October 24, 2017

How Will Germany’s New Government Impact Berlin’s Foreign Policy?

German Chancellor Angela Merkel delivers her speech during a Lower Saxony's Christian Democratic Union's (CDU) regional election campaign rally in Stade, Germany October13, 2017
German Chancellor Angela Merkel delivers her speech during a Lower Saxony's Christian Democratic Union's (CDU) regional election campaign rally in Stade, Germany October13, 2017

Angela Merkel continues as Chancellor, but her foreign-policy options have changed

Angela Merkel may be staying on as Germany’s chancellor, but it wasn’t the landslide she had hoped for nor will she be governing with the coalition partners she wanted. Both factors will have a big impact on Germany’s foreign policy.
In September Merkel’s centre-right CDU-CSU alliance got its lowest share of the vote since 1949—meaning that she is weakened politically. It also means that her only option is to cobble together a coalition between four very different parties, all with opposing views on key foreign-policy objectives.
Her centre-right Christian Democrat CDU and her Bavarian allies, the conservative CSU, will have to find common ground with the liberal FDP (Free Democratic Party) and the Greens. This so-called “Jamaica Coalition”—the parties’ colours mirror the Jamaican national flag—will not be as chilled out as the name suggests. Building that coalition will be tricky. Keeping such fractious partners together could be even more difficult.
It’s a very different proposition to the cosy centrist coalition between the CDU and the centre-left SPD that has governed sleepily for the past four years. Both parties had gravitated to the consensual middle ground over the past decade, making agreements relatively easy. But over the next four years expect more argumentative, combative politics in Germany: faced with the threat of upstart populists, the SPD and CDU grassroots are demanding more defined left-right political identities.
The new four-way coalition that is likely to rule Germany will be made up of parties that will be struggling to prove their worth to voters—either because of a weak election result, as is the case with the CSU, or because, like the FPD, they’re fighting to re-establish themselves back in national politics. This means that leeway for compromise or ambitious foreign policy reform will be limited.
The first big foreign-policy challenge is Europe, and in particular the eurozone. Before the election there were hopes, particularly in Paris, that Merkel would devote what is likely to be her last four years as chancellor to an ambitious legacy of eurozone reform. Given Merkel’s cautious wait-and-see approach, that hope may have been misplaced. Certainly a substantial eurozone budget was never on the cards. But her underwhelming election result now makes courageous reforms even more unlikely. She’s still standing, but in no shape to take risks, and a rambunctious coalition at home will distract her.
During the election campaign the SPD was the only party to back enthusiastically Emmanuel Macron’s wish for more German support for weaker eurozone members. The new government will be made up of parties that are much more sceptical of eurozone risk-sharing.
The FDP is ideologically against fiscal transfers, seeing these as artificial support for struggling economies that need reform. FDP leaders have even suggested that the only way for Greece to get back to economic health is to leave the eurozone altogether.
The Bavarian CSU, meanwhile, is reeling from catastrophic losses in the election, mostly to the right-wing populist Alternative for Germany, or AfD, which broke into the national parliament for the first time, winning 94 seats. With Bavarian state elections next year, the CSU is determined to lure back conservative voters who defected to the Eurosceptic AfD. So expect the CSU to get more hawkish when it comes to eurozone reform, to avoid losing even more votes to the AfD.
At the same time, Berlin’s new government will try to build bridges with Macron. With the exception of the AfD, all German parties are ideologically pro-European. There is an awareness in Berlin that a struggling eurozone weakens the German economy and emboldens Eurosceptic populists. So Merkel and Macron will attempt to find common ground in less contentious areas, such as security and defence.
On Brexit, some British politicians and commentators had hoped that a strong Merkel win would help Britain get a good trade deal. That was based on a Brexiteer theory that a CDU-FDP government would be steered by German business and put pressure on Brexit negotiators in Brussels. That was always an illusion: German business views the integrity and long-term survival of the single market as more important than short-term trade with the UK, and has always backed Berlin’s support of Brussels. But Merkel’s weaker position, and her more complicated governing coalition, should finally dispel that Westminster delusion.
