Getting the Expectations Right: No Great Post-Election Changes for Transatlantic Relations
Shortly before the Bundestag election in Germany on September 22, there seems to be only two possible scenarios for the next term. According to polls, either a rather unstable center-right government without a majority in the Bundesrat, Germany’s upper house, will prevail, or Germany is heading for another Grand Coalition within a decade, which will likely survive a full term, but might face political gridlock sooner rather than later. Right now, only two things are certain.
First, the CDU is well ahead and the chancellor herself remains very popular. Should she be re-elected for a third term, change is not likely to occur in the next four years. Second, as an irrefutable sign of Germany’s political stability and economic prosperity—despite the euro crisis—this election campaign has been marked by triviality in terms of debates and issues. This trend contributed to the well-known complacency that lies in any extended period of economic and market strength. In other words, the electorate—as well as political parties—is not debating the big issues, particularly those related to foreign and security policy and Germany’s role in the world.
Rather than asking about the developments in the Middle East, the potential of a Transatlantic Trade and Investment Partnership (TTIP), or the future of Europe, they are worrying about highway tolls, “veggie days,” reasonable energy prices, and a capital gains tax. As politicians in the United States, United Kingdom, France, Poland, and elsewhere are expecting German leadership commensurate with its economic and export strength, the government in Berlin is limiting itself to a passive role of successfully managing political conflicts at home.
The Euro Crisis
The prerequisite for this role has been Merkel’s crisis management throughout the euro crisis—hopefully not at the expense of the political future of the EU. Although she had been under constant pressure since the onset of the euro crisis to take more serious action with regard to Greece, the chancellor insisted on economic austerity and only started following the European Central Bank’s (ECB) pledge to do whatever it takes to prevent the currency bloc’s break-up when southern beneficiaries of EU rescue packages agreed to undergo drastic structural reforms.
The fact that she took neither course, but instead pursued a very pragmatic approach of doing both step-by-step, is why she has sustained such impressive popular support—and why even the National Security Agency’s (NSA) Prism surveillance affair did not really weaken her ability to govern. By pursuing the methodical approach, Merkel even withstood U.S. pressure and stronger preference for using counter-cyclical macroeconomic policies—namely “quantitative easing” and deficit spending to stir the demand side of the economy—to solve the euro crisis and reduce account imbalances on the global level.
Meanwhile, the southern European economies seem to be picking up a bit, and German unemployment, despite underwhelming 2014 forecasts, is still the lowest it has been since unification. Whether this means that the crisis is over and all problems are fixed remains to be seen. As a matter of fact, however, the majority of the German electorate still seems to trust Merkel on that issue more than the opposition, but they feel excluded from deliberations on the future of the euro.
Though it is certainly not a campaign issue, governments on both sides of the Atlantic should push vigorously for TTIP after the election. This will require broadening the objectives of TTIP. Estimates of a rise in German exports by about 1.2 percent and imports from the U.S. by 1.6 percent suggest that most potential lies in an agreement that includes both the elimination of tariffs, which are already low, and—more difficult—the reduction of non-tariff barriers that can be directly influenced by policy or which result from lowering other trade-spurring elements, such as foreign direct investment. This latter category constitutes nearly 80 percent of the potential economic gains from TTIP.
This means that both sides will have to push against vested domestic business interests and must be willing to exert political leadership, particularly within the EU, in Berlin’s case. Leaders must also start to communicate that we should not stall over minor issues, but instead recognize that fragmented global production and supply chains have made free trade and more efficient regulation mutually dependent.
One of the most pressing issues beyond elections will be energy security. The paradoxical situation is that, although all parties supported the idea of going green and thus, could not exploit rising energy prices as an election argument, energy prices have started to divide the German electorate. For the next coalition, it will be decisive to correct the premise of Germany’s energy transition, which holds that soaring fossil fuel prices will make eco-power affordable.
As the United States is heading for oil and gas self-sufficiency, which will bolster Washington’s international position and its economy, Berlin, knowing that low energy prices are the driver for any industrialized country, is about to harm its climate goals with eco-power. This sounds paradoxical, but unlike how American natural gas is replacing coal and thus reducing carbon dioxide emissions, Germany emits more now than before the energy transition. Merkel has already announced that an adjustment of the renewable energy act (EEG) ranks very high on the agenda for the next four years.
Greater Middle East
Last but not least, the issue that contributes most to what experts like to call the transatlantic “expectation gap” is the mismatch in domestic and international perceptions of Germany on conflict and crisis management in the greater Middle East. As Washington looks for Germany to increase its engagement and leadership in global affairs, Berlin’s position is nowhere more inconsistent than on the issue of a strategy vis-á-vis the region. The dilemma with this is that, although it’s not a new phenomenon, it is happening at a time when the only nation that could exert leadership—namely the United States—cannot convince a skeptical American public on Syria and, thus, is losing credibility in the region as well. How, then, can you expect Germany to take the lead—at least within the EU?
Unfortunately, the result of the latest developments in Syria is that Germany feels vindicated, though its support for Obama’s G20 declaration was was half-hearted at best. The strategy of “leading from behind” will become the major dilemma for the West in the region, and Germany will continue to depend on a global security system to which it could make more contribution. It would, however, be extremely important for Berlin to leave its status as an inconsistent partner, who abstained from the intervention in Libya and maneuvered between natural allies and the opposition in Syria.
In other words, the country can escape from its contradiction and call for a rules-based world and punishment for Syrian chemical weapons use. Or, it can let others do the punishing. Unfortunately, it seems that the current turmoil in the Middle East will not provoke Germany to rethink its global role. That’s why we should not expect too much from the new government, which will likely be another Merkel-led coalition.