International analysis and commentary

How Germany should engage to reshape the EU

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Traditionally, German foreign policy has been geared towards working within multilateral organizations, partnerships, and action in cooperation between liberal democracies. Consensus-based coordination within the framework of the European Union and the transatlantic NATO alliance are, from a German perspective, proven and preferred approaches. The strong commitment to deepening the EU and cultivating close relations with the US have helped Germany, not only politically and economically. Strong partners with extensive involvement in foreign, security, and defense policy – such as the US, France, and the United Kingdom –, and functioning regulatory structures, have allowed Germany to guarantee security for its population while showing relatively little international engagement.

 

Rising uncertainty, insecurity and competition

Structures and rules have come under pressure, and this not only since the election of Donald Trump as US President. Three factors are central to this. Firstly, the shift of economic, political, and military clout towards Asia has led to a relative underrepresentation of emerging powers in international institutions. For about two decades, the necessity to reform the post-war world order has been identified, but no substantial reforms were implemented.

Secondly, the Western model of liberal democracy is not spreading to the extent expected in the 1990s, when the universality of Western liberal values was assumed. The persistence of competing systems also has implications for the recognition of values ​​and legal principles that have been incorporated into international law and international organizations.

Thirdly, countries such as Russia or Turkey are challenging the Western model of politics and society, even defining an antagonistic image of the West, both culturally and politically. Meanwhile, in many capitals and even in Washington, D.C., a mode of “friend or foe” thinking prevails. The guiding idea of ​​international cooperation as a positive-sum game has given way to a world of strategic competition, in which one party’s wins are offset against the losses of another. Not only countries such as Russia and China, but also the US have, in various ways, become large elements of uncertainty and even a threat for Europe.ù

 

Strengthening the EU internally and internationally

For the time being, it is first vital both for Germany and the EU to maintain their relations with the US and to support and engage in institutions, values, ​​and principles of the liberal democratic world. It is unlikely that this orientation changes fundamentally, in view of the existing deep international interdependence, and would entail a departure from Western values. Second, Germany must help Europe develop the capacity for projecting power politically, economically, militarily, and technologically. Third, the EU must increase its own resilience, as attacks of a hybrid nature will increase. Neither the EU nor national governments are able to guarantee protection on their own.

 

Internal and external challenges intertwined

The EU’s internal cohesion and international environment are directly related: external players offer alternative political models, partnerships or modes of funding that some of the EU states are using. Regardless of whether they are doing this because they are convinced of the merits, or because they want to improve their bargaining position within the EU, they are weakening the EU further either way.

The economic and political success of Germany and the EU depends on globalization, free trade, and regulated and peaceful coexistence. A closed economic model would not guarantee a comparable level of wealth, and for most EU states illiberal models of state and society are unacceptable. In its very own interest, the EU should actively defend and shape liberal and multilateral norms – both internally and externally. A normatively consolidated EU can and must do its utmost to maintain multilateral structures, while at the same time making them fairer, more inclusive, and more sustainable than in the past. These structures must become so attractive that they continue to represent a superior alternative to the models offered by China or Russia.

 

Strengthening the economy and social cohesion

Although the EU and the Eurozone are showing moderate growth rates, there are still three weaknesses. The Single Market and the Eurozone were important steps towards the removal of barriers and the creation of a common monetary system, but they need to be completed and be made more resilient.

At the EU level, the development of budgetary, financial, economic, and social policy instruments has not kept pace with monetary policy. At the same time, the capacity for member state governments to actually impact economic developments in their countries is more limited. Seen from this perspective, the discussion about the completion of the Eurozone and the shaping of the Single Market is about re-establishing shared sovereignty and the ability to act at the European level.

Despite significant reforms in governance structures in response to the crises since 2008, the Eurozone needs to be made more crisis-resilient. Instability and loss of confidence in the markets, insufficient consolidation in the banking sector, and increased political and digital vulnerabilities in the financial sector could cause even greater crises, for which the Eurozone is still unprepared. As political polarization has increased, it may be more difficult to respond on an ad hoc basis, and even to create the instruments necessary for crisis management, something that the EU successfully managed from 2010 onwards, with debt rescue packages during the first sovereign debt and banking crisis, and later with the creation of the European Stability Mechanism.

Second, the EU no longer fulfils its promise of prosperity. Many citizens regard it as the Trojan horse of threatening globalization. This perception is exploited by populist parties and used against the EU. European measures in the field of economic and social policy are needed to reduce the impression of vulnerability and delimitation created by the EU and world trade, and make the protective role of the EU tangible. This includes a more realistic economic policy towards China, such as investment control measures, in order to fend off strategic purchases of relevant key industries. The EU and its member states need a more decisive industrial policy and may need to review competition policy, in addition to stepping up policies that support research, education and innovation capacity.

