Europe played a marginal role in the German election campaign – to the dismay of the country’s federalist community. That said, the coalition agreement hot off the press merits applause even from those who complained that the European dimension of German politics was being ignored. For what the “traffic light” coalition has agreed upon is a strong commitment to more European integration in a number of decisive areas. Here is a short take on some of the agreement’s most interesting passages:

Germany in the EU

In an earlier blog post, I expressed the following hope: “Germany is in urgent need of a strong and sovereign Europe. Europe, in turn, needs a committed Germany to become more sovereign. So my hope is that this paradigmatic connection will receive more reflection in the next government’s real politics than it did throughout the election campaign.” The coalition agreement arguably reflects this sentiment in full.

The coalition partners not only refer repeatedly to the ambition of a more sovereign Europe. They also point out that Germany has a special responsibility for the success of the EU and that they want Germany to approach European politics in a manner that is both serving and proactive.

Verbatim: “We will build a government defining German interests in the light of European interests”. With a clear majority of European citizens in favour of German leadership in the EU, the “traffic light” coalition seems willing to live up to these expectations.

Future of the EU and institutional reform

The agreement uses bold language when it comes to Europe’s future in general. It does not shy away from the term “European federal state” as a desirable deepening of EU integration. Concretely, the coalition partners want the ongoing Conference on the Future of Europe to develop into a constitutional convention that prepares amendments to the European treaties.

Although this commitment to federalism is qualified by the principles of subsidiarity and proportionality, it has been a long time since a German government openly spoke of a European federal state. Despite the fact that actual treaty changes remain an unlikely undertaking in the medium term, this language shows a more integrationist stance than that of the current administration.

Unsurprisingly, then, the “traffic light” coalition wants to strengthen the European Parliament’s role with a right of initiative, seek common voting rights and partially transnational lists in European elections and push for an expansion of the so-called “community method.” The latter implies more qualified majority voting in the Council, effectively eliminating veto-rights, which the “traffic lights” would also like to see expanded to the field of Europe’s Common Foreign and Security Policy.

Eurozone and fiscal policy

Due to the FDP’s hawkish position on public spending, the perspective of Christian Lindner representing Germany in the ECOFIN was widely perceived as a potential “No” to reforms of the Stability and Growth Pact (SGP, which France and Italy, among others, would like to tackle in 2022). However, the coalition agreement appears to counter such perceptions.

Although the “traffic light” still finds that the SGP “has proven its flexibility” (as already stated in a preliminary agreement in late October), the coalition partners want to develop the EU’s fiscal rules further and make the SGP easier to apply as well as more transparent. This is combined with the goals of securing both growth and debt sustainability whilst allowing for sustainable investment.

In fact, this gives more leeway than expected to the German position (which, in any case, is forged not only by the Finance Ministry but also by the Chancellery), potentially ranging from rather technical adjustments to substantial reform. Regarding the second big financial issue, NexGenEU, the coalition partners call it “limited in time and scope.”

The text, then, is anything but grist for the mill for those advocating to make the recovery fund permanent. Additionally, there is no reference to further debt mutualization or to Euro bonds, so we should not expect progressive policy developments in this direction (hardly feasible for an FDP finance minister in any case). However, one should also take notice of the fact that neither is explicitly excluded. This leaves the German government with some wriggle room for when the debate becomes serious.

Multilateralism, partnerships and China

When it comes to alliance policies, we find much that was expected: Commitments to strengthening multilateral institutions such as the UN or the G7, an explicit mentioning of Germany’s friendship with France (Scholz’s preference for his first foreign trip), and praise for the transatlantic partnership as a central cornerstone of Germany’s foreign policy (which is to be renewed and re-invigorated).

While all this is in line with traditional and well-established practices, there is also a remarkable shift in tone regarding China. Although the official EU-speak of China as a partner, competitor, and a systemic rival remains in place, the agreement also states that all cooperation with China must be based on human rights and that violations will be openly addressed.

Furthermore, the “traffic light” coalition sees the need to establish a comprehensive China strategy embedded in a European approach and wants to coordinate its China activities with the US, all the while seeking partnerships with like-minded states to reduce strategic dependencies. The passages on China, then, might well sound warning bells in Beijing and induce affirmative nods in Washington.

All in all…

… the coalition agreement is ambitious in its stance towards EU affairs. In parts, the wording goes well beyond what has come to be known as German pragmatism, plotting the course of a government that is serious about achieving a more sovereign Europe, one that is capable of acting on the world stage.

However, one should not forget that the agreement still requires final approval from the three parties involved, to be expected at the beginning of December. Finally, as always in politics, the proof of the pudding is not in the paperwork.