European Council on Foreign Relations

Berlin notebook: fat years for Germany alone

All those who speculated about a change of government, including a substantial change in policy, in Germany after the elections may be disappointed: not only is it likely that the policy may not change, but perhaps not even the coalition. The weakness of the SPD (Social Democrats) is the CDU’s (Christian Democrats) strength. Small signs are emerging and pointing to what may have seemed unlikely (at least for the past weeks): that the coalition of Christian-Democrats and Liberals may simply stay in power.

In Germany, Angela Merkel seems largely unaffected by Hitler paintings or Bismarck analogies, or by a European South that seems to be politically and socially on fire – and European-wide criticism rolls off her skin like water droplets from glass. Instead, it seems to strengthen this embodiment of the "Swabian Housewife", guarding Germany's money without needing the rhetoric or iron handbag of Margaret Thatcher. After all, Merkel – at least in the beginning – was Helmut Kohl's girl (Mädchen), and she perhaps learned from him the pleasure of occupying government office. The election program – saliently entitled governmental programme – that the CDU presented this week is aimed at pleasing the majority of Germans: from mothers to pensioners, everybody gets a small election gift. Fat years for Germany alone seems to be the CDU motto: austerity is for others. The CDU intends to spend some €7-8 billion on election gifts and new infrastructure programmes, without raising taxes. Furthermore, rather than increasing debt it aims at reducing existing debt in real terms.

This is the second German Wirtschaftswunder!

In current polls the CDU comes up with around 42 percent; the FDP scores 4 percent (but is likely to get more and clear the 5 percent hurdle, especially if a few potential AfD (Alternative fürDeutschland) voters decide to vote for the FDP if it promises to stay “tough” on Transferunion  and legal issues related to the ESM). A total of 47 (or even 48) percent does not seem out of reach for the CDU/ FDP combination, and voters do not seem unhappy with this.

People outside Germany may not read the programme with so much enthusiasm. The first page of the programme is prominently dedicated to “Germany in Europe”, but the first page only. Those who may have expected clear policy indications on how the government would shape European intuitions or move towards banking union will be disappointed. Where the SPD party programme at least has potentially promising statements such as “Debt mutualisation should not be excluded”, the CDU wording on Europe is pretty vague, to put it mildly. The CDU commits itself to helping other countries overcome the crisis, to rediscover the path to growth and productivity, and to import the German system of apprenticeships and vocational training so that youth unemployment can be reduced. Those at the receiving end can look forward to it: 5,000 training positions were recently promised to young Spaniards. The problem seems to be, however, that for this sort of training on the job you need a Mittelstand, the very specific fabrics of small and medium sized enterprises that Germany is so full of – but Southern Europe less so. The distribution of some sweets is certainly a nice painkiller; but whether it is a long-term remedy needs to be seen.

Perhaps more important for the economic revival of the eurozone would be the completion of banking union (and a vigorous step towards this will be taken at this week's EU Council). But on the common resolution mechanism for banking union, Berlin is on now hitting the brakes, mostly for legal reasons. The question is whether the resolution capacity will be given to and controlled by a new European agency, or a network of national agencies. Berlin’s preference is clearly the latter.

The “national-network structure” is in any case Berlin’s new trend for Europe, beyond linking national banking authorities. (I will come back to this in next week's Berlin Notebook.) For the moment, there is simply more of the same from Berlin: nothing new when it comes to Europe - at best a very tiny step and not more than one at a time. All Europeans who are getting impatient and who would rather like to see more classical steps of integration, quicker and within the existing treaty fabrics, may desperately lean on a Jewish saying for situations you are unhappy with: “This too will pass.”

However, if Merkel continues after the elections, this too will continue! Start getting used to it!


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