Must Do Better

If the EU is to be a global player and not a plaything, Germany must make crucial improvements to its European policy.

Traditionally, German foreign policy has been viewed and shaped through two prisms, that of the European Union and that of the transatlantic relationship. The country’s involvement in the EU and NATO, and its close cooperation and coordination with Washington have presented a normative frame of reference and practical operational framework for (West) German foreign policy ever since the 1950s. But now the cracks are starting to show.

For Germany, this means not to turn away from one organization or the other–on the contrary. In terms of economic, political, security and defense policy, Germany depends heavily on both and will continue to do so for the foreseeable future. This is all the more true as global institutions see their foundations shaken, paradoxically, by pressures from the United States. It will therefore be in Germany’s interest to make its relations with its European partners, and any resultant relations with the US, as targeted and resilient as possible.

A Question of Global Governance

In today’s rapidly changing world order, Germany’s European agenda has become more multi-faceted than in previous decades. While initially, it was about deepening and expanding the EU, now crisis management has increasingly been pushed to the fore.

To this day, Germany’s EU policy is an expression and consequence of the fact that Germany and Europe require a reliable international regulatory framework in order to secure peace, stability, and prosperity. However, at a time of rapid international change and growing strategic competition between great powers, this policy is becoming part of a more comprehensive form of global governance. As international institutions and laws are being called into question, notably by the US, this has become a pressing task for a middle-sized power with powerful international ties–a task that cannot be achieved alone. If Germany wants to help shape the discourse on an international level, it can only do this effectively–if at all–with the help of its European partners and through the EU.

At this point, three priorities emerge for Germany’s European policy. First, the community’s inner workings must be improved and its future as a cohesive whole secured, rendering it stronger in the global race between economic regions, political systems, and from a security and defense perspective. Second, it must fend off external influences and attempted divisions, thereby improving conditions for joint action on foreign policy. Third, it must safeguard the influence of the EU and its member states in the further development of international laws and organization.

Improving Resilience

Today, European politics is no longer a matter of the voluntary realization of a grand integration project, the “ever closer union” that was envisaged by the Treaty of Rome of 1957. The pressing task at hand is to adapt and integrate existing achievements–such as the eurozone, the single market, and passport-free travel within the Schengen area–to make them sustainable. This must be addressed despite the political climate which has seen polarization increase significantly both within and between member states, in part due to the rise of right-wing populist parties.

For a decade, Germany’s European policy has focused on the North-South divide. The financial and economic crises, which rippled out of the US and toward Europe in 2007-08, and the subsequent economic, banking, and national debt crises deepened economic rifts, making political differences in the eurozone all the more stark. Those showed in disputes over appropriate political responses, open criticism of Germany’s approach, and harsh polemic in the Greek and German media. The antagonism between donor and debtor nations which has pervaded the eurozone since 2010 is undoubtedly no longer a simple matter of north and south. It has long borne traces of an East-South divide: as previous and potential recipients of support and in light of their lower income per capita, some central and eastern European and Baltic members of the eurozone view national developments, such as those in Italy and Greece, with suspicion and consider them deeply irresponsible.

A new debate has arisen over legitimacy. On the one side, governments and societies criticize “the politics of austerity” and European controls over national political decisions on domestic and economic matters as too extensive; on the other, there are those who consider non-compliance with common rules and agreements in the eurozone to be illegitimate and divisive.

Uphold the Rule of Law

If we are to attain better socioeconomic cohesion and acceptance of the common European economic system, the balance between legal compliance and political action, between solidarity and personal responsibility, must be rejigged. This would entail a review of the basic regulations of the single market and the eurozone as well as improvements to the cross-border functioning of the capital, goods, services, and labor markets. These are the tools required to provide a stabilizing effect if neither monetary policy nor market mechanisms are able to guarantee the adjustments required in the event of asymmetrical shocks.

Germany and France are expected to continue working on developing instruments for macroeconomic stabilization. Another important step is to agree on a financial transaction tax, which would provide the EU with tax-based budgetary resources, as well as measures to combat tax dumping through harmonization of corporate taxes. Additional important steps for supporting growth and convergence include greater support from structural reforms, European research and innovation initiatives to support the digital revolution, and work on the European capital markets union, aiming to improve financing options in the EU.

In recent years, increasing reference has been made to an–at times discernibly–growing rift between the East and West within the EU. The discourse on Europe in some central and eastern European nations is particularly vehement in its prioritizing of questions of identity and sovereignty. Criticism of the EU is often combined with a radical rejection of migrants of a Muslim background. The Hungarian and Polish governments push explicitly illiberal democratic models and must be held accountable for violations against the principles of the rule of law and democracy.

