BF-FieldManual-FEB13 -3.pdf - Bertelsmann Foundation

CASE STUDY: THE NATURE OF GERMAN LEADERSHIPUNDER ITS EU PRESIDENCY IN SPRING 2007Policy preferences of European states traditionally tend to toggle between their Atlanticist identity and European identity. Thishas been the case for states such as the UK, Poland, and the Czech Republic and, to a lesser extent, France and Italy. In contrast,Germany tends to manifest its Atlanticist and European identity simultaneously. Germany oscillates between an outward-looking,values-driven foreign policy rooted in simultaneous expressions of Atlanticism and pro-Europeanism and a more inward-looking,insular policy more narrowly defined by self-interests. The former has been seen at several inflection points in German postwarhistory, including 1955-58 (German NATO accession and the establishment of the Treaty of Rome), 1985-86 (Plaza Accords andSingle European Act) and 1989-92 (German reunification in NATO and the Treaty of Maastricht).The 2007 German EU presidency is the latest example and could provide some predictive power for the near future. Fresh off itswildly successful hosting of the 2006 World Cup, Germany hit its zenith in the spring of 2007 when the country’s European andAtlanticist strategies coalesced in a diplomatic campaign that employed all the country’s natural political strengths: 1) its zestfor technocratic management, 2) its penchant for consensus-building, and 3) use of economic institutions imbued with deepgeopolitical meaning.Germany assumed the rotating presidency of the European Union in the first half of 2007 at a time with the union had been set adriftby its failure to pass the EU Constitution Treaty. After years of introspective and painstaking negotiation, the arduous ratificationprocess went down in defeat when voters in two of the EU’s core members, France and the Netherlands, rejected the constitutionin referenda. It was Germany under Angela Merkel’s leadership that salvaged the rudderless European project, repackaging the EUConstitution into a leaner, more technical document that became the Treaty of Lisbon, signed under the subsequent Portuguesepresidency. The political investment of the Merkel government single-handedly revived the EU to the extent that at least oneobserver deemed the most lasting legacy of her first term in leadership. 17During this period, the Merkel government engaged a campaign to rebuild relations with the US after the estrangement betweenthe two countries—and the US and Europe more broadly—in the run-up to the Iraq war. The capstone of the normalization wasthe May 2007 US-EU Summit in Washington, which launched the Transatlantic Economic Council (TEC) a cross-ministerial bodyseen at the time as a means of upgrading relations between the US and the European Union to the highest level of economiccooperation. Along with the Open Skies Agreement, the TEC was designed as a somewhat technocrat body, but it was intended asa deeply symbolic political reconciliation of the US and Europe in the wake of the intense strain of the previous four years.This is not to say that Germany’s simultaneous assumption of Atlanticist and European identities always leads to durableoutcomes. After all, Merkel’s subsequent December 2009 decision to limit the imbued powers and institutions granted underLisbon Treaty, which many expected to lead to a more centralized EU role in European political and foreign-policy decisionmaking,demonstrated that she is capable of U-turns, even on signature achievements. Nevertheless, its 2007 tandem campaignstoward Europe and the US could provide insight into how German leadership might be best deployed in the current environment.Given past reticence to take swift action, Germanleaders are likely to postpone major decision-makingor destabilizing events until after September 2013national elections.much-needed political cover in Germany,despite the Bundesbank’s protests.Maintaining the primacy of democraticinstitutions has been a central implicitmessage of the ECB, even as electedpolicymakers, recognizing its abilityto take decisive action and be lesssusceptible to public opinion, intendto cede responsibility to it over bankingsupervision and potentially a rolein recapitalization, wind-downs anddeposit protection. As the US’s 2008experience with TARP and the FederalDeposit Insurance Corporation (FDIC)demonstrates, decisions around the fateof the financial sector could open up theECB to greater political scrutiny.France is a key swing state in the eurozonesystem and will face important politicaltests in 2013. Balancing between fiscaltightening and growth promotion hascreated a precarious position for thegovernment under President FrançoisHollande, which won election on a policyplatform of increased social protection,high-income-earner tax increases (to75 percent for the top marginal rate),wage increases and qualified reversalsof changes in the retirement age, andan (unrealized) promise to renegotiatethe Fiscal Compact. The French haveguaranteed cuts in 2013 to reduce2 2The Eurozone Crisis