Consequences of the German Election for the European Union and Trans-Atlantic Relations

On September 25, Public Policy Fellow Robin Quinville gathered 3 experts to discuss the issues surrounding the outcome of the German election.  She was joined by Riccardo Perrisich, Vice President of Assolombarda, Unione Industrali de Roma and former Director General for Industry at the European Commission, Peter Sparding, Transatlantic Fellow at the German Marshall Fund and Stephen Silvia, Professor at the School of International Service, American University.  Herewith is a summary of the hour long discussion.

Chancellor Angela Merkel won the September 24th election, but the size of her victory was down from prior elections, making her relatively weaker than before.   Merkel’s party, the CDU – together with its sister party, the CSU – won 33% of the vote.  Now her challenge is to form a coalition government after her previous partner, the SPD saw its vote fall to 20.5%.   SPD leader Martin Schulz lamented that the election “was a death blow for social democracy in Germany” and he vowed not to enter into another coalition with Merkel’s CDU. Should he stay true to his word, Merkel’s new partners will be the Free Democrat Party (FDP) and the Greens, the former gaining 10.7% and the latter 8.9% of the vote. Given the colors of each party, black, yellow and green, a coalition among these three parties might be called the Jamaican coalition, after the colors of the Jamaican flag.

The extreme right party, the Alternative for Germany (AfD) emerged in third place with 12.6% of the vote. 60% of those who voted AfD admitted that their vote was a protest against Chancellor Merkel’s invitation to migrants back in 2015 rather than support for the nationalist, anti-immigration, anti-Islam, and anti-EU party. However, AfD’s determination to break the traditional dominance of the two parties -- CDU and SPD -- reflects the changing political culture in Germany.  It might also draw Merkel to the right and tighten her migration policy.

No immediate shift in policy is expected in the short term as voters go to the polls in Lower Saxony in mid-October. Coalition negotiations are expected to last about three months, with the existing CDU/CSU/SPD coalition remaining in place until agreement is reached.  During that period, we should expect Merkel to focus first on domestic issues and coalition building and pay less attention to foreign policy. How might this affect relations with the United States?

President Trump has insisted that Germany meet its obligation of 2% of GDP to the NATO budget, but the Greens are committed to reducing defense expenditures, not increasing them. Trump has also criticized Germany’s budgetary surplus; Germany’s new government will need to weigh its commitment to a balanced budget against the public demand for increased public expenditure on German infrastructure.  Also, German demography reflects an ageing population and insistence on strengthening German pension funds; Merkel cannot afford to ignore this social expenditure, particularly if the Social Democrats take on the role of leader of the opposition. It looks unlikely that Merkel will be able to keep its commitment to a balanced budget; a decision to be welcomed by both President Trump and her EU partners who would like Germany to spend more money on domestic programs.

Trade will be a key issue in US relations with the EU and with Germany. The pro-business FDP may reinforce Merkel’s desire for a Trans-Atlantic Trade and Investment Partnership (TTIP), and an opportunity to restart TTIP exists if Merkel’s Jamaican coalition is strong enough to resist the anti-globalization, anti-trade movement. However, given the Trump administration’s preference for bilateral trade agreements, it’s unclear whether the idea of renewing negotiations with the EU can gain traction.

Migration remains the principal challenge for Germany and Europe with over 2 million people entering the EU since early 2015. Asylum seekers must be distinguished legally from economic migrants, a process which is both lengthy and prohibits applicants from working while their case is decided. The lack of work, combined with lack of skills and language have become hurdles which Germany can overcome through legislation and accelerated implementation of its integration policy, but the German election results demonstrate that migration remains a hot-button issue.  Observers on this side of the Atlantic must become accustomed to a more turbulent and voluble Germany.

Diana Villiers Negroponte, Public Policy Scholar