In addition, the EU needs to shape and regulate the digital transformation in order to play a role in the setting of global standards in the future. Europe should not concentrate on monitoring and responding to developments in other countries and regions, but will need to prioritize its own competitiveness and attractiveness as a strategic resource.

 

Consolidation of foreign and security policy

In the field of foreign and security policy, the EU needs to improve its ability to act strategically together and needs to build resources to be able to act independently and effectively. The EU initiatives for enhanced military capabilities, permanent structured cooperation, and the development of a strong industrial defense base, including through the European Defense Fund are important steps forward and step up the contribution Europeans make to the transatlantic alliance.

The challenges of security policy today go far beyond the military. Internal and external risk areas are merging, including in “non-military” fields such as politics, business, and society. Violence can take a variety of forms, be it oppression through economic dependency, disinformation, or cyber-attacks that steal data but also endanger infrastructure. This conflict plays out below the threshold of a classic war, which makes it difficult to react unambiguously. Governments need to consider new categories and competences in security policy.

The EU’s need to develop its ability to define and pursue far-reaching objectives is particularly crucial in multilateral contexts given the diversity of strategic cultures and national perspectives, which already vary greatly in the way they analyze problems ranging from international security assessments to risks facing the Eurozone. The discussion on common strategy should use and connect different traditions and strengths, but needs an explicit understanding of the starting position, common goals, and ways of sharing the burden. Even closely cooperating EU partners, operate out of different security and defense-related cultures and therefore have to be all the more explicit about common goals and instruments.

Despite these shortcomings, the EU is a more competent actor to cope with the existing complexities than any single member state alone. Germany may have hesitated over the past years, but should be an active advocate to ensure that the EU is provided with the necessary resources. Starting points for a much-needed debate on the ambition and vision of the EU as a formative power, as a space of liberal order, and as a cooperative but more independent player in international politics, are provided by the EU’s Global Strategy in response to major transformations in regulation and security policy. The narrative of a protective EU also finds its origin in this strategy.

Germany should proactively work with partners to ensure that the EU builds up the independent ability to act in three areas: strategy (political goals), decision-making ability (institutions and processes), and the ability to act (instruments and resources). Strengthening European and national strategic capacity within NATO is a prerequisite for its credibility in security policy, following its own principles in security and defense alliance, and for policy-making. If the EU succeeds in doing so, it will also strengthen its ability to shape international developments.

 

Normative self-assertion

As a starting point, the EU needs to renew its agreement on the common values that underpinned its founding and expansion. This will offer it more external credibility as a liberal democratic agent. A major challenge here is to prevent states such as Hungary and Poland from moving further away from the European model of democracy and value consensus, even after agreeing to these principles upon accession. There are governments in power, not only in Hungary and Poland, that are undermining the functioning of their democratic order and restricting important elements of liberal societies.

This relates to, for example, the freedom of the media, the existence of an independent civil society, and the independence of the judiciary. So far, the EU system has failed to stem or even reverse these developments. If the existing instruments prove unsuccessful and there is no clear protest against this path within the societies concerned, consideration must be given as to whether states that are in permanent conflict with the principles of democracy and the rule of law can remain full EU members.

 

Making the EU a formative power in a changing world

In the coming decade, Germany and the EU will have to continue to revise their foreign policy. For the Federal Republic, the Western bond within the framework of the EU and NATO helped shape its identity, while placing restraints on its own foreign and defense policy. Today, European ideas and formative power within the international system, which is undergoing fundamental change, must be developed. This requires simultaneous actions of security policy and regulatory procedures.

First of all, the basic strategic decision must be made as to whether the EU, together with Western partners, wants to maintain an open system of liberal societies. If so, the EU must try more vigorously to shape or include globalization and the new environment of power policy associated with it. An unadulterated view of the strategies of other players and the consequences of the described trends and upheavals is required to assess the necessity and options for action resulting from years of inconsistent response to threats. Neither the federal government nor the European partners will manage to forego placing inconvenient demands on society when faced with the real challenges, such as the provision of resources and the need for joint action. However, it will only be possible to organize political support for this if the EU increases internal convergence, security, and resilience. The task of developing the EU into a formative power in a hostile environment requires far-sighted political decisions, both internally and externally, which Germany, together with its partners, should bring about. This is threatened by populist attempts to pit the nation state against Europe – Europe can only gain formative power if the two entities pull together.

It is likely that the EU will continue to differentiate itself in the coming years and will increasingly work together in subgroups, hopefully including the UK, in order to maintain its capacity to act. While differentiation may promise quicker and more efficient policy-making, the risk needs to be seen that too much differentiation may actually lead to disintegration. So, while pragmatism is needed to define urgently needed policy responses, engagement, in particular by large member states, to maintain the EU institutions and legal framework remains key.