The good European? Why Germany's policy ambitions must match its power

Policy brief
22 February 2018
  • Germany’s politicians are at last debating the country’s role in Europe. They should pursue a clear European agenda that overcomes ‘small nation’ thinking: Berlin needs to acknowledge that because of Germany’s weight, its domestic economic policy has consequences for its neighbours. It also needs to take more responsibility for European security.
  • By outsourcing European security to the United States, and closely co-ordinating with France and Britain on European affairs, Germany has long enjoyed the luxury of not having to think strategically about economics or foreign and defence policy. In economics, Germany has been unwilling to give up its partial and self-serving euro crisis narrative; in defence and foreign policy, German politicians have long avoided engaging voters in a debate about the country’s responsibilities for international security. But the election of US President Donald Trump and, to a lesser extent, Brexit, has focused minds in Berlin: if Europe is to meet its many challenges, Germany needs to question some of its longstanding assumptions.
  • This paper examines German political narratives and priorities and outlines an ambitious but realistic strategy in the areas of European trade policy, economic governance, migration management, and defence, and looks at Germany’s relationships with its main strategic partners.
  • First, Germany needs to think more strategically about trade. Under Trump, the US has given up its leadership role in setting the standards for global trade, leaving a void which the EU can fill. Germany has the chance to lead a European push for greater emphasis on social rights, environmental protection, fair taxation and political standards. Berlin needs to develop a trade policy that understands and is willing to use the EU’s considerable economic pull for its strategic goals, such as supporting reforms and social standards, or spreading market economics and the rule of law in its neighbourhood.
  • Second, Germany must take steps to strengthen the eurozone. Berlin is unlikely to support eurozone reforms like debt mutualisation, or a sizeable common budget. But there are other things it can do: Germany could agree with – and even promote – the idea that fiscal policy could do more to lean against the economic cycle at a national level. Berlin should stop dragging its feet on the banking union and make the capital markets union a political priority. Germany could also raise investment at home and abroad by setting up a public wealth fund.
  • Third, after its leading role in the EU migration crisis in 2015, Germany must help develop a long-term European strategy to manage migration. Berlin should be pragmatic about working with Turkey and Libya to stop irregular migration, while also leading the way in ensuring that the use of development aid from European countries is co-ordinated at an EU level. Here, Berlin should go beyond just economic assistance: it could help develop a neighbourhood policy that ties investment support, development aid, full trade access to EU markets, and legal migration routes, to clear standards on the rule of law, democracy, social and minority rights.
  • Fourth, in light of the deteriorating security situation in Europe’s neighbourhood, and in order to become less dependent on the United States’ protection, Germany has no choice but to invest in defence and modernise its armed forces. The government must tackle Germany’s inability to deploy at scale and the low availability of crucial weapons platforms, as well as the domestically controversial subjects of German arms exports, and participation in NATO’s nuclear deterrence arrangements. While Berlin should continue to be a leading voice for the EU’s efforts to rationalise its defence market, it should defer to the operational experience of France and Britain and work with them to increase the readiness of European troops.
  • Finally, Germany must rethink its working relationships with its main strategic partners. Berlin should not make the mistake of assuming that the Trump administration will be replaced in 2020 by a more traditional US leader, and instead invest in rebalancing the transatlantic relationship. It must enter into a constructive debate with Warsaw about migration, and the rule of law. And it should seize the opportunity that Emmanuel Macron’s presidency provides to work constructively with France on eurozone reform.

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