Observations of an Expat: European Complacency

Political Complacency is dangerous. It stifles innovation and sweeps problems under the carpet because they involve difficult decisions that might rock the boat but end up sinking it if they are ignored too long.

Angela Merkel was in many ways a good German Chancellor. She was a good European leader. She was a consensus builder inside coalition structures. But her constant search for consensus led her to compromises on important issues which needed to be resolved. This was the downside of an otherwise upbeat chancellorship.

Political agreement resulted in economic prosperity for the Germans—and complacency about the unresolved issues, both in Germany and EU-wide. Her likely successor, Social Democrat Party (SPD) leader Olaf Scholz, appears to be heading the same way with a slight leftward bent.

Defence, climate change, public debt, China and infrastructure issues were problems Mrs Merkel faced when she first became chancellor back in 2005. Germany still faces them and you can now add to the list Russia, refugees and the troublesome East Europeans. And because Germany is the most populous and one of the richest countries in the European Union, its problems are EU problems.

In 1997 Environment Minister Angela Merkel called for urgent action on climate change. It is still one of Europe’s climate bad boys. In 2021 Germany relies on fossil fuels for 44 percent of its electricity and emits more carbon dioxide than most European countries.

The long-term chancellor played a major role in attacking Russia’s annexation of Crimea and activities in Eastern Ukraine. But she has done little to oppose the development of Moscow’s intermediate range nuclear weapons and has ensured Germany (and Europe’s) dependence on Russian natural gas with Nordstrom Two.

On Defence, Germany spends only 1.4 percent of its GDP on its military— well short of the two percent NATO target. Since the election of Donald Trump in 2016 Mrs Merkel has been saying that Europe cannot rely on the US for its protection. The message has been repeated after the Afghan withdrawal debacle and the AUKUS nuclear submarine deal. But defence spending remains low.

China is another reason for problems with the US. The Asian giant is one of Germany’s biggest markets. It swallows up seven percent of German exports. The Chinese railway to Europe (a key part of China’s Belt/Road initiative) has its current terminus at the German city of Duisburg where it sends ten freight trains a day. Germany is reluctant to threaten this lucrative market by supporting America’s security-oriented Asia Pivot.

The East European countries in the Visegrad Group—especially Viktor Orban’s Hungary—have broken a string of EU regulations and laws. There have been some sanctions against them, but because of Merkel’s pursuit of no-matter-the-cost consensus their impact has been minimal and Orban and his ilk are allowed to make political capital out of continuing to thumb their noses at Merkel and her liberal European values. This constantly undermines the rule of law in the European Union.

In 2015 Angela Merkel made the incredibly brave moral decision to admit more than a million Syrian refugees to Germany. Unfortunately, her bravery spawned the growth of the right-wing Alternative for Deutschland (AfD) and failed to persuade other EU countries to follow her example. It also pushed the EU into a deal with Turkey to keep 3 million refugees in Turkish camps. Unfortunately, the arrangement has morphed into a blackmail with the EU almost doubling its $3 billion a year payment to Turkey or face a flood of refugees across the Aegean.

Merkel’s policy of no new debt and limited public spending (which was implemented by Olaf Scholtz as finance minister and vice chancellor from 2018) helped to keep a tight rein not only on spending in Germany but also on heavily indebted countries elsewhere in Europe. She allowed a substantial breather to deal with the coronavirus epidemic, but not much more. The result has been that creaking infrastructure across Europe requires a massive cash injection and a better EU-implemented public debt structure to finance it.

Of course, one problem is that although Germany is the most powerful EU country it is still only one of 26. Since the 2014 Lisbon Treaty the European Council has had Qualified Majority Voting, but its meetings still aim for the consensus unanimous vote. The question of a two-tier Europe, especially as regards Eastern Europe, remains on the cards for whomever takes over in Berlin.

But then, then the European mantle may not continue to lie on the shoulders of the German Chancellor. French President Emmanuel Macron is keen to don it, and uses every opportunity to project himself as the ultimate European. The next few months is an opportunity for him to lay the groundwork for the job. Germany will be self-obsessed with coalition negotiations. Those are expected to be completed by Christmas, at which time France will be entering its campaign for the two-round April presidential elections.

At last count there were 19 declared and undeclared candidates for the tenancy of the Elysee Palace. The early money is on a return of Macron. The left-wing is hopelessly divided. The right-wing is usually dominated by Marine Le Pen and her National Rally. But this election has seen the rise of 63-year-old talk show host Eric Zemmour who is even further to the right then Ms Le Pen. He has the distinction of being convicted of internationally-reported hate crimes and has called for the banning of Mohammed as a first name in France. At the latest poll ( September 25) Zemmour had 13 percent of the vote and Le Pen had dropped from neck and neck with Macron with roughly 25 percent each to 16 percent of the vote. If there is a challenger to Macron at the moment it is former EU Brexit negotiator and centre-right Gaullist Michelle Barnier. He is standing at ten percent in the polls, but if Marine le Pen and Zemmour are knocked out in the first round he could emerge as a serious second round candidate.

The main problem with French dominance of the EU is the absence of a firm grip on their domestic economy. The unemployment rate in France is exactly double that of Germany (4.31 percent to 8.62 percent in 2020) and France’s GDP is $2.938 trillion compared to Germany’s $4.319 trillion in 2021.

