Europe After Merkel

“Stability” in Germany, based on a consensus about economic and security issues, has created instability in Europe for the last eight years—and the longer Germany continues to remain “stable”, the worse it could ultimately be for Europe.

Ever since Angela Merkel’s announcement last November that she was stepping down as leader of the German Christian Democratic Union (CDU), there has been much anxiety about what might happen to Germany—and Europe—when she is no longer Chancellor. Her current term only ends in 2021—and her resignation as party leader may allow her to remain in the chancellery until then. Nevertheless, commentators are worried that Europe is about to enter a new period of “instability”— although the Merkel era has itself been a period largely characterized by instability in Europe.

The reality is that, even after Merkel steps down as Chancellor, there will be no dramatic change in Germany or its role in Europe and in the world. This is above all because of the consensus that exists in Germany about key issues. Merkel has to some extent created that consensus, but she has done so by following public opinion rather than by shaping it—her skill was to knit together positions on different issues based on popular preferences.

The fragmentation of German politics has, paradoxical effects. As the center-right and center-left are no longer able to form governments with their preferred coalition partners grand coalitions become even more unavoidable.

This “Merkel consensus” has to some extent come apart in the four years since the refugee crisis in 2015. In particular, there has been a backlash from the right to the shift to the left she is perceived to have made on social issues and in particular on immigration policy. It was this backlash, led by Bavarian Christian Democrat leader Horst Seehofer, that forced her to step down as party leader.

It is also true that the German political system is fragmenting. In particular, with the emergence of the Alternative für Deutschland (AfD), the German right is now experiencing what the German left experienced after the emergence of Die Linke in the 2000s. But to some extent the AfD is Merkel’s creation—even its name was a direct response to her statement that there was “no alternative” to the first bailout of Greece in 2010. The presence of the AfD in the Bundestag is part of Merkel’s legacy.¹

The fragmentation of German politics has, however, paradoxical effects. As the center-right and center-left are no longer able to form governments with their preferred coalition partners—the Free Democrats for the Christian Democrats and the Greens for the Social Democrats—grand coalitions become even more unavoidable. (This could change, however, if the Christian Democrats move to the right, particularly on cultural issues, as center-right parties elsewhere in Central Europe have done.)

Thus even after Merkel leaves office, Germany’s European and foreign policy is likely to continue much as before—even as the world around Europe is in flux. Germany will seek above all to maintain the status quo in Europe and the world—even as the status quo becomes the status quo ante. What this means in practice is continuing paralysis and increasing conflicts within Europe.

The Myth of Strategic Autonomy

In a now celebrated speech in a beer tent in Bavaria in May 2017—the so-called Bierzeltrede—Merkel urged Europe to take responsibility for its own fate. “The era in which we could fully rely on others is over to some extent,” she said. The remarks were widely seen as a response to the election of Trump and the vote by the British people to leave the EU. They seemed to many to indicate that Merkel was now prepared to take decisive steps to move Europe towards what is often called “strategic autonomy”.

The most obvious problem is Germany’s low level of defense spending. Unlike some other EU member states, Germany’s defense expenditure, while slowly increasing in absolute terms, is actually decreasing as a proportion of GDP.

Whether or not Europe is able to achieve “strategic autonomy” in any meaningful sense depends largely on Germany. Yet Merkel has done little to make the shift in policy that would be necessary in order for Europeans to be able to “take our fate into our own hands”, as Merkel put it.

The most obvious problem is Germany’s low level of defense spending, which falls short of its commitment as a NATO country to spend 2 percent of GDP. Unlike some other EU member states like the Baltic states that underspent but are now quickly increasing spending and reaching 2 percent, Germany’s defense expenditure, while slowly increasing in absolute terms, is actually decreasing as a proportion of GDP. In fact, it is now unclear whether Germany will even meet the already watered-down pledge to NATO allies of spending 1.5 percent of GDP on defense by 2024.²

Germany is not just a problem, however, because of its own low level of defense spending. The eurozone’s fiscal rules—driven by Germany since the first version of them was included in the Maastricht Treaty in 1992—also put downward pressure on defense spending in other EU member states like France. Thus it is not only that Merkel was not prepared to commit Germany to what was necessary in order for Europe to “take its fate in its own hands”, but it is also that the policies she has pursued are actively preventing Europe from doing so.

