German leadership in the EU
Whichever form a new government takes, it is clear that there will be weeks of coalition negotiations during which time Germany will be very much focused upon itself. Experts predict that in case of a Grand Coalition the internal fighting over controversial issues will not leave much time for burning questions at EU level.
Lisbon agenda
German voters have expressed a clear 'no' to a neo-liberal competitiveness agenda as proposed by the Conservatives and Liberals and favoured by industry. Although the Schröder government had started a set of economic reforms, the opposition promised to go much further on the path towards liberalisation and labour reforms. With the left winning a majority of the votes overall (including the anti-reform ultra-left Linkspartei), German voters have put a definite stop to further reaching reforms, thereby disappointing those who were hoping for strong German leadership in implementing a neo-liberal form of the Lisbon agenda.
If a grand coalition came into being, it is likely that more cautious reforms with a social (and possibly environmental) dimension would be implemented rather than a more radical deregulation approach. Some business leaders even fear a standstill on economic reforms with the two parties unable to agree on key areas such as labour market reforms.
Moreover, political instability in Germany could hamper further reforms and economic growth. "Industry needs a stable situation in Germany," says Janis Emmaouilidis from the Centrum for applied political research (CAP).
In case of a so called 'Jamaica' (black/green/yellow) coalition between the CDU/CSU, the liberal FDP and the Greens, more common ground could be found. "In questions of economic policy, there is quite a lot of overlap in the election programmes of the three parties," says Emmaouilidis. "The Greens have certainly been more open to reforms than some parts of the SPD itself," he added.
The European chemicals industry had pinned its hopes onto a Conservative German government to put a last-minute stop to the contested REACH legislation. However, as things stand, it looks like nothing will get in the way of the compromise hammered out by the UK presidency to go through the Council in November as planned.
Moreover, business leaders who may have hoped for a miracle constellation of Merkel and Sarkozy after the French elections in 2007 to take a strong lead on a European reform agenda will almost certainly be disappointed.
Enlargement
The prospects for Turkish EU membership look more positive after the outcome of the elections. It seems unlikely now that the CDU, in whichever coalition, will be able to insist on their approach to a 'priviledged partnership' rather than full membership for Turkey.
Policy towards Europe
As all German parties are essentially pro-European, any potential government would continue to be supportive of European integration. "In terms of EU politics, a big coalition would hardly make a big difference. It would probably lead to the creation of a ministry for EU affairs," says Bernd Hüttenmann from the European Movement Germany (see EurActiv interview 19 September 2005). "On the one hand, this would be an expression of the importance of EU policies finally being recognised. On the other hand, there would be the risk that EU politics is separated from other areas."
