German Europe

Continent longs for German Europe

A weakened Berlin is bad news for the entire EU.

By MATTHEW KARNITSCHNIG

For decades, the Continent has feared the specter of a “German Europe,” of domination by its biggest country.

These days Europe is more worried about what it will do without a strong German hand at the tiller.

The collapse of coalition talks in Berlin on Sunday is fueling concern that a political vacuum in Berlin could bring the European Union to an effective standstill as it confronts challenges big and small.

“It’s not a good sign for Europe that it’s taking so long,” Bulgarian Prime Minister Boyko Borisov, whose country takes over the EU’s rotating presidency in January, said in Sofia on Monday.

Issues ranging from the EU budget to Brexit to reforming the eurozone will either be delayed or put on hold indefinitely until Germany has a new government.

Trouble is, no one knows when that will be.

On Tuesday, all signs pointed toward a new election. German President Frank-Walter Steinmeier met separately with the leaders of the Greens and the Free Democrats in an effort to nudge them toward compromise. But there was no sign of a breakthrough.

Chancellor Angela Merkel, who met with Steinmeier on Monday, reiterated her skepticism about the prospects of a minority government, saying she would prefer another election.

If that happens, Germany is unlikely to have a stable government until the summer, at the earliest. In the meantime, Merkel would continue to lead a caretaker government with the Social Democrats.

But with its mandate expired, the government’s ability to make important strategic decisions would be seriously constrained.

While some have speculated that France could take the lead in Europe, that seems unlikely, given the outsized importance Germany has in the bloc.

“Less Germany does not mean more France, it means less joint European action,” Ulrich Speck, of the Elcano Royal Institute, a think tank, wrote this week.

Reforms can wait

The first victim of Berlin’s paralysis is eurozone reform. Germany has been under pressure to engage with France over a series of reform proposals for the single currency area put forward by President Emmanuel Macron.

Macron has been eager to use the momentum after his May election to reinforce the architecture of the eurozone, which most policymakers agree is in sore need of repair.

“It is not in France’s interest for things to get blocked,” Macron said after the German coalition talks collapsed.

Securing such a deal with Germany would be difficult even it had an empowered government. Without one, it’s impossible.

“We’re in the middle of a phase in which we’re discussing whether and how to deepen European integration and a partner like Germany is of crucial importance,” said Austrian Finance Minister Hans Jörg Schelling.

For Schelling, the absence of German leadership hits close to home. He’s considered a top candidate to become the next head of the Eurogroup of eurozone finance ministers. The election is scheduled for December 4 but may now need to be delayed because of the political situation in Berlin.

A more immediate concern than Macron’s EU reform agenda are issues such as Brexit, the EU’s defense initiative and the budget negotiations.

In the U.K., some have speculated that the political limbo in Berlin could strengthen London’s hand in the talks.

“The political weakness of the strongest EU state makes our negotiating position stronger,” Tory MP Jacob Rees-Mogg told the Daily Mail, “With manifold domestic troubles not just in Germany, member states need a deal more than we do.”

Others have suggested the political situation in Berlin will have little impact on the negotiations.

“I don’t as it happens think that the German government will be in any way incapacitated either from negotiations in December or from going forward to do a great free trade deal with the U.K. in the course of the next 18 months,” Foreign Secretary Boris Johnson said.

It’s more likely that Berlin will play an even less active role than it has up to now, deferring to Brussels and France instead. While Merkel hasn’t missed an opportunity to intone the importance of EU unity on Brexit, there has been some speculation, both in Germany and the U.K., that Berlin would pursue a more Britain-friendly course once talks enter phase two in order to safeguard its economic interests there.

That’s now unlikely. Instead, Merkel’s caretaker government will be at pains not to make any moves that could be construed as damaging European unity.

A crucial voice, silenced

Less clear is how Berlin will position itself on issues such as the EU’s disputes with Hungary and Poland over the rule of law. While Merkel has staked out critical positions on both fronts, it will now be difficult for her to take any decisive action. The same is true on the question of EU enlargement in the Balkans, where Germany’s voice has been crucial.

Meanwhile, Germany’s own interests are suffering as well. Berlin’s failure to secure the European Banking Authority for Frankfurt was seen by some in Germany as a direct result of the political disarray in Berlin.

“To steer things in the right direction would have required the full attention of those in power,” the business daily Börsen-Zeitung wrote Tuesday, calling it a “failure of Berlin diplomacy.”

Some in Berlin are still holding out hope that the Social Democrats can be convinced to give up their refusal to renew a grand coalition with Merkel’s conservatives. So far, party leader Martin Schulz, who is set to meet Steinmeier for talks Thursday, has insisted it’s not an option.

But with pressure from both within Germany and outside it, Schulz, who spent most of his political career in the European Parliament, may be forced to give in.

“We all have responsibility for our country,” parliament President Wolfgang Schäuble said in a speech to MPs on Tuesday in which he urged the parties to come together.

“Europe needs a Germany that can act.”