Germany assumes EU presidency with renewed sense of purpose

When Angela Merkel set out her agenda for Germany’s presidency of the EU last week, she made it clear how high the stakes are. Germany’s role, she said, was to prevent the coronavirus pandemic unravelling the European single market and threatening the integrity of the EU.

There is a risk, she told the Bundestag, that the “economic prospects of the EU member states will drift apart and the internal market, Europe’s core element, will be weakened”. That cannot, she said, be allowed to happen.

Germany takes the helm of the EU on July 1, and it will have one overriding, and daunting, priority — to steer the 27-member bloc out of the worst economic crisis in its history. 

“Generally, expectations of the German presidency are extremely high,” said Manfred Weber, leader of the centre-right European People’s party in the EU parliament. “Everyone knows it is the strongest country and is now in the lead from July 1.”

The task Germany faces is gargantuan in its size and complexity. But it has in Ms Merkel a veteran leader whose deft handling of the pandemic has massively boosted her authority, both at home and abroad. “She is a chancellor reloaded,” said one German official. 

That has allowed her to take political risks which only a year ago would have seemed unthinkable. The Franco-German proposal, unveiled in May, for a €500bn post-pandemic recovery fund, financed by debt raised on capital markets by the European Commission, is the most consequential.

“Member states have been looking to Angela Merkel to play a bigger role — the German-French proposal was a reflection of that and a real breakthrough in this crisis,” said the official. “No one else in Europe could have unblocked the debate the way she did.”

Yet analysts say that there is a danger that expectations of Germany could run far ahead of reality. They warn that its European partners would be wrong to think Berlin is now seeking a leap towards EU fiscal union, despite all the talk of a “Hamiltonian moment” when Ms Merkel and Emmanuel Macron announced their joint proposal. 

“People I’ve spoken to in Italy and Spain think that the recovery fund is the start of something beautiful,” said Jan Puglierin, head of the Berlin office of the European Council on Foreign Relations. “But it’s not like Merkel has got enlightenment all of a sudden. It’s created false hopes and as a result the disappointment will be even greater.” 

Germany’s main task, say diplomats, will be to work alongside European Council president Charles Michel and help broker a deal on the recovery fund alongside the upcoming seven-year EU budget.

It has taken pains to present a united front with France. On Monday, Mr Macron will meet Ms Merkel in Meseberg, the small German town where the leaders signed a declaration two years ago reaffirming their countries’ “common ambition for the European project”.

Germany’s main task will be to work alongside European Council president Charles Michel (left) © EPA-EFE

“[Monday’s] meeting reflects their shared desire for close co-ordination between France and Germany, following on from the May 18 initiative,” the Elysée said.

But clinching agreement on the recovery fund before August, Berlin’s preferred timeframe, will test Ms Merkel’s diplomatic skills to the limit. The southern Europeans want money from the fund distributed in the form of grants, not loans. Meanwhile, the “frugal four” countries led by the Netherlands oppose grants in principle and want tougher conditions placed on the disbursing of cash under the scheme. 

Mr Michel announced on Tuesday that leaders will gather in Brussels on July 17-18 to attempt to seal a deal. But some diplomats are already warning that the differences between the member states will be too big to bridge by the end of July.

Ms Merkel’s task will be to chip away at the frugal four’s resistance. If she achieves consensus, it could be Germany’s chance to emerge as the “true leader of the EU”, according to one EU diplomat. “If they can show they can be an honest broker, and can listen, and that it is not just their interest that will prevail, they will gain a lot of trust and credit during this half year,” the diplomat said. Yet getting the balance right will be perilously difficult.

Germany’s eagerness to settle the issue of the recovery fund in July has a simple explanation. The agenda of its presidency will become increasingly crowded after the summer break as discussions over a future EU-UK trade agreement intensify. 

Germany also wants to see a discussion about the EU’s future in the second half of 2020. In her Bundestag speech, Ms Merkel said it was not just a question of overcoming the current crisis, but “making Europe more resilient and future-proof”. The pandemic, she said, had exposed “how fragile the European project still is”.

Germany, she said, should use its presidency to advance the green and digital agendas. Berlin also wants to progress stalled talks on reforming the EU migration system, and to kick-start a discussion on how the EU can take on more responsibility in the world. To that end, Germany will organise a summit between the EU and the African Union in October.

How such goals can be reached when the pandemic has curtailed physical meetings with numerous participants is unclear. An EU-China summit due to be held in Leipzig in September was postponed because of coronavirus. The July 17-18 summit will be the first in-person gathering of EU leaders since February. 

However, analysts detect a sense of purpose in Germany’s approach that was lacking before the pandemic. “Six months ago, when you spoke to people in Berlin the impression was that they didn’t really have a clear idea of what to do with the presidency,” said Lucas Guttenberg of the Jacques Delors Centre in Berlin. “I don’t think the government saw it as an opportunity.”

That had now changed. “There is actually a positive agenda — not one that is mostly defensive,” he said.