Germany wants a federal union. Bring it on

Now we are talking. The f-word is only mentioned once in the coalition agreement of the new German tripartite government, but it is all over the European section of the document. We have come a long way. And this is certainly good news.

Not long ago there was an increased perception that Germany had lost its ‘European instinct’. Back, 10 years ago, Simon Bulmer and William E. Paterson, two well-known EU scholars and Germanists, convinced many that Germany had moved from being a “tamed power” to a “normalized power”, which like France and the UK was not pulling back in defending its own national interests. This started with Schröder and became even more evident with Merkel and her intergovernmental union method

Germany had thus become a neo-mercantilist, reluctant hegemon, driven by narrow economic interests, more interested in commerce with China than in deepening the Union.

I was never convinced about this thesis and throughout the euro crisis I kept telling my interlocutors in Spain and beyond that, despite the appearances, the German political class was deep down in favour of a federal union. This was a hard sell. I remember vividly having conversations with Spanish government officials in which they ventilated their anger about the narrow-mindedness and selfishness of their German counterparts. 

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Frustrated by this gap in perceptions in 2014 I published an article arguing that the German political class was still in favour of a federal political union and that the problem was the weakness and inaction of France, back then led by a disappointing François Hollande. Again, many were unconvinced, in the 2013 German federal elections the future of the European Union was hardly discussed, and in the 2017 elections the then SPD candidate Martin Schulz proposed a “United States of Europe” and he was mocked and ridiculed. At the time, when someone mentioned the f-word in any European forum there was a lot of eye-rolling. 

From Schulz to Scholz 

No more. Four years later. In the 2021 governing Koalitionsvertrag one can read it black on white. The current Conference on the Future of Europe should lead to the creation of a “federal European state”. From Schulz we have moved to Scholz. How one single letter (and person, not Scholz but Trump) can change things! The f-word is not just mentioned without any substance. As Simon Hix points out, the agreement is “hugely ambitious and potentially transformative for Europe”. 

There is a clear call for a “constitutional convention”, more power to the European Parliament with its “own right of initiative” for new legislation and the introduction of transnational lists and consolidation of the “’Spitzenkandidaten’” process. There is also the intention to make the EU council more transparent and to widen the qualified majority voting system to core, sovereign, areas of the national states like foreign policy. There is even the aim to establish a true “Foreign Minister”. 

In addition, there is a clear indication that infringement of the rule of law in the member states will not be tolerated (a clear message to Poland and Hungary) and that the EU budget cannot be cut to repay the new debt issued for NGEU, which means that the EU will need to develop its own resources (i.e. introduce European taxes) or augment the national contributions. 

Finally, therefore is a clear commitment in favour of an EU with strategic sovereignty (a more federal wording than strategic autonomy) with the goal to be more autonomous in the global context and in strategic sectors such as energy, health, raw materials and technology. This is state-building in the making, as Daniel Kelemen and Kathleen R. McNamara would conceptualise it, not only based on market integration but rather as a response to a more menacing geopolitical context of great power rivalry. 

However, words are cheap. It is easy to talk federalism, it is much harder to do it. We will see whether the coalition partners are ready to walk the walk after talking the talk. A federal state without a sizable federal budget is an oxymoron. The coalition agreement does not commit to it. While it is true, as Lucas Guttenberg argues, that there are no red lines on a possible continuation or substitution of NGEU with another central fiscal capacity, there is no clear commitment either. 

Furthermore, the whole paragraph on the Growth and Stability Pact (GSP) and its potential reform is ambiguous and confusing. In the first sentence the writers say that the Economic and Monetary Union needs to be strengthened and deepened. That´´’s great but doesn’t mean much. Then, they say that the GSP has shown to be flexible. Does that mean that it has worked? The next sentence says that upon the GSP, “we want to secure growth, debt sustainability and sustainable and climate-friendly investments.” Does this mean they are in favour of a green golden rule, as proposed by Zsolt Darvas and Guntram B. Wolff? If so, would a forthcoming taxonomy on what green investments are be compatible with a an easier and more transparent GSP? The technical and political discussions could be very messy.

There is also a determination to increase investment in public European goods such as digital infrastructure, railway systems, energy supplies and cutting-edge research and development to secure the autonomy and competitiveness of the Union in the 21st century. But where will the money come from? And who, and on what governance mechanisms, will decide how to spend it? These are still many open questions. 

In 2018, 22 Spanish experts signed a manifesto calling for a permanent central fiscal capacity to secure both needed investments and reforms (and to have a fully-fledged banking union). We also acknowledged that treaty change might be necessary. The coalition agrees. If this is the case, one wonders whether this would imply changing the Grundgesetz and organise a referendum. In the current context, where nearly one third of Germans do not want to be vaccinated against covid-19 (presumably because they distrust the authorities) this possibility seems to be a no-go.

But without the support of the people political unions do not survive. This coalition achieved power without talking about Europe in the campaign. They have now four years to explain to their voters why a federal European state, based, of course, on the principal of subsidiarity, is a good thing. Not based on a grand vision, but upon the same pragmatism that they deployed in forming this traffic light coalition. Being this a Koalitionsvertrag (contract) one can only hope that pacta sunt servanda

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