EU recovery deal: the summit that will cement Merkel’s legacy

If one had to name a day on which Merkel took up the fight for her legacy as a European shaper, it would have been 18 May. It was on this day that she and French President Emmanuel Macron proposed that the 27 EU member states should, for the first time, take on debt together to tackle the crisis.

At the EU summit, German Chancellor Angela Merkel made a U-turn as German advocated for the assumption of joint debts and dissociated itself from other donor countries for the first time and not just for economic reasons. This time, Merkel is fighting for her legacy as a shaper of the EU. EURACTIV Germany reports.

In Brussels, the dust that the 27 EU heads of state and government stirred up over the long weekend of summit talks is slowly settling. While the ball is now in the European Commission’s and Parliament’s court, a European debate is turning into 27 national ones.

Having returned home, heads of state and government are now telling their people about their adventure, justifying their stance and trying to make political capital out of the summit.

The case of Chancellor Angela Merkel, however, is a special one as this is her last term in office. When she leaves office in 2021, her 32-year political career – almost half of which will have been served as chancellor – will end.

At this point, she probably no longer cares about political capital, but about her legacy, which seems to be a European one first and foremost.

German industry pleased with EU summit result

German business associations are cheering the deal EU leaders reached at a marathon summit that ended on Tuesday morning (21 July), and they have every reason to do so, explains economic researcher Jürgen Matthes. But some observers are displeased with cuts in funding for innovation, research or defence. EURACTIV Germany reports.

U-turn in May

If one had to name a day on which Merkel took up the fight for her legacy as a European shaper, it would have been 18 May when she and French President Emmanuel Macron proposed that the 27 EU member states should, for the first time, take on debt together to tackle the crisis.

On that day, Europe was confronted with two new realities. Firstly, the Franco-German axis, once the engine of European integration, was back. And secondly, Merkel made an unprecedented U-turn in German EU fiscal policy as the country went from being a savings champion to a major donor.

Just a few months ago, it would have been unthinkable for Berlin to commit itself to shared EU debts. During the Greek debt crisis, Merkel and former Finance Minister Wolfgang Schäuble repeatedly rejected the idea of jointly issued eurobonds. This time the proposal came from her.

“After a very long term in office, Merkel has made an abrupt turnaround, the signal of which is remarkable. In doing so, she has thrown overboard many of the principles that were important to Germany in overcoming the euro crisis,” Bert Van Roosebeke, head of department at the Centre for European Politics in Freiburg, told EURACTIV Germany in an interview.

According to Van Roosebeke, this U-turn had both political and economic motives. Merkel is well aware that Germany can only recover from an economic crisis of this magnitude if it still has markets for its exports afterwards.

EU leaders hail ‘historic’ deal at marathon summit

In today’s edition of the Capitals, find out more about German Chancellor Angela Merkel being annoyed with the so-called ‘Frugal Four’ during the EU Council summit negotiations, Slovenian Prime Minister Janez Janša backing Hungary when it comes to the rule of law conditionality of EU funds, and so much more.

“Frugal Four” forced to step out of Berlin’s shadow

According to Roosebeke, the Franco-German initiative was “of crucial importance” as a subsequent European Commission proposal on the EU Recovery Fund with the same amount of aid would not have “existed in this form” otherwise.

Merkel displayed her sense of broadcasting drama after the summit when she once again appeared in front of the cameras together with Macron. Although the Commission proposal was discussed, the two put the Franco-German initiative in the limelight, delivering the message that “nothing works without us.”

For EU member states that had always been opposed to redistribution at EU level this caused a number of problems as they were previously able to ride comfortably in Germany’s slipstream. “But now, as this was suddenly no longer the case,meaning they were forced to step out of Berlin’s shadow,” said Roosebeke.

Could this the beginning of a new, self-confident alliance without Merkel? That is how Austrian Chancellor Sebastian Kurz sees it.

The “Frugal Four”, which includes Sweden, the Netherlands, Austria, Denmark and could expand to include Finland, will continue their cooperation Kurz announced after the summit.

“This is the most important point because I believe it to be quite historic,” he said. Cooperation, he added, “is relevant to the balance of power in the European Union, but this is nothing indecent, but in our case something very positive.”

Council brokers historic stimulus pact as budget cuts, rule of law retreat plague deal

Leaders of the 27 EU countries finally compromised on a €1,074 billion long-term budget and recovery fund instrument early on Tuesday (21 July) morning, but it took one of the longest-lasting summits in European Council history and the final deal cut funding for some of the bloc’s key priorities.

A disappointed opposition

Now Germany will have to deliver what it promised in Brussels and will probably have to pay up to an additional €10 billion into the EU budget each year.

This is why Merkel has been criticised by the opposition, though this could actually be seen as a success in building up a legacy.

According to Alexander Graf Lambsdorff, the foreign policy expert of liberal party FDP, the “Four” had “played the role that Germany actually should have played” during the summit and Europe should be “grateful” to them. According to FDP leader Christian Lindner, the “real successor” of Bundestag President Wolfgang Schäuble in Europe should be Dutch Prime Minister and spokesman of the ‘frugal group’, Mark Rutte.

However, this should fit in well with Merkel’s targeted image.

By comparison, Green MEP Daniel Freund accused Merkel of having caved in on the rule of law issue. “Nine days ago she declared fundamental rights to be the top priority of the German EU Presidency. Now she is giving Viktor Orban a free ride”, Freund writes.

So far, Merkel’s own party has been mainly supportive.

According to CDU faction spokesman Florian Hahn, “good results have been achieved”, adding that “all negotiating partners have jumped over their shadows.”

But do they all see that way?

“I don’t think it is yet possible to estimate how far the support in Merkel’s own ranks will go,” said Roosebeke.

While some political careers end in shame or quietly, Merkel has the chance of achieving a grand finale amidst the coronavirus pandemic. And she seems ready to seize this opportunity.

[Edited by Benjamin Fox]

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