What Should We Expect on Europe and China from the New German Government?

The Germans have an election. Its outcome is unclear. The parties take their time in forming a coalition. Once formed, the new government’s “German foreign policy”, as Chancellor Olaf Scholz immediately stressed, “is a policy of continuity”. “I would like to continue with the northeast German mentality that has prevailed here up to now,” he said. “Not so much will change there,” he added. So far, so familiar.

But does this ring true? There are two reasons why it may not in fact be business as usual. First, the new Foreign Minister, the Green Party’s Annalena Baerbock, has signalled that she intends to break from the past in significant ways. This involves shaking off the indulgent view of China and Russia that Merkel often took—viewing them instead in a much more sceptical light. This means a tougher line on China and Russia regarding sanctions, human rights and Nord Stream 2. Secondly, there is likely to be a significant shift on Europe. This will probably lead to a tightening up of the German approach to rule breakers within the European Union, and more attention being given to a German European grand strategy and deeper European integration.

Much of this has already been ‘priced’ in by analysts and government. It is no secret that as Foreign Minister, Baerbock is coming in with a roster of new opinions and approaches that break with Merkel’s direction. She is adopting a structurally different approach—human rights and environment prioritized over economic interest. The open question is whether the general assumption that she will be tempered and diluted by Chancellor Scholz is justified. In fact, as we shall see, there is reason to think that on at least one issue, Olaf Scholz is a more radical thinker than many realize.

The future of Germany’s foreign policy

Let us begin with the rhetorical shifts. Baerbock wants a foreign policy “guided by human rights and values”. She is also keen to use both carrot and stick, declaring that, “For me, a value-based foreign policy is always an interplay of dialogue and toughness.” As one of the Greens’ most prominent foreign policy figures, Franziska Brantner, says, “We have to stop [equating] German interests with German economic interests…We as Germans really have to change course. If we continue, we will pay a very heavy price.” Or to quote Jens Althoff of the party’s own Heinrich Böll Foundation, “Annalena Baerbock no longer wants a foreign policy that is driven solely by the country’s economic interests”. All this signals a plan to reverse the Merkel years’ prioritization of commercial interests at the expense of a crackdown on human rights. It is a turn away from the old German strategy of Wandel durch Handel – change through trade – which goes back to the heady days of Ostpolitik and détente in the late 1960s and 1970s.

The practical effects of the shift will first be tested by relations with Russia, especially with regard to the two core issues Nord Stream 2 and Ukraine. So far, the German watchword has been what the Financial Times calls “continued engagement” with Putin. This is rooted in a long and complex relationship with Moscow, harking back to the Cold War. Central to it is the dependency on Russian energy, which was accentuated by the post-Fukushima decision to bail out of nuclear power. This makes Berlin inclined to avoid tension in order to ensure the continued supply of oil and gas, making the Nord Stream II pipeline across the Baltic Sea operational without further delay. This was so important to Germany, that one of the first foreign policy initiatives of the Biden administration was to withdraw its own objections to the scheme, not out of love for Putin but deference to Merkel. There is also a broader German hesitation about taking on Russia, which is partly driven by fear but also by guilt over Nazi behaviour during the Second World War. As John Lough puts it in Germany’s Russia Problem, “Germany’s historically conditioned reflexes have distorted its view of Russia and continue to inhibit its behaviour”.

Now the language, at least, is hardening. There is genuine worry among the new government that Russia might invade Ukraine, a US assessment shared only recently by Germany.

Berlin’s moves on this will be a test and indicate how the Germans wish to proceed in the European geopolitical arena. Baerbock has already been implicitly critical of Merkel’s approach to Russia, complaining that, “some seem to prefer to close their eyes to reality and hope that it won’t be so bad. That usually doesn’t work when it comes to Russia.” Whether Scholz and Baerbock will diverge on the Ukrainian situation is unclear. Their rhetoric is currently similar with Scholz emphasizing that, “We have a very clear attitude: we want everyone’s borders to be respected”, echoed by Baerbock’s statement that, “Ukraine’s territorial integrity and sovereignty are not negotiable.”

The divide on Nord Stream 2, by contrast, is clearer. While Scholz and much of the opposition and public opinion support it, the Greens vehemently oppose it, with Baerbock stating that, “We can’t allow ourselves to be blackmailed” by Russia. This matters because Nord Stream 2 is currently still subject to regulatory approval to ensure it complies with EU energy legislation. Whether the Greens have the capacity to block Nord Stream 2 for good is another matter. The fact that there was no mention of Nord Stream 2 in the coalition contract published in November can be interpreted either as a sign that it is a done deal, or that the matter is entirely up in the air.