On these issues, however, Merkel reflects German public opinion. Many in the strategic community are increasingly embarrassed about what Jana Puglierin of the German Council on Foreign Relations calls “backsliding” by Germany on its defense commitments.³ The German public remains as opposed as ever to what the experts call “responsibility”— especially because any increase in defense spending may now be seen as a concession to Trump rather than a step Germany needs to take to make Europe independent of the United States.

Since the election of Trump, some in the strategic community have also called for a rethink of Germany’s nuclear policy. In February, Wolfgang Ischinger, the director of the Munich Security Conference, called for France to extend its nuclear deterrent to the whole of Europe—for which other EU member states would pay.⁴ Aside from, however, the immense technical difficulties associated with “nuclear sharing”, it seems even harder to imagine that the German public might be willing to spend money on nuclear weapons than it is to imagine a dramatic increase in spending on conventional military capabilities.

In short, public attitudes mean that Germany is likely to seek to continue to remain a free rider in security terms. While the strategic community talks about the need to respond to new threats in an increasingly dangerous world, the German public is more worried about losing its post- World War II identity. As Foreign Minister Heiko Maas, a Social Democrat, put it in an op-ed in the Spiegel in November: “Germany must remain a Friedensmacht.”⁵

The German public remains as opposed as ever to what the experts call “responsibility”— especially because any increase in defense spending may now be seen as a concession to Trump.

An increasingly tough approach

Just as Germany’s approach to security will not change dramatically, nor will its approach to economic policy. If anything, the consensus in Germany behind the approach Merkel has taken to economic policy—particularly in the context of the Euro crisis that began in 2010—is even stronger than that on security policy. Perhaps the best expression of this consensus was the statement by the Social Democrat Olaf Scholz when he took over from Wolfgang Schäuble as Finance Minister last year: “A German Finance Minister is a German Finance Minister”.⁶

While the strategic community talks about the need to respond to new threats in an increasingly dangerous world, the German public is more worried about losing its post- WWII-World War II identity.

The consensus goes back to the shift in Social Democrat economic policy that took place under the “red-green” government of Gerhard Schröder. It was this government that implemented the structural reform that is widely—though wrongly—seen as the reason for the turnaround in the German economy in the second half of the 2000s and that has been imposed on crisis countries since the beginning of the Euro crisis. Whoever is in power, German policy will continue to be based on a vision of “competitiveness”.

Since the beginning of the crisis, Europe has been divided between creditor and debtor countries—roughly, in other words, between north and south. In the first few years of the crisis, it sometimes seemed as if Germany was isolated as southern European countries formed a “common front” against it. But by the time a renewed debate about Greek debt took place in the summer of 2015, other countries such as Slovakia were more vocal in their support of Germany’s opposition to redistribution within the eurozone.

This divide has now hardened further. The so-called New Hanseatic League of eight northern European countries was formed last year largely as a way to counter French pressure on Germany to make concessions on eurozone issues and in particular in response to President Emmanuel Macron’s proposals to create a eurozone budget and Finance Minister. It is therefore now more difficult than ever to see how there can be any progress in making the Euro area more sustainable and reducing Euroscepticism.

This paralysis in the eurozone makes the economic and political prospects for Germany and Europe bleak. After the Euro crisis began, the demand for German exports in Europe slowed, but the German economy continued to boom on the back of demand from China and the United States. As demand from China slows, however, and a trade war with the United States looms without any prospect of renewed demand from within Europe, Germany looks set to go into what could be a prolonged recession.

