Both the European Commission and the International Monetary Fund (IMF) have just published findings about the performance of the German economy and the state of structural reforms. While there is plenty of discussions in Berlin about what ‘the others’ (in particular France) are not getting right, there is not much of a debate on what ‘the others’ (Commission and IMF) suggest that Germany is or is not getting right. The new findings did not get much attention in the public debate.
Not surprisingly perhaps, as both reports continue what sounds like good news and point out that Germany’s public finances have been overall sound. The IMF underlines that Germany’s “safe haven status and strong balance sheets” has been an “anchor of stability” during the eurozone recovery. When it comes to the recommendations, however, the IMF experts do again not shy away from getting involved with the politics of the euro crisis, welcoming this year’s marginal loosening of the fiscal stance: “(…) fiscal over-performance should be firmly avoided as it could imply a contractionary fiscal stance that is unwarranted in the current low growth environment.”
The Commission is more cautious on the question that has been dominating the eurozone debate for the past months: is Germany that is leading on fiscal consolidation (which makes it look like the teacher’s pet, something Chancellor Merkel was so pleased about in her home country) the real burden to the eurozone? It is hardly surprising that the Commission avoids this hot issue, since the report is a mere recommendation to the Council of Ministers. And, arguably, the Commission diligently follows a rather narrow mandate in assessing German fiscal policy and its 2013 national reform programme. However, against the background of a fierce debate (mostly resonating outside of Germany) on how to trigger jobs and growth in the eurozone the European Commission’s proposals look rather innocent. Frau Merkel, of course, will have been pleased not only with the findings, but also with the fact that the Commission basically restricted itself to inserting the data they collected in the Member States into tables without spending too much time on interpreting them.
The IMF underlines Germany’s crucial role in shaping the future institutional and legal framework of the eurozone. This reads like a hardly veiled criticism on Chancellor Merkel’s so far rather woolly ideas. Just last week, her joint proposal with President Hollande on establishing the function of a permanent president for the eurozone raised eyebrows even within her coalition in Berlin. While I believe it was right to respond to the French initiative launched by President Hollande, as I suggested in my previous blog piece, Merkel should not underestimate the attention she gets for such moves. She might have considered it as a friendly yet half-hearted response to the bruised neighbour, likely to end up watered down or even abandoned the moment its gets on the agenda of the 27 members. But Merkel should know that any move that might shed light on where Germany wants to take the eurozone is taken rather seriously these days and tactical moves are likely to be met with indignation.
Another more telling intervention of Angela Merkel received attention this week. In an interview with DER SPIEGEL the chancellor reiterated what has become in my opinion the word around which she develops her construction plan for Europe: coordination. In her world, the Commission president has a “coordinating function over the policies of the national governments” and therefore should continue to be nominated by the heads of state and government (with a certain role for the European Parliament to play). No more transfer of competencies to the Commission, but improved coordination in policy areas that can strengthen the competitiveness of the eurozone. Read again her Bruges speech of 2010 – it is pretty much in there already.
Needless to say that Merkel’s “c-word” has been a declaration of war to those who carry the “f-word” banner (in the continental, not the British understanding of federalism) advocating for strong and independent EU institutions. A widely overlooked decision: the heads of state used a clause in the Lisbon Treaty and agreed to keep one Commissioner for each Member State at the recent May summit. While this was only a formal adoption of a decision previously being granted to Ireland, Chancellor Merkel was surely pleased. After all, the European party families are gearing up their campaigns for the European Parliament elections in 2014 with joint candidates for the post of the Commission president. What a nightmare for the ‘c-lady’ to imagine a democratically legitimised president of the European Commission representing the majority in the EP, presiding over a reduced college of Commissioners. What would the reports of such a more independent figure have looked like?
After the questionable results of the “open methods of coordination” in the Lisbon Strategy of 2000 – will coordination as a mode of governance get its second wind? Frau Merkel is taking the lead in its revival.