One also needs to factor in the convergence of foreign policy and environmental sentiment on Nord Stream 2. An anti-Nord Stream movement in the vein of Fridays for Future would have the capacity to exert more domestic pressure on the new government. Lack of domestic pressure for action on Russia is viewed as one of the reasons that Scholz has been wary of adopting a harder approach. As Cathryn Clüver Ashbrook has argued, “The biggest problem right now is that the German population doesn’t sense the urgency…It doesn’t see the threat potential.” That could change very quickly if Nord Stream 2 was reframed as an environmental, rather than a security, concern.

Merkel’s legacy

There are probably also changes ahead on the People’s Republic of China (PRC). Merkel was not completely silent on human rights abuses there, but she tended to mute her criticism in the interests of economic cooperation and German exports. This was especially evident as her authority ebbed during the last years of her Chancellorship. At the supranational level, Merkel was widely regarded as the driving force behind the EU’s investment deal with China, which is currently on hold. More broadly, she has repeatedly warned against a lack of engagement and interaction between China and Europe. At the global level, Germany didn’t take part in Donald Trump’s US trade war against China.

This legacy has already been targeted by Baerbock. In an open dig at Merkel’s foreign policy, she told a German newspaper that, “Eloquent silence is not a form of diplomacy in the long run, even if it has been seen that way by some in recent years”. Becoming more specific, Baerbock called the PRC a “systematic competitor” and called for “strategic solidarity with democratic partners, defending our values and interests together, and patiently advocating these values in our foreign policy.” To this end, she has called for increased EU import duties on PRC firms that fall foul of European standards, rules against state subsidies or labor laws. 

Even more importantly, Baerbock wants to align Germany’s position with the USA. The coalition deal explicitly commits Berlin to, “work together with like-minded countries to reduce strategic dependencies”.  It is possible that she might follow the USA and UK in a diplomatic boycott of the Winter Olympics in the PRC. Meanwhile, Xi Jinping is moving the country away from open access to international firms, reducing the economic pull-factor for Germany and Europe. In effect, Baerbock is looking to inverse Merkel’s priorities, subordinating commercial interaction to a tougher line on human rights. Barebock’s approach has not gone unnoticed on the Chinese side, with the Chinese Embassy in Berlin calling for “bridge builders instead of wall builders.”

Finally, there is the question of Europe. It is widely assumed that, as The Guardian recently claimed, “None of the parties that will make up the new government have promised a radical change in Germany’s stance on Europe.” The argument here is that any German government will revert to the mean, and to the stasis, of the Merkel years. This may happen, but the signs are that the new team has greater ambitions in Europe than that. Baerbock is a strong Europhile. When asked where her first call would be as Chancellor, she said, “to Brussels because German foreign policy must always be European.”

In her first visit to Brussels as Germany's Foreign Minister, Annalena Baerbock reaffirmed her country's support for NATO, saying the alliance is an "indispensable pillar" for Europe's security. pic.twitter.com/9oGNymJYV8

— DW News (@dwnews) December 11, 2021

Baerbock has also signalled that she sees a more activist Germany as the key to a successful EU foreign policy. She attributes the problems of the past few years to European and German passivity. “Because Germany is the biggest player in the EU”, Baerbock says, “it’s crucial that if the EU wants to be strong, if the EU wants to play its international role and also its role in its own neighborhood, then it needs a strong, open, but active German foreign policy.” Beyond this, the Greens want to build the existing economic and monetary union into a full-scale social and fiscal union. They see the Recovery Fund as the most important instrument to achieve this. “The major lesson of the euro crisis”, she says, “was that austerity can end up suffocating an economy”. 

Olaf Scholz may function as much less of a curb on this tendency than many imagine; he may in fact be an accelerator. Because of his caution during the Merkel Chancellorship, and his scepticism – shared with new Finance Minister Christian Lindner – about lifting the ‘debt brake’ – his integrationist tendencies are often downplayed. These have been repeatedly attested to in speeches going back at least fifteen years in which he has expressed an interest in a much deeper political union, for example at Tutzing in 2015, but also on several other occasions. More recently, as Finance Minister he influenced the creation of the EU’s post-pandemic recovery fund, signalling a willingness to engage in further European economic integration. When Scholz now says that he wants to, “continue the efforts Germany has made in recent years to create a strong, sovereign European Union”, this should not be taken as mere fluff.

