Andrew Marshall is a director of communications consultancy Fishburn Hedges and a Conservative Party activist
On December 16 a referendum will take place in Germany on its participation in the European Stability Mechanism - a referendum, that is, for the 65,000 members of the liberal Free Democrats (FDP). It’s been triggered by a backbencher, and the party leadership is now working overtime to ensure that the proposal that the FDP should oppose the ESM doesn’t pass, not least since this would throw into question the FDP’s role in the governing coalition.
This is, needless to say, just one of the pressures on Angela Merkel. She’s managing the crisis day by day like any leader: indeed, ever since she became Chancellor, the German media has complained about her lack of strategy. Behind all that, though, the electoral backdrop is stark: the centre-right coalition is unlikely to be re-elected in 2013. The CDU/CSU is at around 32% in the polls, down just a touch on its last performance, but the FDP has collapsed from its record 14.6% in 2009 to around 4%, both because of its inability to deliver on overblown tax promises, and because of the unpopularity of its former leader Westerwelle (still Foreign Minister).
Even if the FDP gets back above 5% and is thus in the next parliament, the “black-yellow” coalition of CDU/CSU/FDP looks well behind the alternative centre-left coalition of Social Democrats, now back up to 30-31%, and the Greens, off their poll highs but still on around 17%.
So Germany will either get a SPD-Green government (as under Schröder) or – if as likely the left party has a blocking position in the Bundestag – we could be back to a CDU-SPD "grand coalition", as in 2005-9 (with the larger party providing the chancellor). Indeed, the coalition already last year lost its majority in the not-unimportant upper house (the Bundesrat), due to losses in the staggered cycle of Länder elections.
This is the context in which Merkel has been repositioning the CDU. Ever since too market-orientated a stance lost her an expected majority with the liberals in 2005, she’s been rowing back to the centre. Recently that pace has accelerated: consider the nuclear power U-turn, the end of conscription, school reform ideas, and possible quotas for women on corporate boards. Most recently, Merkel has changed her position on the minimum wage - all of which has led to commentator chatter of a “social-democratisation” of the CDU (though there is going to be a mini tax cut, not least to help stabilise the FDP).
While many of these new policies are not uncontroversial in her party, they are not necessarily unwelcome in an environment where the German economy has rebounded, but where the electorate is pretty sceptical about global capitalism. Merkel needs new coalition options for 2013 - or possibly before, if the Free Democrats implode and leave government, though it’s still difficult to construct that scenario, and the German constitution makes early elections difficult. But unless SPD-Greens can secure an overall majority, which is possible but not easy, the CDU, with stable polls and a centrist position, could be well placed to look for new coalition partners – with the SPD in a grand coalition, or even possibly with the Greens. Merkel would probably still prefer to govern with the FDP next time, but she’s a realist.
On the Euro, Merkel is playing a fairly hard game, both out of personal conviction and because of the dynamics of German politics - though keeping some room for manoeuvre. The fear of Weimar-style inflation is mentioned more by British columnists than the German media, but some parliamentarians (and the public) are clearly concerned about limitless bailout costs, even though it’s broadly recognised that Germany’s economic fate is inexorably linked to its neighbours, not least in preventing an over-valuation of the currency. While there are more populist anti-Euro sentiments in German politics now, they are more institutionally weak and much less ideologically eurosceptic than the UK’s "right wing press” may sometimes think. “DM nostalgia” is just that. There is speculation about the scope for a new party to oppose the Euro bailout - but so far it’s just talk, with no credible leaders in the wings.
The respected former businessman Hans-Olaf Henkel’s latest book “Save our money – how the Euro fraud threatens our prosperity” argues for two separate currency zones, but he’s said categorically that he doesn’t want to found a party. Any taint of the extreme right would be fatal to any anti-Euro initiative. Some Free Democrats are tempted to fill the anti-Euro bailout space, but whatever the result of the membership vote, the chances are that the FDP’s pro-European leadership will keep any such shift rather nuanced. It’s ironic that the pro-market FDP, which might be theoretically best placed to capitalise on anti-bailout sentiment, is extremely unpopular – it tested out an opportunistic anti-bailout campaign in the recent Berlin city elections and was rewarded with precisely 1.8% of the vote.
