European Affairs

This approach is obviously colored by the often-exaggerated sense of anticipation that started building up last spring about the German presidency and its potential to change conditions in Europe. A bleak mood reigned in Europe (then as now), stemming from the deadlock over the EU constitution and fuelled by what seems to be general growing antipathy toward the EU itself. Suddenly, Germany – and Merkel – started being touted as the savior capable of bringing solutions to all these problems. One reason for the high expectations was the impressive start of Merkel’s chancellorship, a performance offering a sharp contrast to the often-devastating political situation in neighboring major European countries. For example, only weeks after she came to power in October 2005 Merkel emerged as one of the key players in finding a compromise on the EU financial package in December. Suddenly, the dark sky over Europe seemed to lighten at least a bit, and she got credit for part of that change.

At first, top officials in Berlin were flattered. But their mood changed as more and more requests came in for action to solve major problems on Germany’s watch. By the time of the EU summit in Brussels in June 2006, they were relieved by the cautious final statements, which were seen by many Europeans as a downright failure. That outcome cleared the path for a more realistic perspective, at least on the question of the EU constitution. The timeframe for a solution now extends far beyond the end of the German term in June 2007.

Merkel herself has prepared and positioned herself carefully for her entry onto the European stage. As the opposition leader and chief of the Christian Democratic party (CDU), she regularly met with other conservatives from other EU countries. And she carefully positioned herself in the center – between France and Great Britain, between big and small EU countries. Coming from East Germany she was – and still is – considered to be much more sensitive to eastern European concerns – even though it was the previous chancellor, Social Democrat Gerhard Schröder, who actually drove the entry of the eight Eastern European democracies into the EU (against initial French opposition).

So Merkel looks like the ideal power broker. In international and European politics, strength is measured in relative terms, and all her major partners seem to be weak at the moment: Jacques Chirac and Tony Blair are lame ducks, so they cannot afford to support controversial initiatives on the European level. Poland under the nationalistic Kacynski twins (President Lech Kacynski and Prime Minister Jaroslaw Kacynski) seems to be moving into isolation even within Eastern Europe. Among the bigger member states, only Spain and perhaps Italy to a lesser degree have domestically unchallenged pro-EU leaders at the moment.

Domestic politics has already taught Merkel how painful it can be not to be able to live up to high expectations. In opinion polls, her governing grand coalition is losing support after decisions to raise taxes and reform the health system. In Europe, where the presidency depends for success on 24 partners, the appetite for change seems even smaller. So “our mission is Erwartungs-Management [management of expectations] at the moment,” admits a top official in the chancellor’s office. Of course, he adds, Germany wants to live up to expectations of seeing Germany play a leading role in constructive EU developments. And the German record is not bad in this respect.

When Germany held the presidency the last time in 1999, Berlin brokered a major EU deal on financial perspectives and got consensus on “Agenda 2000” – an action program aimed at giving the EU a new financial framework for the period 2000-06 with a view to enlargement. It was no mean feat considering that the rising costs associated with taking in new member states had to be reconciled with France’s interest in keeping its farm subsidies under the Common Agricultural Policy. The German government, then a coalition of Social Democrats and Greens, also managed to lead European nations into the Kosovo war without doing too much damage to relations with Russia, which was opposed to outside intervention.

This time, though, there are particular difficulties, including electoral calendars, that will make it hard to get decisions on the single most important issue on the agenda: the stalled EU constitution. After the failure of the referendum on this issue in France, only a newly elected leader in Paris can take decisions on how to move on. But the French presidential elections will not take place until May, leaving only a month before the German presidency runs out. This view of the French situation is shared by all EU governments – hence their agreement at the summit last June to push back any formal deadlines. On this and other issues, Merkel always has to bear in mind her domestic situation as the head of a coalition government in which she has to work within the terms of the coalition contract that her Christian Democrats signed with the Social Democrats.

On a more positive note, what the German government thinks it can do in its presidency on the constitutional problem is to start paving the way for a breakthrough later on. The declared aim is still to save as much as possible of the draft constitution. As German officials constantly repeat, the majority of EU states have ratified the proposed constitution, so over time pressure will build on those states that have not ratified yet or are not willing to try to. Even Romania and Bulgaria, which join the union on January 1, have ratified the draft. In her thinking, Merkel sees a fresh opportunity in the planned “informal summit” on March 25 – commemorating the 50th anniversary of the treaty of Rome in 1957 – to raise awareness of what binds Europeans together and thus reinforce the point that the constitution is necessary. Even, Berlin hopes, ratification reluctant governments will be inclined to try moving ahead. And the German presidency hopes to be able in June, as it hands over the EU presidency, to bring out a roadmap for the constitution that could lead to a decision during the French presidency of the EU – in the second half of 2008.

Until then, even Merkel now stresses, it is unlikely that a decision can be reached. This new view may not sound ambitious, but the German government’s recent experience with this issue has convinced Berlin that it will be a success to just keep alive the idea that the EU needs a constitution. Berlin clings to this vision even though both Nicolas Sarkozy and Segolene Royal, the two leading candidates in France, have both already made it clear that they want major changes in any new draft constitution.

In comparison to the constitution impasse, other foreseeable items seem secondary on the German agenda. Normally, a country holding the EU presidency can be expected to look for ways to improve its image, usually by pushing a major new “directive.” But directives take years of preparation by the European Commission before any decision can be reached, and right now the pipeline of new EU regulations is rather empty. Under President Manuel Barroso, the Commission has been reluctant to launch initiatives on new directives. For many leaders, this might seem problematic, but Merkel is determined to turn it into an advantage for her policies.

