Tuesday

31st May 2016

EUobserved

EU power shifts from Brussels to Berlin

While the eurozone crisis in 2013 lingered in most countries, Germany seemed to be doing better than ever.

It had low unemployment, high productivity and exports so strong that the European Commission asked it to do more to help ailing periphery countries in the single currency bloc.

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  • Merkel's 'safe pair of hands' on an election poster (Photo: Valentina Pop)

Chancellor Angela Merkel - the most powerful leader in Europe - was elected once again and took up a third mandate in a coalition government with the Social Democrats.

Merkel's popularity is remarkable in Europe, where most leaders are distrusted by their voters and governments are unstable due to the economic crisis, austerity fatigue, perceived incompetence or corruption scandals.

By contrast, Merkel's party almost won a supermajority in the September elections scoring 41.5 percent of the vote. It was the party's best result in more than 20 years.

Merkel's "safe pair of hands" are appreciated by Germans. They like her cautious governing style; the fact that she rarely rushes into decisions.

A giant billboard close to Berlin's government quarter did not even feature her face, just her signature 'rhombus' hand gesture. It suggested that all Germans needed to do was to keep "Mutti" in charge.

Her election message was simple: "Germany is doing well." By reelecting her, Germany would continue to be well-off, an "anchor of stability" in a shaky Europe where several countries have had to apply for a bailout.

Merkel's success with her voters is also based on her tried and tested approach to eurozone policy: acting only when necessary and never in advance.

In 2013, her centre-right government continued to preach "structural reforms" and told other countries to do their "homework."

Her coalition government with the Social Democrats will not deviate from that course.

The coalition programme agreed after almost two months of negotiations promised more of the same: more sticks than carrots; supervision; control and a little bit of "solidarity" with troubled euro peers.

This approach has dominated the major euro policy decisions taken in Brussels.

With Germany having to pay the lion's share of any EU bailout, the German taxpayer stood and will continue to stay at the forefront of all policy decisions on the euro.

When a leaked report from the German intelligence service showed that Cyprus' banking sector was full of shady Russian money, it caused uproar in Germany.

Wasting German taxpayers' cash to protect Russian oligarchs became a political no-go.

The conditions for Cyprus' €10 billion bailout was that bank depositors had to take a hit. The smartest Russians had already moved their money elsewhere, but Berlin needed a political sacrifice. And it got what it wanted.

Protests in southern Europe denouncing Germany's "austerity diktat" did prompt some cosmetic change in Merkel's policy.

She became more active on youth employment, organising a mini-summit on the issue in Berlin. The German development bank also granted bilateral loans to Portugal and Spain to help small enterprises.

But the underlying message continued to be "fiscal discipline" coupled with centralised supervision. The German government's latest push is for binding "contracts" in which counties oblige themselves to painful reforms in return for cheap loans.

Germany's industrial leaders also made a show of power.

The EU commission watered down a proposal to cap CO2 emissions and delayed its implementation until 2021 after Germany's environment minister, with auto lobbyists snapping at his heels, said Nein.

The power shift was noticed abroad.

China's Prime Minister Li Keqiang visited Berlin in May. He did not bother to go to Brussels. Merkel said she supports China's stance in an EU trade war on solar panels and a grimacing commission bowed to Berlin once again.

US President Barack Obama also visited Europe for his second time since taking office. He skipped the EU capital, but he also went to Berlin.

His visit was overshadowed by the US spying scandal. Merkel remained courteous and even joked in a TV interview that she did not think her phone was being tapped.

But the joke was on her a few months later, when US whistleblower Edward Snowden revealed that US spooks had bugged her mobile.

They were not alone - British, Chinese, Russian and even North Korean spies were also keeping tabs.

The famous question - "Who do I call when I want to talk Europe?" - has no answer. The EU is too complicated. But 2013 showed that calling Berlin (or bugging its calls) is a good place to start.

This article was printed in EUobserver's yearly magazine 'Europe in review 2013'. The print edition looks back at the most important stories of the year. To obtain a copy of the magazine, please contact mc@euobserver.com. Price per copy €4.75 + postage, excl. vat. Discounts on larger purchases

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