The CDU parliamentary rebellion on the enlarged EFSF in late September did strain the party, but the rebel numbers were kept well down and the rebels are hardly eurosceptics - rather simply those appalled by the lack of budgetary oversight over the huge sums involved and the lack of clarity about the end game. What some of them wanted was more EU control over member state deficits, given the contribution Germany was making.
Most importantly, in that vote Merkel got the opposition Social Democrats and the Greens – her potential future coalition partners - onside. None of the potential "chancellor candidates" the Social Democrats might choose fundamentally oppose Merkel’s European policy (indeed some are rather more "pro-European"). Within the CDU, Merkel’s main rivals have left the scene, there is no top-level policy challenge to her on Europe, and one of the most promising long-term successors, Ursula von der Leyen, has called explicitly for a “United States of Europe”.
So what does the CDU now want? Its 24th party conference starts today in Leipzig. Unlike the Conservative Party, the CDU’s roots are as a mass membership party in which conferences do matter and have real votes, even if there is a strong drive for consensus and constant criticism that it has become simply a “Chancellor party”. The party’s executive board, on which Merkel and other leading figures sit, is bringing to the conference a 24-page position paper on Europe. Since the CDU is the most important political party in Europe, this is worth reading. Here are a few extracts (my translation):
“The CDU is the Europe party of Germany. For us our commitment to Europe is not only a rational matter, but an emotional commitment…..The political and economic advantages for Germany far outweigh the costs of EU membership…..our membership of the Eurozone alone in the last two years has brought extra growth of at least 2% and thus at least €50 billion”.
“We want to complete the economic and currency union and make the EU into a strong political union…The Euro is more than a currency, it is a major communal undertaking and essential to a good future for Europe.”
“We will resist the over-simplifiers and populists and consistently highlight those successes we have already achieved in Europe.”
“The CDU is convinced that through more market-orientated measures and less bureaucracy and state dirigisme, a new impetus for prosperity in Europe can be made possible.”
“The stability and growth pact must, through enhanced automatic sanctions mechanisms,..become a credible instrument of reliable budgetary policy in Europe, therefore we want this integrated in the treaties to create a debt brake at a European level.”
“We want the political union to have a democratic two-chamber system, consisting of the European Parliament as the directly elected chamber of the people, and the council of ministers as representatives of the member states…The political union needs to have a face, so in future the President of the European Commission should be directly elected by all citizens of the Union.”
“More integration is not an end in itself, but the key to a strong position for Europe in the world. We want to breathe new life into the principles of subsidiarity – petty rules by the EU Commission endanger the acceptance of Europe by our citizens. They want more Europe where it helps them, not a Europe organising all details of their lives.”
After considering defence and energy and the need for the Commission to both deregulate where possible but also have more powers to enforce application of existing European legislation, the document then sums up:
“The consequence is that in key policy fields we need more Europe, and so the necessary treaty changes represent a major challenge. The EU must be kept as a unit, but member states who are able and willing to go further, such as with the Euro or Schengen, should be able to do so. Other states should have the option to join later, but there should not be, in policy or organisational terms, any delinking from the EU – competing European architecture and unclear responsibilities would endanger the political union.”
“The CDU accepts its responsibilities – with our Christian vision of humanity we have a compass which allows us to take up this challenge as an opportunity. We are ready to undertake an active role in the deepening of the unity of Europe”.
There’s a paragraph on France in this document, and a mention or two of Poland, but nothing on Britain. For the CDU, Britain has made itself marginal. The CDU always invested much more in the party-to-party relationship than we did in return. The EPP decision (and Europe-wide parties matter much more to the CDU than we might think) was simply seen as marking the culmination of the CDU’s long process of disenchantment with the UK and the Conservative Party on Europe.
It’s easy to write off such a paper as mere words. But it reflects the CDU’s deeply-held convictions and Merkel’s judgement about what needs to be done in the current crisis in the German national interest and the interests of Europe. If we’re all re-negotiators now, those in the Conservative Party most ardent for treaty change would do well to pay some attention to the debate in Leipzig next week.
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