Domestically, she has declared that the reduction, not extension, of state regulation is one of her major aims – and public opinion appears to have reacted favorably to this. Extending this approach to her EU role, the German government pressed hard at the EU summit meeting last June and succeeded in getting agreement on tasking the Commission to report on ways of cutting red tape in the EU bureaucracy in order to make the European project more popular with Europeans. Unfortunately the EU Commissioner charged with the Bürokratieabbau – a German, Günter Verheugen – recently blotted his copy book in Brussels with a controversial (some people say unwarranted) attack on the overall quality of EU employees.

Germany also wants to launch a general debate on what programs need to be completed to put in place an integrated EU as planned. The Commission has been told to present an inventory of what has been done and what remains to be done to implement the already agreed blueprint for a fully integrated single market. This exercise, involving a review and some recommendations, will provide an opportunity for a deeper debate on where the EU wants to go and what it still hopes to achieve.

Similarly, Berlin has asked the Commission to schedule several reports for completion in the first half of 2007 while Germany is in the chair. For example, a report on energy policy is due at the spring summit: that calendar allows time before the EU summit in June (marking the end of the German presidency) for Berlin to assume leadership in planning a European strategic energy concept that addresses the challenges of security of supply and the right mix of fuels in EU energy consumption. Here the German government is heading for a conflict with the Commission, which is pressing for more European regulation in energy against the objections in Berlin to the emergence of an EU-wide regulatory authority.

Energy has special relevance to the German presidency because of the singular German-Russian relationship on energy and Berlin’s role as the main interlocutor on this subject with Moscow. Merkel’s entourage project confidence that she is the European leader who can find a compromise on this thorny topic with Moscow – a possibility that is probably enhanced by the fact that Germany also holds the G8 presidency starting in January, 2007.

Although she is well-placed in these respects, Merkel will find her room for maneuver restricted by political factors that limit her options. There is intense debate these days about the efforts in some countries to foster national champions, particularly in the energy sector. On the question of nuclear energy, which is finding new supporters in many countries, Merkel is bound by her government’s coalition agreement with the Social Democrats to maintain course on the “nuclear exit” strategy set by the previous German government. So this German domestic commitment is liable to limit her flexibility about possible accords on energy in the European Union and the G8.

All these preparations for a quietly constructive, rather low-key presidency may be shot to pieces by foreign crises that boil up on the EU during Germany’s watch. The situation in Serbia may deteriorate as pressures build up to decide the future of Kosovo. Iran and its controversial nuclear program are very much on the agenda, possibly with escalation in view if the UN Security Council imposes sanctions on Tehran. Nobody knows if the UN mission in Lebanon (UNIFIL), in which the EU is heavily involved, will stay as calm as it is now.

An even trickier matter could be the current uneasy compromise with Turkey (to “freeze” eight chapters of the 28 involved in the accession negotiations). For the German presidency, this matter – like energy questions – has sensitive national overtones. The question of Turkish membership in the EU is by far the biggest difference on EU policy between coalition partners in Berlin. Since Merkel is opposed to Turkey’s membership, her actions as EU president will be scrutinized with care (and even suspicion) by her coalition partner in Berlin, the Social Democrats, who favored the start of accession talks. Merkel has always maintained that she will abide by EU decisions taken before her election as chancellor – theoretically including a favorable pursuit of the Turkish accession process. But she stills favors “privileged partnership” with Turkey – a status short of full membership.

In practice, the German government would like to reframe the Turkish question in a broader context about the capacity of the EU to absorb more new members. There is growing resentment against further enlargement of the union – the phenomenon of “enlargement fatigue” mentioned recently by the president of the Commission. Merkel wants to intensify the debate about the EU’s absorption capacity, a goal she will probably pursue indirectly by proposing that the EU overhaul and intensify its “neighborhood policy” dealing with nations that do not get membership in the EU. In addition, the EU is aware that it desperately needs a strategy on the Black Sea region, on Georgia and throughout Central Asia.

The chancellor is warily conscious of the need to keep a balanced approach: If Europe looks East for a “strategic partnership,” it has to look west as well to its true and first partner – the United States. Merkel slowly warmed up to the idea for talking about a transatlantic free trade zone, at least as a distant perspective. More short term is the aim to at least link up with Washington on regulatory questions on standards and other non-tariff barriers to trade (and investment). And, of course, there will be a related push to save the stalled Doha talks on global trade liberalization.

An experiment in this presidency will be a strengthened “troika” practice in the form of tighter, stronger coordination with the two presidencies that will follow: Portugal and Slovenia. The goal is a more stable EU agenda, which shifts less every six months with the leadership of a country that has its own regional and national preferences. To implement this more stable approach, German officials are already in talks with their counterparts in Ljubljana and Lisbon. A first outcome is a work-share in the “neighborhood policy”: Berlin will concentrate in its term on the contacts to the eastern frontier of the EU, Portugal will then follow with the southern frontier. In these contacts, Germany, given its exceptional size and geo-economic weight, has to tread tactfully in order to avoid giving the impression that it aspires to a de facto 18-month EU presidency.

One crystal-clear point about the playbook for the German presidency: Merkel is determined to avoid letting Berlin monopolize all the attention. She wants to use the limelight to play up German regions. Many council meetings will be held in other parts of Germany, no doubt a lot of them in cities in eastern Germany, where Merkel was born. She started her political career in what was then East Germany and last year took President George Bush to her Baltic Sea constituency in the eastern German state of Mecklenburg-Western Pomerania – where she has already scheduled the next G8 summit talks. EU meetings in this region will also signal to other nearby new democracies that Merkel wants to see the center of the EU shift eastwards.

In making such meticulous preparations for a smooth EU presidency, Merkel is taking a very workmanlike approach, both to the potential domestic benefits and to her international role as the EU’s titular leader during the first half of the year.


This article was published in European Affairs: Volume number 7, Issue number 3-4 in the Fall/Winter of 2006.