Beyond the East-West Divide

The dichotomy between models of liberal Western democracy and society and openness toward more integration on one side and models of illiberal democracies and societies as well as isolationist politics and criticism of the EU on the other can no longer be reduced to a fault line between East and West. It has long been the case that parties in almost all EU member states have formed and succeeded in speaking for those who feel they have lost out to globalization, see no benefits to stronger cooperation in Europe, and push for a return to the nation state. As uncomfortable as it may be, these forces must be integrated into the discussion regarding the future of Europe, and they must be challenged to formulate their own ideas in a concrete way.

Euroskeptic, often populist parties and movements receive external support, be it from Russia or the US, for instance from the former head of the Breitbart News website Stephen Bannon, with a view to weakening Europe from within: with targeted propaganda, the dissemination of fake news, and support from the extreme right and left. They reject greater European cooperation, pushing instead for an identity-based nationalism. It is crucial to the EU’s future to be able to fend off the external influences which seek to divide it, undermine its ability to act, and weaken democracies and democratic powers.

For decades–and to its own advantage–the US has supported the integration of Europe and worked toward a close transatlantic relationship. The current US president has called the transatlantic alliance into question, triggering incentives for cooperation and integration within the EU, such as in matters of defense. Washington continues to send political signals which could, or may even be intended to, undermine European unity.

Germany now has the task of tackling interference from Washington and strengthening the EU, as Washington’s negotiating partner, in those areas where Brussels has a claim to representation, such as in trade policy. When it comes to defense, it is not a matter of strengthening cooperation between Europeans “against Washington,” as is often surmised. It’s a case of strengthening Europe’s capabilities within the context of NATO and, in doing so, increasing its contribution to the alliance.

Strategic Dilemma

In the case of China, defending against interference and reducing dependence while maintaining close relations is a real balancing act. Following strategic investments, among other moves, China has developed considerable influence within the EU and must be viewed as a potential threat. Defense strategies such as screening investments or utilizing political criteria for procurement are not enough–particularly as measures developed to ban Chinese investments in strategic industries are limited in their effectiveness if Chinese businesses are operating through European companies.

China’s perceived strength is also an expression of Europe’s weaknesses. Germany and the EU’s innovative powers are waning, and they are investing too little. This trend shows the EU’s strategic dilemma particularly when dealing with the crises in the eurozone. China made strategic investments in Portugal and Greece. During the crisis, the governments of these countries understandably allowed Chinese money into the country. Considering Germany’s own economic development, this is a rational short-term strategy, as long as Germany and the EU underinvest structurally.

However, the medium-term impact on the EU and the member states is only gradually becoming clear. When it comes to the EU or the UN, governments of countries in receipt of considerable investment from China consistently “toe the line” dictated by Beijing. Indeed, in 2017 Greece blocked a joint EU declaration on China before the UN Human Rights Council, and Hungary refused to sign an EU statement on the arrests of lawyers in China. Similarly, Greece and the Czech Republic advocated watering down EU regulations on controls on Chinese investments.

A Creator of Order

The European economic debate’s narrow focus on consolidation instead of investment has other, occasionally dramatic effects within the context of global power shifts, strategic competition, and rapidly advancing technological developments. Europe is at risk of falling behind the US and China in the race for artificial intelligent and biotechnology. The most successful online portals have long since ceased to be European ones. Significant sectors of the automobile industry are feeling the pressure; Germany has lost industries such as consumer electronics, telecommunications, computing and solar energy. A boost in European potential for growth and innovation and therefore the preservation of Europe’s economic powerbase is required to strengthen cohesion within the EU and make it possible for it to take on a formative role. This applies especially to new sectors such as artificial intelligence, cyber security, and other fields with basic regulatory requirements.

In light of its economic model, its traditions, and the orientation of its values as concern foreign policy and its understanding of itself from a security perspective, Germany has indicated that international laws and institutions will remain essentially functional. New regulatory frameworks will be established in order to, for example, keep up with the pace of technological developments. Another sensible aim of German’s European policy is therefore to strengthen Europe’s international role, enabling the EU to have an impact on shifts in the world order.

Germany’s Role at the United Nations

Germany has committed to using its temporary seat on the UN Security Council to represent European interests. Symbolically, it is sharing its presidency with France for the first time. Its top priority is to take an active role in the vital discussions surrounding UN reform–especially with the US, which may withdraw from more UN organizations, or reduce funding for them.

Germany’s strategy as regards its seat on the UN Security Council is to be viewed within the context of further efforts to give the EU a more powerful voice on the global stage. The German government supports majority decisions in EU foreign policy in order to make the likelihood of a decision being reached more probable. However, a unanimous decision must first be made regarding the change in this voting model. Due to the external influences mentioned above, it is also highly unlikely that the EU will actually take this step; at best, it will first identify individual fields in which a majority decision can be reached.

Finally, Germany should assume the role of an engine in the further development of civil crisis management, in European collaborations on defense within the Permanent Structured Cooperation (PESCO), and in smaller formats. As cooperative efforts on defense intensify, one must also anticipate criticisms that Europe is working “against the US,” if, for example, it promotes its own industrial defense projects. This insinuation must immediately be countered with the fact that the initiatives are taking place within the NATO framework.

