The first EU summit of Germany’s Presidency was a tough five day affair – the second longest summit ever. The EU countries met to agree the budget for the next seven years: the planned corona recovery program of 750 billion euros was to be added to the budget, taking the figure to about 1.8 trillion euros – the largest financial package in the history of the EU and one that is controversial.
Several counties, particularly Denmark, Sweden, Austria, Finland and Holland – opposed the proposal. The compromise agreed in the early hours of Tuesday morning involved a smaller amount of grants than the Merekl-Macron plan had envisaged (390 billion euros) as well as 360 billion euros in cheap loans for governments.
As a result of the agreement, Germany will in future pay an additional ten billion euros a year into the EU budget. Angela Merkel said that, “Europe has shown that it is able to break new ground in a very special situation such as this one,” and EU Commission President Ursula von der Leyen that no region in the world has stood together as well in the crisis as Europe.
As negotiations went into the fourth day, reporting in Germany was fairly pessimistic. The Frankfurter Allgemeine wrote that the summit will leave scars : “The hours and hours of negotiations…. have brought the participants to their limits more than ever….It is not only at EU summits that compromises are only ever made when everyone has taken the proverbial look into the abyss. But the tone has become personal, perhaps too personal – and it is always against Dutch Prime Minister Mark Rutte in particular. Macron has hit the table several times out of anger at the “frugal” and Rutte has hit it with his fist. He behaved like former British Prime Minister David Cameron in budget negotiations. Austria’s Chancellor Sebastian Kurz also feels the anger when he briefly leaves the room to answer a phone call. “Can you see it? He does not care. He doesn’t listen to others, has a bad attitude. He takes care of his press, and that’s it! ”Macron scolds.” The article concludes, “The dispute, however important the fund may be for the future of the EU, is ultimately a proxy war for a much more fundamental question: Which direction will the EU take in the coming years?”
The Welt took an even more pessimistic view arguing that the summit has revealed how how divided Europe is. “After this summit, Europe will not be the same as before. Not only has the duration been historic; the marathon negotiations also marks the end of an illusion of Europe. The negotiations, which have increasingly slipped into disputes and allegations, clearly show how deep the trenches are on the continent and that the countries of Europe are no longer in agreement on what the EU project is supposed to be.”
However, after agreement was reached, the Welt reported that Merkel ‘left the summit the winner’ since she had achieved compromise: “It was a ‘we-moment’ …..And despite their differences, they still held together. The compromise machine Europe – it worked. ” Apart from the achievement of reaching compromise, the Welt argued that, “For Merkel, it is a triumph for another reason: Unlike in the European debt crisis, when smaller fiscally- conservative countries were able to hide behind the Chancellor’s tough stance, they now had to reveal their positions. And that also leads to a reassessment internationally: the idea that it is only Germany and Merkel who are breaking down cohesion on the continent with miserliness and small-mindedness is a thing of the past. Now it is obvious that the reality in Europe is more complicated.”
The Süddeutsche Zeitung wrote that, “The Union has succeeded, but the political price is high. The faults within the EU are clearly visible…….the debate about the political shape of a new EU will now take centre stage.” The article argued that, “two blocs, who are openly blackmailing the principles of the Union, have solidified” – a group of states ignorant of the rule of law (Hungary, Poland) who “use the EU as a milking machine,” and a group of national populists education officers (Austria, the Netherlands). “In combination, these countries have done serious damage to the Union in the past few days.”
The Zeit was more optimistic, writing that, “While the worst economic crisis of the post-war period is raging in the member states, while old alliances are breaking down all over the world, the EU, which has often been said to be dead, has shaken itself vigorously and put together the most ambitious budget package in its history.” However, “the heads of government have decided that European money can only be paid out if the rule of law is observed. But Poland and Hungary made sure that some back doors were left open. The principle of unanimity in decision-making has always been one of the strengths of the EU, but also one of its weaknesses.”
ZDF reported that Greece was surprised that a German chancellor, of all people, had advocated a solution based on solidarity; ” For years, German government politicians were feared, even hated,” but Merkel and Macron’s initiative “was really excellent,” according to the Greek Foreign Minister: “All Greeks feel much better in this EU today.” As a Deustche Welle article reminded us, ten years ago, “Caricatures of Angela Merkel in Nazi uniform appeared in Greek newspapers 10 years ago. At the height of the financial crisis, the Germans were seen as taskmasters, mercilessly teaching the indebted states of southern Europe budgetary discipline.”
The CDU/CSU Union is holding at around 37% – 38% in the polls – up 11% – 12% since a record low in March, while coalition partners the SPD have failed to profit from approval of the government’s handling of the corona crisis; the SPD has even lost two points according to ARD-Deustchland Trend.
The Alternative for Germany (AfD), which has dropped around 5% since before the corona pandemic, is failing to gain its ground back.