Meanwhile, as the eurozone’s southern periphery struggles to create growth in the context of the eurozone’s fiscal rules, extremist parties there are likely to continue to become more powerful and, once in power, to create more of the conflicts that we have seen since the Five Star Movement and the League formed a coalition government in Italy last year. The EU’s response to this kind of “populism” is likely to be one centered on the increased use of coercion.⁷ France may be allowed some flexibility—in part because the EU wants to support the “pro-European” Macron and in part because, as European Commission President Jean-Claude Juncker said in 2016, “it is France”. But, led by Germany, the EU is likely to take an increasingly tough approach to peripheral countries in both the east and the south.

Since the beginning of the crisis, Europe has been divided between creditor and debtor countries. In the first few years of the crisis, it sometimes seemed as if Germany was isolated as southern European countries formed a “common front” against it.

The conflict within Europe

What all this is likely to mean is a continuation of the competitive dynamic of coalition building within the EU that began with the Euro crisis.⁸ In the last few years, the relatively simple standoff between the two blocs that had formed in the context of the Euro crisis have given way to a more complex and fluid dynamic of coalition building. In particular, since the refugee crisis in 2015, a division between east and west has also emerged. An interesting question now is whether eastern and southern EU member states led by “populist” governments will coalesce into a kind of “coalition of the peripheries”.

In any case, it seems likely that conflict within Europe will continue and perhaps intensify. Thus although the fear that many commentators had about a new period of instability in Europe when Merkel leaves the chancellery is unfounded, this is not such a good thing as most “pro -Europeans” assume. In fact, “stability” in Germany, based on a consensus about economic and security issues, has created instability in Europe for the last eight years—and the longer Germany continues to remain “stable”, the worse it could ultimately be for Europe.

As the eurozone’s southern periphery struggles to create growth in the context of the eurozone’s fiscal rules, extremist parties there are likely to continue to become more powerful.

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1. Streeck, W. (2018, May 20). Europe under Merkel IV: Balance of Impotence. American Affairs. https://americanaffairsjournal.org/2018/05/europe-under- merkel-iv-balance-of-impotence/.
2. Germany could miss even reduced NATO defense spend- ing goal (2019, February 4). Reuters. https://www.reuters.com/article/us-germany-budget-military-idUSKCN1PT1Z3.
3. Puglierin, J. (2018, August 29). Stuck in a Holding Pattern. Berlin Policy Journal. https://dgap.org/en/think-tank/publications/further-publications/stuck-holding- pattern.
4. Frankreichs Atomwaffensollen EU schützen (2019, February 9). N-TV. https://www.n-tv.de/politik/Frankreichs-Atomwaffen-sollen-EU-schuetzen- article20850074.html.
5. Maas, H. Wir müssen über Abrüstung reden (2018 November 3). Spiegel. http://www.spiegel.de/politik/ausland/heiko-maas-wir-muessen-ueber-ruestung-reden-a-1236449.html. – On Germany as a Friedensmacht, or “force for peace”, see also Kundnani, H. The United States in German Foreign Policy (2016 April 14). German Marshall Fund, p. 6. http://www.gmfus.org/publications/united-states-german-foreign-policy.
6. Cerstin Gammelin und Nico Fried, “Olaf Scholz im Interview: ‘Politik ist keine Vorabendserie,’”Süddeutsche Zeitung, 16 March 2018, https://www.sueddeutsche.de/politik/olaf-scholz-im-interview-politik-ist-keine- vorabendserie-1.3909193?.
7. On the increasing role of coercion in the EU, see Hans Kundnani, “Discipline and Punish”, Berlin Policy Journal, 27 April 2018, https://berlinpolicyjournal.com/discipline-and-punish/.
8. On this dynamic, see Hans Kundnani, The Paradox of German Power (London: Hurst, 2014), p. 111.