The second big foreign-policy challenge facing Germany is migration. In the election Merkel’s CDU lost around one million voters to the anti-migrant AfD, after she was blamed for her so-called “open-door policy”. In fact, since numbers peaked in 2015 and 2016, Merkel’s government has been quietly pushing the door shut. Refugee numbers have dropped substantially—mainly because the Balkan route has been closed, but also as a result of the controversial EU-Turkey deal.
In her next term in office Merkel’s coalition needs to straddle a seemingly impossible divide: keep the Green Party and moderate CDU members happy by sticking to Germany’s humanitarian refugee commitments, while pacifying conservative demands for a cap on asylum-seeker numbers. The contradictions will be papered over by avoiding certain inflammatory words—such as Obergrenze (“upper limit”). There are also moves to redefine categories of migrants and introduce a new immigration law that would enable migrant workers to come to Germany. But a coalition agreement will be a tricky balancing act that could falter if numbers surge again.
The third pillar of German foreign policy is the transatlantic relationship. Here the main problem for Berlin is president Trump’s erratic behaviour. Chancellor Merkel is a committed trans-atlanticist who is aware of the important of the US to Germany. So she will stick to her principal of pragmatically engaging with Trump while attempting to uphold Germany’s free-market, rules-driven principals.
In this, she is likely to get more support from her new government coalition partners than she did from the SPD. Left-wing parties in Germany are traditionally ambivalent about the US, and during the election campaign the SPD was the only party that attempted to score political points by talking tough on Trump—SPD leader Martin Schulz apparently hoped that he could have his own “no-to-Iraq-invasion” moment and repeat Gerhard Schroeder’s electoral success. But the feisty rhetoric came across as macho and aggressive. German voters appear to like Merkel’s calm, only-adult-in-the-room approach when dealing with difficult foreign leaders. Without the SPD in government, Berlin may pursue more ties with Washington.
The FDP, with an admiration for American dynamism and liberal market principals, is committed to a deep transatlantic relationship. The Green Party, meanwhile, is currently run by its economically pragmatic moderates, known as “Realos”. They are opposed to the Transatlantic Trade and Investment Partnership (TTIP) on environmental grounds. But Trump has apparently killed off the trade deal for now, and the Greens are unlikely to waste political capital by blocking Merkel on other transatlantic issues.
On NATO, things could be more difficult. Merkel has committed Germany to eventually reaching NATO’s defence-spending target of 2% of GDP. But that is deeply unpopular with voters. The FDP favours more pan-European defence cooperation and is keen to cut taxes, so defence spending targets as a proportion of GDP appear arbitrary and wasteful. The Green Party, meanwhile, is not only against more defence spending, but also wants Germany’s arms industry scaled back.
But it’s Germany’s main opposition party that could create the most fuss over NATO. Arms spending is one of the main political fault lines between left and right, and as the SPD liberates itself into opposition, and attempts to regain its left-wing credentials after years in a suffocating grand coalition, defence could prove a useful, cost-free policy. Merkel is trying to neutralise the issue by pushing the NATO target into the future and remaining vague on how it should be achieved. But if she is forced to take concrete action and increase defence spending substantially, expect fireworks in Berlin’s parliament.
The final foreign-policy challenge is the relationship with Russia. Merkel will attempt to keep dialogue going with Putin, while remaining firm on Crimea and anti-Russian sanctions over Ukraine. But her CDU party is outnumbered. All the parties now in parliament, with the exception of the Greens, have a conciliatory attitude towards Moscow and favour loosening sanctions. Some leaders, including the FDP’s Christian Lindner, have suggested accepting the annexation of Crimea. Merkel’s government will probably stay on course, with the Greens and the FPD cancelling each other out. But there will more ferocious debate in parliament when anti-Russian sanctions next come up for renewal.
Overall, Merkel’s next government is likely to project an image of stability. The economy remains strong and, if talks go well, a “Jamaica coalition” could provide voters with the best of all worlds: centre-right economic reliability mixed with Green social progressiveness, plus an invigorating blast of digital modernity from the liberals.
But this is likely to be Merkel’s last term, so the centre-right will be on the hunt for a successor. In addition, a combative AfD, and a return to left-versus-right politics, will make Germany’s parliament more divided.
To the rest of the world, Germany under Merkel will probably seem as stable as ever. But politically Germany is changing. What’s not yet clear is what it’s changing into.

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