A Forsa survey published this week showed that the number of east German men supporting the AfD are well above national averages: 27% of east German men would vote AfD, compared to 12% of east German women, and 13% of western German men and 5% of western German women.
The AfD has always been a ‘male party’, both in terms of membership and support. The Forsa poll also confirmed another trend about voting patterns in the east of the country. Voters in the five former eastern German states are much more likely to vote for the extremes – the AfD and Left Party. The AfD came second in the east in 2017, with 21.9%; it came second in all three state elections in the autumn of 2019 too. The Left Party came third with 17.8%, and first in Thuringia in October 2019. In 2017, the CDU won only 27.6% of the vote in the east, compared to 34.1% in the west. The SPD, which came second nationally with 20.5%, came in fourth place, behind the CDU, AfD and Left Party.
The corona pandemic has not only boosted the poll ratings of the CDU/CSU Union, but re-shuffled the likely candidates to be CDU leader and to be the Union’s Chancellor candidate for the election next year.
The three CDU leadership candidates are North Rhine-Westphalia’s Prime Minister Armin Laschet, and MPs Friedrich Merz and Norbert Röttgen (both also from North-Rhine Westphalia). Health Minister Jens Spahn, who was widely expected to run, made a surprise announcement in February that he would run as deputy to Laschet. Spahn, however, now has a problem. He is tied to Laschet, but since the Covid-19 crisis started, Spahn’s popularity has improved dramatically and Laschet’s has gone in the other direction. There are increasing calls in the party now for Spahn to stand to be leader.
The CDU is also facing another dilemma: the possibility of a Bavarian CSU Chancellor candidate – Bavarian Minister President Markus Söder is currently in a strong position. A ZDF Politbarometer recently showed that 64% of all respondents and 78% of Union supporters say that he has what it takes to become Chancellor. Yet the CDU may not accept a CSU Chancellor candidate, particularly one as controversial as Söder.
This week, the media has been speculating about how the Union may solve these problems. The Süddeustche Zeitung wrote that one solution being discussed in the Union is that Laschet could become Federal President, Spahn CDU leader and Söder the Chancellor candidate. Although, reported the Süddeustche Zeitung, this is a scenario which could solve many problems, removing the logjam of candidates without public arguments, it also causes other problems. Laschet would have to give up his leadership candidacy without any guarantee he would be elected as Federal President. Moreover, a deal would make it look as if the CDU was using the highest office of state to solve party-internal problems. As SPD general secretary Lars Klingbeil tweeted, “Sacrificing a strong and popular federal president like Frank-Walter Steinmeier to meet the career goals of a few CDU boys? This spectacle of Söder, Laschet and the Union is becoming increasingly unworthy.” In addition, Laschet is not a woman, and since there has never been a female Federal President, there will likely be pressure to elect a woman. Finally, is it still not certain that Söder actually wants to stand as Chancellor-candidate, since there risks for his party are great; he would be head of a coalition government in which the CSU would probably be the smallest party, forcing Söder to make permanent compromises, which could weaken the CSU position in Bavaria. In any case, as the Frankfurt Allgemiene reported, there is serious opposition in the CDU to the idea of Söder becoming Chancellor.
As the trial of the man accused of attacking a synagogue in Halle in October commenced, with the accused stating that Jews are “the main cause of white genocide,” reports and discussion of right-extremism continued apace.
Two weeks ago, Interior Minister Horst Seehofer and director of the Office for the Protection of the Constitution Thomas Haldenwang introduced the BfV’s annual report and warned that right-wing extremism was the greatest threat to security at the moment. The BfV counted a total of 32,080 right-wing extremists in Germany last year – an increase of 30% compared to the previous year.
There is widespread concern about a series of threatening emails sent to public figures with the signature “NSU 2.0” referring to the terrorist group NSU (“National Socialist Underground”), which murdered ten people in Germany between 2000 and 2007) including 15 sent at the end of last week.
Accusations of right-extremism in the Alternative for Germany (AfD) continue. In Saxony-Anhalt, Peter Günther, President of the AfD State Arbitration Court has been threatened with exclusion from the party following a Spiegel report that he had dubious contacts on Facebook and had spread anti-Semitic conspiracy theories.
The AfD are in turmoil following the dissolution of the nationalist wing, the ‘Flügel,’ and the expulsion of Brandenburg leader Andreas Kalbitz. This week, ARD interviewed joint party leader Jörg Meuthen. Meuthen dismissed talk of a split in the party and argued that “very reasonable forces prevail in the local parties, and that the AfD is ‘growing up’. Speaking of Kalbitz, Meuthen stated, “We do not tolerate right-wing extremists in our ranks.” However, when referring to the leader of the disbanded Flugel, Bjorn Höcke, Meuthen said, “Mr. Höcke has given no reason for the cancellation of his membership,” and rejected the term ‘right-extremist’ for the Flügel.
