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Berlins EU plan: More muddle in the middle

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BERLIN — Europe finally gets a new German government this week. But that doesnt mean it will finally get answers to the big questions facing the Continent.

By definition, the return of the “GroKo” — a German contraction of “grand coalition” — was going to be anything but radical.

“Step by step, day by day,” is how Olaf Scholz, interim Social Democrat leader and future finance minister, described the coalitions modus operandi at a press conference with Angela Merkel on Monday, adding that the GroKo wasnt a “marriage of love.”

Thats the problem. An alliance of the two largest and oldest parties in parliament is the epitome of consensus. At a time of political upheaval in Europe and the world, many Germans want more from their politicians. Roughly half of Germans oppose the GroKo as too boring, too unimaginative and too conventional, according to recent polls. Or, as a line that made the rounds on German social media put it: “Wake me up before you GroKo.”

As it stands, it will be a challenge even to win the support of Merkels conservative parliamentary group.

But when Merkels fourth term as chancellor begins on Wednesday, almost six months after last years general election ushered in a long period of coalition haggling, both Germany and Europe will be looking for signs as to where the new alliance of Christian Democrats and Social Democrats will lead.

What looks likely to emerge is broadly more of the same — a cautious, steady-as-she-goes, centrist course.

“Weve got a lot of work ahead of us,” Merkel said on Monday with typical understatement.

For months, politicians of all stripes have spoken with somber urgency of the need for Berlin to formulate a response to French President Emmanuel Macrons proposals for reforming the European Union.

Among other things, Macron wants a more closely integrated eurozone with its own finance minister, budget and governance — a model that he argues would steel the single currency against the next crisis.

German Chancellor Angela Merkel and French President Emmanuel Macron

So far, the key GroKo players have treated the issue like an overdue R.S.V.P. While everyone agrees Berlin needs to respond, theres less clarity on what it should say.

Even though the first line of its title is “A New Impetus for Europe,” the 177-page coalition pact itself offers few details on EU strategy. For example, the agreement calls for “improving the functioning of the EU, especially the EU parliament.” Yet it doesnt say how. Similarly, the pact says Germany will pay more into the EU budget, but offers no hints about how much that will be.

Behind the scenes, officials say the phone lines between Paris and Berlin have been running hot over these and the other details of European reform.

But given the skepticism in Germany about any moves that would require Berlin to either pay significantly more or take on more risk for its EU partners, its unlikely the GroKo can get away with presenting the public with a fait accompli.

Thats especially true considering the question of European reform didnt play any role at all in the September election campaign.

The parties avoided the subject because Europe is not generally seen as a topic that wins votes. If there had been a debate, the GroKo would have a stronger mandate to push through an ambitious agenda.

As it stands, it will be a challenge even to win the support of Merkels conservative parliamentary group. A number of conservative MPs have already ruled out any steps, such as a Europe-wide bank deposit insurance, that could leave Germany on the hook for other countries losses.

While that resistance isnt new — some of the same MPs opposed the last governments support for eurozone bailouts — the new GroKo will have a slimmer majority of just over 40 seats.

“Its going to be difficult to keep the group together on Europe because there are number of red lines,” predicted one MP from Merkels Christian Democratic Union.

“When it comes to the question of deposit insurance, I recommend to everyone that they dont say no” — European Commissioner Günther Oettinger

The CDU leadership is already grappling with the problem.

“When it comes to the question of deposit insurance, I recommend to everyone that they dont say no,” European Commissioner Günther Oettinger, a member of the CDUs executive committee, told an audience of conservatives last week in Berlin.

The deposit insurance is viewed by many as the linchpin of the EUs planned banking union because it would significantly reduce the risk of bank runs in countries where financial institutions run into trouble.

If Merkel has to fight to push through a measure like deposit insurance, hardly a radical idea, it may be impossible to pursue Macrons more ambitious aims for eurozone integration.

Much will depend on how the German republic reacts to the proposals. If the Germans do move, it will have to happen soon, before Europe enters another election season next spring.

Aside from eurozone reform, the new government also has to tackle a range of other pressing issues. Heres a rundown of where the new GroKo stands on major policy questions facing Europe:

Tech: Bär necessities

The new governments approach to technology in many ways reflects the fudge that runs through much of the coalition agreement.

Dorothee Bär, the outgoing deputy transport minister, has been appointed Germanys first “state minister for digital affairs.” In the new junior ministerial post, located inside Merkels chancellery, Bär will be coordinating and overseeing Germanys efforts to make its economy fit for the digital age.

German State Minister for digital affairs Dorothee Bär | Getty Images

A critic of Germanys restrictive data protection laws, which she describes as out “of the 18th century,” Bär doesnt shy from controversial positions. Shes made clear shes not a fan of the EUs draft e-privacy reform.

“We need a system of rules that offers opportunities to our businesses and doesnt destroy them,” she told Bild in a recent interview. “But if only Google and Facebook profit from the e-privacy regulation — which is well-intended but poorly-made — then this is just wrong.”