Macron, however, controls the EU’s biggest military and its only nuclear weapons. He hopes to leverage that into political power along with a long tenancy at the top—if he wins in April. But any French president will still need German money.

* American expat journalist Tom Arms is LDV's foreign affairs editor and Campaigns Chair for Wandsworth Lib Dems. His book “America: Made in Britain” was published on 15 October.

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9 Comments

  • Steve Trevethan 2nd Oct '21 - 12:18pm

    Thank you for your article.
    If China is such a threat, why do “we” trade with China so much?

  • Laurence Cox 2nd Oct '21 - 12:33pm

    Actually the French Presidential election is more complex than you indicate. Using the latest Harris Interactive polling (fieldwork 24-27 September) it is not clear that Michel Barnier will be a challenger as he is running third (on 8%) behind Xavier Bernard (14%) and Valérie Pécresse (12%) for the centre-right nomination(s). If either of the other two is selected it cuts into Macron’s vote by a few percent. The other significant candidate, Jean-Luc Mélenchon is at 13%.

    While Macron looks to be a certainty to get into the two-candidate runoff, he could be facing almost anyone between Mélenchon and Zemmour and if that second candidate turns out to be either Bernard or Pécresse we could be looking at an upset as the Left may well abstain while the Right coalesces around the centre-right candidate to get Macron out. LREM is so closely associated with Macron that his defeat could spell the end of it, triggering a reorganisation of the centrist tendency in French politics. In particular, we could see a resurgence of the Gaullist centre-right.

  • @ Steve Trevethan: We trade with China so much because of greed. They are able to produce high quality manufactured goods at a low price.

    @Laurence Cox: You are right. It is more complex then one paragraph allows. It is also too early. If a week is a long time in politics then seven months is an eternity.

  • Steve Trevethan 2nd Oct '21 - 2:15pm

    Thank you!
    Might one of the purposes of government be to manage greedy groups in its society?
    Can a government be genuine and democratic if it does not protect the generality of its people from the greed of the powerful few and the ignorance of the ill informed many?

  • Paul Fisher 2nd Oct '21 - 10:56pm

    Not sure where begin on the dismantling of this critique of everything European. I’ll leave it at a simple observation: no petrol queues, no empty supermarket shelves, no shortage of lorry drivers, no comparable food banks and criminal leaders get locked up. Overall, a gamma minus and could do better. The biggest economic block on the world, just. Hey ho.

  • Peter Martin 3rd Oct '21 - 8:13am

    The “economic prosperity” argument for Germany is somewhat overdone. Taxes are much higher than they are in the UK.

    The problem is largely caused by Germany’s huge export surplus. Other countries can only pay for German imports if they export themselves to Germany. If they don’t, or can’t, because of an desire to maintain the surplus then someone else has to pay.

    And guess who that is? Yes, it’s the German taxpayer.

  • Nonconformistradical 3rd Oct '21 - 8:58am

    @Peter Martin
    “Taxes are much higher than they are in the UK.”

    What about their public services? e.g. condition of infrastructure? It seems to me that some countries where low taxation has become the gospel of truth their infrastructure might suffer as a result e.g. USA, UK

  • Peter Martin 3rd Oct '21 - 10:23am

    @ Nonconformistradical,

    There are concerns in Germany about infrastructure too.
    https://www.economist.com/europe/2017/06/17/germanys-low-investment-rate-leaves-its-infrastructure-creaking

    The conventional thinking which nearly all Lib Dems go along with is that if we want Nordic style public services we will have to pay more taxes. This is only true up to a point. There is a bit more to it than is usually explained. On the one hand Germany does better than us in supporting students in higher education but on the other hand it doesn’t seem to have much money to spare on its armed forces. So there are multiple factors involved.

    However, it is a matter of simple accounting that exports are a real cost. If exports and imports don’t balance then someone has to pay the difference. If we ran an export surplus of say £100 billion rather than a deficit of £100 billion we’d have to raise £200 billion more in taxes.

    There are downsides to running both a trade surplus and a large trade deficit. The first leads to higher taxes than are necessary. The second creates long term international debt issues. It makes sense to take the matter of trade balances much more seriously than we do, in both the UK and Germany, and consider how best we can both move to a position of balanced trade.

  • Nonconformistradical 3rd Oct ’21 – 8:58am:
    What about their public services? e.g. condition of infrastructure? It seems to me that some countries where low taxation has become the gospel of truth their infrastructure might suffer as a result e.g. USA, UK

    The UK is a high tax country with the tax burden now at a 70 year high. A low tax country would be the Isle of Man: 10% standard rate Income Tax, 20% higher rate Income Tax (capped at £200,000), transferable tax allowances, tax relief on mortgage interest, 0% Corporation Tax on most businesses (10% on financial companies), no Capital Gains Tax, no Inheritance Tax, no Stamp Duty Land Tax. A moderately taxed country is New Zealand with 13% VAT, higher Income Tax rate of 39% (was 33% pre-pandemic), no Capital Gains Tax (except second properties owned for less than 10 years), etc. In both these countries public services and infrastructure are of a similar or better standard than the UK.

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