Hanging in the Balance

Germany also has an important role to play in intra-European discourse, as some central and eastern European states in particular view themselves as considerably dependent on the US. Together with France and other EU partners, Germany needs to engage in deeper strategic talks to develop a common understanding of the changing challenges, its own and more common goals, and the instruments required to achieve them. With this in mind, European partners require more than to simply establish the necessary forums and processes between themselves. A crucial factor will be whether a genuine interest exists on both the German and the other side to enter this highly political discussion in an honest and committed way, in order to make Europe more capable of acting strategically.

Germany’s European policy must get to grips with a paradox: in light of international challenges, European cooperation has never seemed so important, while the centrifugal forces at work within the EU have never been so great, strengthened as they are by strategically exercised external influences. Together with France, Germany must work on solutions to enable the EU to deal with the challenges–both internal and external–which can no longer be denied.

Over the past couple of years, both countries have demonstrated to differing degrees that they recognize the signs of the times. If they run on sight, and if red lines are considered more important than developing strategic courses for action–be they in matters of the eurozone, defense or enlargement policy–then the shifting internal and external environment will continue to shrink the scope of European policy. Part of the discussion must focus on how Europe can secure and build on its remaining strengths and which options for power it can develop in order to avoid becoming a plaything–or worse, one plaything among many–in a world of strategic competition and zero-sum game thinking. To guarantee its resilience and power to act in international affairs, Germany and its EU partners must invest much more in the internal cohesiveness of the EU.

Just over two years ago, Germany’s mantra for its European policy was that the EU would make it through the age of Brexit with its 27 states intact. London’s attempts to conduct talks with a view to reaching an agreement on the side, in the interests of German industry based in the United Kingdom, fell flat in Berlin. The aim was to make any attempt to copy the UK seem unappealing and to ensure that its threats to leave did not change the fundamental principles of the EU.

Greater Flexibility

From the German perspective, it still makes sense to define the reference group for discussions surrounding the future of the EU as participants in the single market. It also remains the correct approach to hold fast to two principles: first of all, the freedoms of the single market and the European legal system, including the Copenhagen criteria on democracy and the rule of law, are and remain the basic principles of the EU. Second of all, the EU institutions must be protected and strengthened in their contractual duties, especially following this year’s European elections.

Nevertheless, there are grounds for greater flexibility in European cooperation. Europe is ultimately only a persuasive power by virtue of its success. If the system remains in a self-blockade, it will be necessary to work together to solve the problems in smaller groups of countries. In doing so, the edges of the community become blurred: as the EU struggles to differentiate itself internally, opportunities arise to cooperate more closely with neighbors, with the UK as a former EU state and with candidate countries. Brexit will contribute considerably toward making the future conversation on some topics, such as security and defense policy, more a matter of the creative role of Europe rather than that of the EU.

To preserve the internal cohesion of the EU, or at least that of the eurozone, Germany must show a greater willingness to compromise on economic organization and finally agree to the creation of stabilizing instruments and a greater sharing of risks in return for mechanisms which exert effective pressure on national politics. This will come at an acceptable price, considering the enormous benefits Germany derives from the existence of the euro, its functionality, and the single market. Together with France, Germany must also press ahead with discussions on the EU’s competitive position. The ban on the merger between Siemens and Alstom rail operations has made it clear that this must include not just a strategic research and innovation policy but also a discussion about an industrial and competition policy which looks to the future.

The Age of Minilateral Relations

Diplomatic efforts must be reinforced when it comes to seeking compromises and building a sustainable consensus. A new age of bilateral and minilateral relations began just a few years ago, when there was talk of reducing or even withdrawing German embassies from EU partner nations because involvement in EU structures and voting mechanisms had become so close. This sought to prevent future mishaps like the failed attempt to impose a migrant quota system, to understand developments in member states and the scope of their governments, and to campaign better for the EU’s own position and identify common preferences. For some of Germany’s important partner states, such as Poland and France as much as the United Kingdom, intensive bilateral relations must be maintained very consciously in order to (re-)establish mutual trust and identify common strategic goals. That France must be listed here shortly after the signing of the Aachen Treaty is evidence of the extent to which even these formerly close partners have become estranged.

The first indications of a rethink of European policy are evident in Berlin. Previous approaches, such as the “Likeminded Initiative” or #EuropeUnited will not be enough. Plausible political proposals and pioneering efforts are still needed in light of the comprehensive challenges at hand. This may be due to the chaotic situation in the EU or a recognition of the fact that our national interest may be deeply at risk if we do not come to our senses and lead the way with a crucial willingness to lead, take action, and engage in dialogue. If it turns out to be “too little, too late,” it is Germany and Europe who will pay the price.