Just how much influence Bär, an energetic 39-year-old political scientist from the Bavarian sister party of Merkels CDU, will have is unclear. Despite all the buzz surrounding “digitalization” (the umbrella term Germans use to describe technological advances), Bär wont have the resources, in terms of either staff or money, of a full-fledged ministry.

Energy and environment: Light green

Germanys reputation as a green energy champion takes a hit in the new coalition deal, as the parties have backtracked on a 2020 target for cutting greenhouse gas emissions, and declined to impose a deadline for phasing out coal-fired power.

Germany is projected to fall significantly short of its goal to reduce emissions by 40 percent by 2020, compared to 1990 levels. The coalition agreed to close that gap as quickly as possible, but did not give a timeline. It did, however, stress that the country intends to meet its 2030 goal of 55 percent.

Meanwhile, the new GroKo will continue to push its expensive shift to renewable electricity production, known as the Energiewende, which has been plagued by delays and cost overruns.

German cities have been breaching EU air quality limits for years.

In a win for nuclear opponents, the new coalition said it will work toward changes to the 61-year-old European Atomic Energy Community treaty — effectively pushing to block new nuclear energy. The position lends more weight to the EUs anti-nuclear bloc, including Austria and Luxembourg, which will grow stronger after the U.K. leaves.

Berlin will have to continue efforts to tackle rampant air pollution in German cities, which have been breaching EU air quality limits for years. The European Commission could decide to drag Germany in front of the European Court of Justice later this month. A recent court ruling, meanwhile, paved the way for diesel bans in German cities. That has left politicians scrambling to find alternative solutions to bans, including forcing carmakers to make expensive hardware fixes to their cars.

Trade: New captain, same course

The economics ministry, which handles trade, will switch from Social Democrat to Christian Democrat control, with Merkels close ally Peter Altmaier taking charge. Altmaier will need to get up to speed quickly, as a trade war with the United States looms. He is likely to keep the ministry on the same broadly centrist course as his Social Democrat predecessors.

The coalition deal commits Germany to push for “binding” labor and environmental standards in all EU trade agreements. It also says the grand coalition government will “provide the conditions for the CETA deal to fully enter into force” — meaning ratification of the Canada trade deal by the Bundestag and the Bundesrat, where regional state governments also get to vote.

Peter Altmaier | Adam Berry/Getty Images

As Europes largest exporter, Germany has a lot riding on such deals. Look for Altmaier to push hard on CETA as well as for a deal with the Mercosur bloc in South America.

Agriculture: CAP fits

The new government says it wants to keep the current level of Common Agricultural Policy funds, which account for about a third of the entire EU budget. That puts it at odds with many in Brussels, who believe the EU should slash its €59 billion-a-year farm policy as other financial pressures begin to bite. Berlin will not block all types of reform, however, hoping to target subsidies more efficiently so that farmers incomes remain stable and those in disadvantaged areas stay afloat.

The government also wants to increase the share of organic farmland in the country to 20 percent by 2030. And it wants to move away from using glyphosate, the controversial weedkiller. “With a systematic reduction strategy, we will significantly restrict the use of glyphosate-containing plant protection products with the aim of basically terminating the application as soon as possible,” the coalition agreement says.

Migration: Limited ambition

Whereas the 2013 coalition agreement spoke in positive terms about immigration, the current agreement takes a much more cautionary view — reflecting severe strains placed on the country by the 2015 migration crisis. The 2018 coalition pact states that “a situation like 2015 should not be repeated” and that “immigration should not overwhelm Germanys ability to integrate.”

Outside the realm of the obvious, the agreement specifies how many immigrants will enter the country each year — between 180,000 and 220,000. The government will also continue to push for a common European asylum system, a “fair distribution mechanism” within the EU, as well as stronger controls on the EUs external borders.

The pact also includes a commitment to expand development and humanitarian programs in developing countries to prevent further migration. “We want to fight the causes of flight, not the refugees,” the agreement says.

Defense: Call Washington

As ever, Germany aims to achieve NATO capability and budget goals. Yet once again, Berlin stops short of pledging to raise defense spending to the NATO target of 2 percent of GDP — something the Trump administration has demanded in blunt terms.

Put simply, the agreement is chock-full of the policy waffling that has frustrated Washington and a number of Berlins other allies for years. Germany wants a robust arms industry (and the jobs that come with it) but is reluctant to sell tanks and other weapons to countries that may use them. Similarly, Berlin is committed to NATO and is sticking to its pledge to work toward the 2 percent of GDP spending goal — as long as that doesnt mean it has to really spend 2 percent.

German politicians, particularly from the Social Democrats, have cited the countrys militaristic past as a reason to keep defense spending at modest levels. But the GroKos stance on defense will remain a source of tension with both European and transatlantic allies.

Janosch Delcker, Kalina Oroschakoff, Sara Stefanini, Madeleine Schwartz, Hans von der Burchard, Jakob Hanke, Emmet Livingstone and Bjarke Smith-Meyer contributed reporting.

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