Charlotte Street Partners



Germany's European opportunity

Written by Alex Massie
3 September 2020

Earlier this summer, as the true depth and scale of the coronavirus emergency became clear, Germany assumed the presidency of the Council of the European Union. This was a coincidence of timing, but a fortuitous one nonetheless for, as chancellor Angela Merkel argued, “Europe needs us, just as we need Europe”. This crisis was also Germany’s opportunity.  

And about time, perhaps. Germany has been Europe’s engine but also a reluctant leader. History – and the ghosts of history – help explain that for all the obvious reasons but 75 years after the end of the second world war, Germany at last seems willing to assume the responsibilities inherent in its position as the continent’s largest and most significant economic player. “How Europe fares in this crisis compared to other regions of the world will determine both the future of European prosperity and Europe’s role in the world”, Merkel now argues. After 15 years as chancellor, leading Europe out of the coronavirus offers Merkel her best chance of a lasting, and significant, political and economic legacy. 

To that end, even Germany’s conservative bankers appreciate that some old rules no longer apply. Germany, historically suspicious of debt, endorsed a €500bn rescue stimulus fund which, while possibly insufficient to the task at hand, nonetheless marked a sharp break with previous German economic orthodoxy. And no wonder since, to take but one of the many straws in the wind, 49% of those surveyed for the most recent EY Attractiveness Survey feared that Europe would become a less enticing destination for investment in a post-Covid world. 

It helps that Germany has had a “good crisis” – this is a relative term, admittedly, but an accurate one. Fewer than 10,000 Germans have died from Covid-19 and so it is perhaps little wonder that, once again, Germany is the subject of envious attention in the UK. The contrast between the German and British experiences during this emergency is galling. If Germany can manage, why can’t we? 

Some of the reasons for Germany’s better performance seem clear: a decentralised health service proved nimbler than the NHS, but German governance also showed the benefits of strong, local and regional administration. Here, too, the contrast with the UK has, on the whole, been obvious. Equally, some political leaders are suited to challenges that require a firm grip and a keen grasp of detail while others, shall we say, are not. Once again, the German model is an enviable one. 

Nonetheless, if the crisis has made German leadership a necessity, encouraging Berlin to take a more proactive approach to EU leadership, it is also a confirmation of pre-existing global trends. Donald Trump’s election in 2016 made clear the tensions and weaknesses bedevilling the Atlantic alliance; Germany was already wondering what that meant for it and for European security.  

That problem may be partially alleviated in November, but others are more immediately pressing.

The European Commission has forecast an 8.7% drop in GDP in eurozone countries, amid an environment in which risks remain “exceptionally high and mainly to the downside”. “The tasks ahead of us are enormous and will require a huge effort”, Merkel noted. 

Also, according to Merkel: “time and again it has been shown that Europe is not yet sufficiently resistant to crises”. Coronavirus has, she argues, “coincided with the two great disruptive phenomena of our time, climate change and the digital revolution, which are changing our lives and our economies regardless of the virus”. 

“It is in Germany’s interest to have a strong internal market and to have the European Union grow closer together, not fall apart. As ever, what’s good for Europe is good for us”. This is hegemony in a cardigan, and an analysis that might not be welcomed in other parts of the continent where it might be thought that what’s good for Germany is not necessarily great for everyone else. 

Germany has spent decades sinking itself into the European project, so it is hardly surprising that Berlin conflates the German interest with the wider continental interest. Yet as Merkel acknowledges, “many young EU accession countries share our enthusiasm for the European Union as a work of peace on the one hand, yet display scepticism towards Europe on the other. We need to develop understanding for that. I see my job as working for a self-determined, liberal Europe rooted in the fundamental rights of the individual”. 

There are, however, limits to German assertiveness. China is both partner – in terms, Merkel says, of economic cooperation and climate change – but also a competitor. The tension between these positions is evident and lends itself to fudge, not clarity. Germany’s industrial and manufacturing interests weigh heavily here, just as they do in terms of the relationship with Russia. Asked earlier this summer if Germany is “underestimating” the threat posed by Russia, Merkel recognised Moscow’s enthusiasm for so-called “hybrid warfare” but insisted that, “on the other hand, there are good reasons to keep engaging in constructive dialogue with Russia”, not least since “in countries like Syria and Libya, countries in Europe’s immediate neighbourhood, Russia’s strategic influence is great”. In other words, do not expect too much clarity, or too much rigour, from Berlin.

And this points to the duality of German positioning. On the one hand, and in matters European, Germany leads, cloaking its own interest in the language of aspiration and continental solidarity; on the other, and outwith the EU itself, Germany’s approach is largely dictated by commercial and political realpolitik. Foreign policy is not a place for dreamers. 

But it is clear, once again, that European policy will – and, indeed, can only – be driven by the traditional Paris-Berlin axis. France and Germany set the tone and the agenda and everyone else is expected to fall into line. The UK might generally have been a sceptical participant in the European project, but its influence – its obstinacy, if you prefer – to some extent counterbalanced the French and German vision of the continent’s future. That alternative, and that restraining influence, no longer exists. From which it seems probable that, just as the coronavirus emergency will supercharge already evident trends, so Brexit gives Paris and Berlin the opportunity to double-down on their own agenda. Here, too, a great acceleration is evident and likely to continue.

If this is Germany’s moment, it is one that has been a long time coming. History is not easily shrugged-off, but Europe can no longer afford a tentative Germany. The consolation, perhaps, is a new and greater awareness in Berlin that Germany cannot afford a tentative Germany either. 

About Beyond the Street and Alex Massie

We are all guilty of being too inwardly focused sometimes, especially as we navigate these changed times. It is all too easy to be caught up in the problems close to home, and for overarching trends to pass us by.

To remedy that short-sightedness, Charlotte Street Partners has enlisted the ingenuity and talent of the writer and commentator Alex Massie. As our new correspondent at large, Alex will look at the bigger picture for us each week. We have challenged him to come up with something a bit different: broad, lateral thinking, thematic insights and a more global perspective.

Alex is a freelance journalist and commentator based in Edinburgh. Not only is he Scotland editor of
The Spectator, but he also writes a political column for The Times and The Sunday Times. He features regularly on the BBC as a political commentator and has written in the past for The Telegraph, Politico, The Washington Post, the Los Angeles Times, The New York Times, the New Statesman, The Observer, and TIME magazine, among others. He was also the Washington correspondent for The Scotsman and assistant editor of Scotland on Sunday

We hope you enjoy his work – and do feel free to forward this email on to colleagues and friends you think might be interested. They can subscribe to Beyond the Street and our other regular briefings here

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