Meanwhile, in the Thuringian parliament, Thuringia’s Prime Minister Bodo Ramelow showed the middle finger to Thuringian AfD MP Stefan Möller during a heated state parliamentary debate on how to deal with National Socialist Underground (NSU) files. The AfD called for Ramelow’s resignation, but he was supported by the Left Group parliamentary leader who said that it had been “the only decent response to an indecent person.” Tensions between the Left Party and the AfD have been high since February, when the AfD kicked off a political crisis by engineering the election of an FDP Minister President instead of Ramelow.
A Deutsche Welle opinion piece argued that while many social media posts have heralded Germany as a model for reckoning with past atrocities, Germany shows us that atoning for past sins does little if the systems that allowed for them are not dismantled. The article argues that, “Migrant background” was introduced in the German census in 2004 to track diversity — without naming race — and has since become ubiquitous. Often shortened to “migrant,” regardless of where one is born, it’s used almost exclusively to describe people of colour, including Germans of colour, though “German” is notably absent,” and concludes, “Who has access to citizenship, who is othered as a “migrant,” and who is stopped by the police are shaped by racialised notions of belonging that predate World War II. Lauding Germany for how it “dealt” with its past makes ongoing racism today invisible. Monuments were never built to the Nazi past, but neither was that past adequately situated with what came before, or what has happened since. This is a mistake we can learn from.”
Covid-19 and the economy
The FT reported that the Dax index’s rally over the past few months has brought it to just 1.1 per cent below where it ended 2019, making it Europe’s best performing main equity market.
The Handelsblatt, in the start of a series looking at how different government departments reacted to the crisis, examined the Employment Ministry, with Hubertus Heil (SPD) at its head. Before the crisis started, Heil announced new employment records; now unemployment is heading towards 3 million. However, “compared to the United States, for example, where more than 45 million employees have lost their jobs at least temporarily since mid-March, Germany is doing remarkably well. The government has received praise from both trade unions and employers: “The Federal Ministry of Labor acted swiftly and prudently during the corona pandemic. In this way it avoided a major increase in unemployment, ”says Reiner Hoffmann, chairman of the German Trade Union Confederation (DGB).”
The Handelsblatt points out that the government very quickly reactivated by expanding the short work rules from the 2008/9 financial crisis, as well as expanding access to basic social security, increasing short-time work benefits and extending the duration of entitlement to unemployment benefits. From March to June 25th, employers registered around 12 million employees for short work at the Employment Agency (compared to around 3.3 million people throughout the 2009 recession year). Thanks to short work, unemployment has so far only increased relatively moderately, with estimates that almost 640,000 additional unemployed people can be attributed to the virus pandemic by June.
So short work was a success in the crisis; but there were also criticisms that Heil increased the amount from 60% of net income, to 70% from the fourth month and 80% from the seventh month (and more for employees with children). This was popular with employees and unions but the Handelsblatt cites researchers who think that created unrealistic expectations. Although unions and many businesses have called for an extension of the duration of short work, others have warned that “at some point we will reach a point where we try to save jobs that are not sustainable.”
There were also people who were not well protected by the government: people with ‘mini jobs,’ who do not pay into unemployment insurance, did not receive short work or unemployment benefits.
A study by the Bertelsmann Foundation published this week showed that a fifth of all children and adolescents in Germany (around 2.8 million) live in poverty and that the corona crisis is exacerbating the problems. There are strong regional differences, with Bremen and Berlin having a particularly large number and Bavaria and Baden-Württemberghaving the lowests. The survey also revealed differences at the municipal level.
Supply chain law
Gerd Müller, Minister for Economic Cooperation and Development and Hubertus Heil, Minister for Labour and Social Affairs, are planning to introduce a law in parliament when it resumes in September to propose a due diligence law for supply chains, since about 70m children worldwide still work in exploitative conditions. The law would require companies to check human rights and environmental standards in every location, from the places where raw materials are extracted and assembled to their final destinations.
This proposal has proved controversial. The FT reported that Peter Altmaier, Minister for Economic Affairs and Energy, has expressed misgivings over the two ministers moving ahead without consensus in the cabinet; but Müller and Heil have argued that only 455 of 2,250 companies contacted in a survey provided “valid answers” on their practices, and only half of these respondents met due diligence standards. While, as the Deustche Welle reported, over 60 companies have expressed support for the proposed law, (including Tchibo, Rewe and Nestlé, and Ritter), pro-business associations are opposing the proposal.
The Deustche Welle reported that researchers from the Peace Research Institute Frankfurt (PRIF) have said that Germany violated arms export regulations for 30 years, by exporting weapons of war and armaments to countries affected by war and crisis, countries with human rights violations and regions of tension. In doing so, the researchers said, Germany has violated EU laws: ” According to the study, there have been “wars fought with German weapons and serious human rights violations. One example researchers cited was the September 2014 student protests in Mexico. Police violently attacked and shot students with G-36 assault rifles from the German company Heckler & Koch. The study also said German-made weapons are being used in the war in Yemen.”