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To the next German chancellor: Don’t sacrifice Europe

by editor

Paul Taylor, a contributing editor at POLITICO, writes the “Europe At Large” column. 

PARIS — Dear Bundeskanzler,

We don’t yet know who you are. But Germany’s partners have a message for you: Don’t sacrifice Europe to clinch a coalition.

After the most fragmented election in post-war history, you and your most prominent rival have both claimed a mandate to govern. What comes next will be weeks and probably months of wrangling over the formation of a coalition, followed by what is likely to be the first three-party federal government.

This won’t be an easy time. The pressure on you will be high, and there will be the temptation to focus purely on domestic concerns, with Germany’s role in the European Union an afterthought at best, and a bargaining chip at worse.

That would be a terrible mistake. For you. For Germany. And for the EU. Winning elections may be all about domestic politics, but in Berlin in particular governing is about Europe.

As it faces a raft of pressing challenges — geopolitical upheaval, economic uncertainty, the lingering threat of COVID-19 and the looming specter of climate change — Europe will need a strong, proactive Germany. And this election result is already cause for concern.

The risk is that EU policy — barely mentioned during the campaign — becomes something to be traded away to win over the fiscally hawkish Free Democratic Party.

FDP leader Christian Lindner will seek to prevent any move toward a fiscal union. He opposes common European debt issuance and has demanded a swift return to the EU’s strict budget discipline rules and to Germany’s own balanced budget obligation. He is against both tax increases and higher state borrowing. 

He also wants the crucial job of finance minister — a role in which he would call the shots in the eurozone and likely take a hard line rejecting any shared liability for other EU countries’ debt or for rescuing their banks.

Having secured more than 11 percent of the vote, the FDP is in a pivotal position to determine whether you or your rival will lead the next government. In either case, the pro-European ecologist Greens, with about 15 percent, would be the other junior partner.

Pulling them both into the same coalition will be your first test as leader — and it won’t be an easy one. Your awkward bedfellows will want to nail down every dot and comma of a government program in a formal “coalition contract.”

The last such document — which brought a Grand Coalition of conservatives and Social Democrats to office in 2017 — promised a “new departure for Europe,” following the U.K.’s vote to leave and the EU’s migration crisis.

What it couldn’t do was predict the real leap forward in closer integration — that arrived only years later, with the collective response to the coronavirus crisis. After a chaotic, beggar-thy-neighbor start to the pandemic, EU countries came together to create a common recovery fund, financed — for the first time — by collective borrowing and agreed to pool purchases of vital vaccines.

Both of those landmark decisions ran counter to deep-seated German instincts of avoiding a “transfer union,” in which wealthy, frugal northern countries subsidize poorer, more indebted southern countries. And yet, fortunately, in an emergency, your better angels prevailed.

As a result of your predecessor Angela Merkel’s courage, everyone is a winner: The European economy is bouncing back faster than optimists dared forecast, even before most of the NextGenerationEU money has been disbursed. Southern countries’ borrowing costs have stayed low as the joint debt issuance has buoyed market confidence, and Germany’s European export markets are buying again.

But under your leadership, Europe will face a new challenge: making those temporary one-off advances permanent, to give EU countries the capacity to make vital public investments in the green and digital transition.

That will be a tough sell in Germany, but it needs to be made.

During the campaign, you and your main opponent stuck to the comfort blanket of fiscal orthodoxy, promising to revert to Germany’s constitutional “debt brake,” which severely limits public borrowing, as soon as the pandemic is over. While that may have seemed a political necessity to reassure nervous voters, it is economic nonsense.

Europe and Germany both need massive investment to drive the industrial and energy transformations required to achieve carbon neutrality. That can only be done by raising public capital — both at the national and European level — either circumventing or amending the EU’s strict debt and deficit rules.

Fortunately, there are formulas for issuing debt for public investment without having to rewrite your constitution or breach European regulations. You should propose off-budget funds at the EU level to build green energy networks and high-speed digital networks.

In geopolitics too, your EU partners will want you to take more responsibility for collective action. This will include pushing back against Russian assertiveness in Eastern Europe more firmly, tempering your lucrative trade ties with China with greater vigilance toward human rights and European security interests, and stepping up in NATO and European defense efforts.

Whatever they may say, few Europeans actually expect you to go back on the now-completed Nord Stream 2 natural gas pipeline from Russia to Germany, even if many think it was a geopolitical error to build it. But when that pipeline comes on stream, you will have a duty to uphold Merkel’s pledges that Ukraine will remain an energy transit route — imposing extra sanctions on Moscow if necessary — and that Berlin will invest in hydrogen power development in Ukraine.

It’s high time too that Germany gave stronger backing to democracy, rule of law and fighting corruption in Hungary, Poland, Bulgaria and Romania. Berlin’s reluctance, for historical reasons, to get tough with its eastern neighbors has emboldened them to defy EU norms with increasing brazenness.

As former Polish Foreign Minister Radosław Sikorski said a decade ago, “I fear German power less than I am beginning to fear its inactivity.” 

Actually, I fear a toxic combination of the two: that your unwieldy and wobbly coalition may use German power to impose lowest-common-denominator solutions rather than live up to its responsibility to help build a stronger and more coherent Europe.

Please prove me wrong.

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