What the new German grand coalition means for Europe

German Chancellor Angela Merkel leaves after her press statement at the Christian Democratic Union headquarters in Berlin on 5 March 2018. [EPA-EFE/FELIPE TRUEBA]

With the end of political uncertainty in Berlin, Chancellor Angela Merkel is about to face crucial political decisions – including a possible reform of the eurozone. EURACTIV Germany’s media partner “Der Tagesspiegel” reports.

The fact that there will be a remake of the German grand coalition after the SPD membership’s decision last weekend was received with relief by Germany’s EU partners.

On Monday, German President Frank-Walter Steinmeier formally proposed Merkel for re-election to the German Bundestag. This will take place on 14 March, and then the interim German government would turn into a cabinet that is once again fully capable of acting in European politics as well.

A “kick-start for Europe”, as called for in the coalition agreement between CDU/CSU and the SPD, can then take shape.

As long as Merkel is only in office as a managing Chancellor, crucial decisions in European politics have to wait. Routine operations in Brussels continue to run for the greater part of the legislative procedures regardless of the political back and forth that Germany has experienced since the general election on September 24.

For example, the decision on the tightening of an EU directive which regulates the cross-border use of posted workers would still have been possible if the SPD members had decided against a re-launch of the grand coalition last Sunday. But in all decisions that have an agenda-setting character, the EU partners had to await the government formation in Germany.

Good news for Macron

Among others, the planned reform of the eurozone was affected until the SPD vote this weekend. Council President Donald Tusk has drawn up a schedule in which June 28 and 29 are highlighted in red: at the June summit, Tusk hopes that “concrete decisions” will be taken on the further development of the economic and monetary union.

If at that time a new government were not in place in Berlin, Tusk’s schedule would have been wastepaper.

Macron's advisor: France, Germany have only a few months to act

Jean Pisani-Ferry has developed French President Emmanuel Macron’s economic programme and is one of his closest economic policy advisers. Germany and France need a common position to reform the Eurozone, he says and calls for action in an interview with EURACTIV’s media partner WirtschaftsWoche.

Therefore, the outcome of the EU membership decision is good news for French President Emmanuel Macron, because he promised his constituents last year that the eurozone will get its own budget.

In the meantime, numerous other proposals to strengthen the euro have been discussed in public – from the further development of the euro rescue package ESM to EU deposit insurance.

But an interim German government could not have made a binding vote on this sensitive issue in Brussels. Now, Merkel can speak with Macron at the next EU summit on 22 and 23 March about the rough direction of the eurozone reform – and then take decisions at the June summit.

More room for Merkel to reform the asylum system

The planned revision of the EU asylum system is similar in scope to the reform of the eurozone. Chancellor Merkel is working with Italy’s incumbent Prime Minister Paolo Gentiloni and Greek PM Alexis Tsipras to develop a new system that would relieve countries such as Greece and Italy of having to accommodate refugees in crisis situations.

At this point too, according to current planning, a decision should be taken at the end of June. As the grand coalition is safe, Merkel also has more European scope for this issue than in the past five months.

The question of whether or not the EU can resort to a mechanism for distributing refugees in the event of a recurrence of the refugee crisis is currently dividing the EU – many Eastern European countries such as Poland are against it.

Eight northern EU states urge caution in eurozone reforms

Eight northern European countries said today (6 March) that euro zone reforms should focus on completing the banking union, improving compliance with budget rules and setting up a European Monetary Fund, with more ambitious plans left for later.

The unambiguous state of play in Berlin is also good news for the German cabinet’s assertiveness in the Brexit poker with the British government. Especially, because from next summer on, the Brexit negotiations will really go to the bone. They are also likely to concern the broad lines of future trade relations between the remaining 27 member states and the UK.

Those principles are to be captured in a political declaration of intent by autumn. Germany, together with France, stands on the side of those member states that want to prevent the British from picking the cherries out of the single market after Brexit.

If there were only an interim German government in office during the summer, Berlin’s voice in the hot phase of the Brexit poker would have less weight.