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Is Germany Becoming Too Powerful for Europe?

The COVID-19 pandemic has ravaged economies of the majority of European states and – once it is over – Germany will emerge as by far the most powerful country on the continent. This, combined with the departure of Angela Merkel in 2021, might tempt Germany to start promoting its interests more assertively. That would be a mistake.

Standing in Berlin in 2011, Polish Foreign Minister Radosław Sikorski proclaimed that he fears “German power less than German inaction”. Such words would be unusual for any Polish minister at any time.

Accordingly, the opposition back home accused him of advocating too close relations with Berlin, and even of treason and selling out Polish sovereignty. In other European capitals – many of which at that time battled the eurozone crisis – enthusiasm for his speech was also subdued.

Almost a decade later, with the coronavirus pandemic exhausting the strength of the European economy, Sikorski’s words about the need for more German engagement seem to be a generally accepted wisdom throughout Europe. It was Berlin’s consent that made it possible to pool resources and issue common debt to fund the so-called Recovery Fund.

It was first and foremost Germany that managed to negotiate a budget deal during July and December EU summits that aimed to reconcile diverging interests and perspectives of 27 member states.

Taking up the mantle of a ‘responsible stakeholder’, Angela Merkel once again managed to keep – not without some collateral damage, like watering down the rule of law conditionality – the EU together.

Due to this unpleasant, but extremely rewarding role of an intermediary between the North, the South and the East, Germany has become a truly indispensable power in Europe.

A new ‘German question’?

This stabilising approach, however, should not be taken for granted. Rapid changes in the global and European balance of power, and thus the growing power of Germany will create many incentives for Berlin to use its clout more assertively.

After all, the old unipolar world, which gifted Europe prosperity and peace, is over. Multipolarity and the era of great-power rivalry are already knocking on Europe’s door. Liberal forces that once encompassed the whole continent, has been in retreat for some time now. Collective memories about the horrors of the past, to which the EU was an answer, slowly peter out.

There is also the COVID-19 pandemic. According to The Economist data, in May, Germany was responsible for almost half of state aid approved by the European Commission. Moreover, in the first half of December, it asked the European Commission to consider doubling the limit that can be spent to help firms struck by the slowdown.

Although there are some domestic risks to such a generous aid, the bottom line is that no other country in Europe can afford to spend so lavishly to save the most powerful engines of their economies.

On top of that Germany’s budget surplus allowed it to support entrepreneurs and workers through large rescue packages, without putting as much strain on public debt as has been the case of other large European economies, such as France or Spain.

The authors of a report (released in November) by Scope Ratings, German-based rating agency, acknowledge that they “expect Germany to be the only country among the EMU-4 [Germany, France, Italy, Spain] with a fully stable debt trajectory, thanks to a prudent fiscal framework and moderate debt level”.

As Ruchir Sharma put it in the opinion piece in The New York Times: “The strengths Germany is showing make it the large economy most likely to thrive in the post-pandemic world”.

Indeed, only when the European economy comes back on track after the pandemic, will we be able to see the true gap that Germany will have built over its EU partners, especially France.

Hence, there is reason to believe that this new state of play will have an impact on political decisions taken in Berlin. The other factor is an imminent departure of Angela Merkel, which is likely to trigger voices calling for a change in the way Germany deals with Europe. Although no major candidate to succeed the chancellor has yet expressed such a sentiment, this temptation will only be natural for three reasons.

First, the country will enter the post-pandemic era with more economic power than France and its other European partners.

Second, renewed partnership with the Biden administration will most likely be built around the ‘partnership in leadership’ strategy, which – due to increasing American commitments in Asia – may leave Germany free to act on the European scene as it sees fit.

Third, for the last 15 years, Germany’s foreign policy has been based on seeking compromise, slow adjustments, and soft managing differences arising between EU member states. This approach has been neither enticing, nor widely understood by the public, and therefore contains the seeds of its own demise.

Merkel’s three principles

Despite these incentives, however, Germany will be best served to stay the course charted by Merkel’s four terms in power, and informed by the three principles that have accompanied her during this time.

The first one is a desire to retain tenuous European stability. The last couple of decades was a time gifted to Germany by favourable winds of history. After the collapse of the Berlin Wall, stability in Western Europe, strengthened by a common currency and gradual opening of new markets in the East, played a crucial role in Germany’s economic development. For that reason, a few times during her time in office, Merkel went to great lengths to preserve stability in Europe.

In fact, if one was to pick one overriding idea behind extending a helping hand to the South in 2015 during the refugee crisis and doing the same in 2020 during the COVID-19 pandemic crisis, while trying not to alienate the East, it would be preserving stability on the continent.

The second principle is an inclination to ‘sit on the fence’ and maintain the role of responsible stakeholder in Europe. Whether it is a discussion about EU relations with Russia and China, or about a closer European integration, Merkel’s Germany seeks to find the middle ground between conflicting visions. It does not allow its own interests to be trampled, but neither does it allow interests of other states to be totally dismissed.

Germany builds coalitions (as with France to create the Recovery Fund) and mediates (e.g. between the frugal North and the needy South), but can also impose its solutions against the will of some of the European partners and the United States (as with Nord Stream 2).

It firmly sticks to the transatlantic alliance but is not willing to give up on relations with China. It speaks volumes that Germany, while extending a proposal of refined partnership to the Biden administration, again decided not to ban Huawei from its telecoms market. This balancing act is meant to position Berlin as a responsible power that can cut a deal with virtually every state, thereby preserving a stable and predictable international environment in which Germany thrives.

The third principle – historical awareness – is rooted in Merkel’s personal experience. Born in East Germany and having been raised in divided Germany, she is well aware of Europe’s brutal past and Germany’s part in it. Special responsibility that Berlin has towards the rest of Europe is embedded in the thinking of Merkel’s generation, and that commitment has in the last few years contributed e.g. to the conciliatory tone towards leaders of Poland and Hungary despite their autocratic tendencies.

If on most occasions, Merkel strives not to impose proposals written in Berlin on the rest of Europe, but instead negotiate them, it is not only due to the complex EU procedures but also due to this historical perspective that she has brought to the chancellor’s office.

Although Merkel’s adherence to these three principles has not always yielded benefits for Europe as a whole, it nonetheless helped to produce a breakthrough EU budget and the post-pandemic European Recovery Fund, already dubbed the new Marshall Plan. This was precisely the show of German power Sikorski was talking about in Berlin almost a decade ago.

After the COVID-19 pandemic and with a new chancellor in office, much more powerful Germany should not forget that their responsibility will invariably remain twofold: for their own interests but also for the stability of Europe.

Source: Visegrad Insight

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