It is significant that the coalition treaty calls for a change to the EU treaties to facilitate further integration, something which the Merkel administration long tried to avoid.

The coalition demands that the Conference on the Future of Europe, “should lead to a constitutional convention and the further development of a federal European state.” Although the agreement did not commit to the agreed 2% NATO spending target, it did commit Germany to nuclear sharing and deterrence. Stopping short of calling for a European army, the agreement does call for, “increased cooperation between national armies of EU members willing to integrate, especially in training, capabilities, operations and equipment”.

Moreover, the coalition partners have signalled a hard line on Hungary and Poland. The coalition agreement urges the European Commission, “to use existing instruments more consistently and in a timely manner.” It also adds that they will only approve payment of EU pandemic recovery funds to those countries, “if preconditions such as an independent judiciary are secured.” A risky strategy that could lead to irreparable fractures, it also puts rogue governments on notice that they might be left behind by the next stage of integration.

What is next for Germany?

Central to the new German Europe strategy, as both Scholz and Baerbock have repeatedly acknowledged, will be the relationship with France, and especially President Emmanuel Macron. Over the past few years, Merkel left the Frenchman twisting in the wind, most notoriously when she effectively ignored his September 2017 proposals for European reform. When asked where his first visit if elected Chancellor would be, Scholz said, “Paris. Franco-German cooperation is central to our ability to move Europe forward and achieve European sovereignty”. That is indeed the right path, but there are two pitfalls along the way which Macron has already fallen into, but which Scholz and Baerbock may help him out of.

The first is to avoid turning Europe (back) into a Franco-German club, a real danger after Brexit.

If Berlin and Paris go for an intergovernmental cartel at the expense of the other member states, they will meet strong and justified resistance.

If they call upon them to take the plunge into a full federal union they may encounter even stronger opposition, but at least they will not be asking the smaller and middling states to do something that they are not prepared to do themselves. 

The second trap is refighting Brexit. For emotional and domestic political reasons, Macron has plunged headlong into this, picking fights over fishing, Northern Ireland, and the submarine deal with Australia (which has little to do with the EU, but which Paris has been trying to drag Brussels and the member states into). So far, Scholz has avoided the same emotional rhetoric as his French counterpart, although he has had little positive to say on Brexit. He has largely toed the EU line, claiming in 2020 as Finance Minister that, “hard Brexit would have very harsh consequences on the UK economy…not so much on the EU economy after the preparation we have already made for this eventuality”. There is a tone of continuity in the coalition agreement, which signals no softening towards the Germans’ British friends, but rather promises “a common European policy towards the United Kingdom”. If Frost was hoping for flexibility over the Protocol he would have been sorely disappointed by the agreement’s doubling down on ‘full compliance’ with the Northern Ireland Protocol and the Good Friday Agreement. 

The problem for the new German government is that it has signed up to a flawed interpretation of the Protocol and the Agreement it is meant to defend. Suspending the protocol for reasons to do with vital national interests is actually possible under the protocol itself. The EU leadership showed this themselves when they briefly invoked the famous article 16 to try to block vaccine imports from the bloc into Northern Ireland. If placing a customs boundary between the six Counties of Northern Ireland and the twenty six counties of the Irish Republic is a violation of Irish national identity under the Good Friday Agreement, then putting that border in the Irish Sea, separating Northern Ireland from the rest of the UK is a violation of Unionist rights enshrined in the Agreement. Ultimately, the German government could find itself endangering the integrity of the EU Single Market over the Northern Irish peace accord, which is not a place it should want to be in. It may come to rue putting Ireland into a domestic coalition agreement.

There is a real danger here. The Britain of 2022 is not that of 2017, when the May government rolled over in the face of EU ‘unity’. Frost has already rolled back that agreement with the ‘protocol’, which in turn is increasingly unworkable and threatens the Irish peace settlement by violating Unionist consent. Moreover, much of the rest of the EU has moved on and in the east is looking to the UK to help defend them against Russia. Any confrontation which damages the UK-EU relationship would thus hurt Europe, even if it was victorious.

In short, for the new German government taking on the British overfishing, Northern Ireland and some other battle in order to ‘punish’ them for Brexit, to enforce EU ‘rules’ or to scratch whatever other itch they may feel would be an epic mistake. This is a battle that the EU can neither win nor afford to win.