short run, allowing the French to take the lead.

On the other hand, Germans are traditionally good at alliance building. In case the coalition negotiations touch upon critical European questions, the new chancellor would be able to take firm steps with a stronger legitimacy at home and in Europe.

*nonresident senior fellow at Carnegie Europe and editor in chief of Strategic Europe
**first published in: carnegieeurope.eu

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