Will German EU Presidency be a crisis semester or provide a post-pandemic reset?

FIPRA’s global network hosted one of its regular online “client calls” on 13 May 2020 to assess the prospects for the German Presidency of the Council. This note summarises key points.

With Inga Karten, of Miller & Meier Consulting, the FIPRA Network agency in Germany, and Rainer Rudolph, of DGAP, the German Council on Foreign Relations, we focussed on how the COVID19 health crisis has up-ended German planning for the six months, and indeed into the work of the upcoming Trio of Germany, Portugal, Slovenia. Jacki Davis, as the series convenor, moderated the discussion for FIPRA International.

Overall Assessment

Rainer Rudolph emphasised that there would be a high degree of ‘driving by sight.’ At the same time, the MFF and the 2021 budget and the closure of the UK-EU talks – to name but three – would all have to be done on time, whatever else fell by the wayside.

Inga Karten saw a striking disconnect between the stagnant approval ratings of the SPD and Greens, compared with CDU/Merkel confidence ratings. Meanwhile, the CDU campaign to succeed the Chancellor was increasingly framed as a beauty contest on each candidate’s COVID19 performance.

Council work rates were currently at 10% of usual, all digital of course. Even if the Council managed 30% of usual working during the German Presidency, this created huge uncertainties both as to the Council’s collective ability to reach deals on big issues, budget, recovery and immigration, and the bandwidth to discuss the usual range of business.

These difficult conditions raised the question whether highly important but less urgent matters, such as digital, green deal and immigration be delayed. Even stronger doubts arose for the usual round of informal Council meetings and for the events linked to such Councils (for example around the European Year of Rail). We hoped that the African and China agenda would not be lost to sight.

Overall, it is clear that pre-pandemic expectations of the coming German semester have all been put into question. It might be that our expectations for the German Presidency should be scaled back, compared to widespread pre-pandemic optimism. Managing the immediate critical issues would in itself be a success, while legislative business as usual or constitutional discussion would probably and properly be set as lower priorities.

The impact of the pandemic on stakeholders was to make, for example, business leaders much more ‘balanced and thoughtful’ about the breadth of the ‘real’ challenges facing the EU. The pandemic had taken us by surprise and needed a strong response. The Climate was still the big issue. The underlying social impact of the pandemic lock-down also required serious attention from the first. Germany would, as ever, be working very closely with Paris, but also to ensure that the ‘South’ also felt support from the EU and remained committed to the Single Market.

Some specific aspects

The recent judgment of the German Supreme Court as to the legality of previous ECB interventions was seen by all as a joker in the Presidency pack. The implications went both to the EU legal order (a national court challenging the supremacy of EU law and Court) and to the proportionality of specific options for ECB and Eurozone action going forward. On the legal implications, the judges seemed surprised to have provoked what may have been an unintended constitutional conflict. Not all of the discussants were so surprised. There was inevitably a likely impact of their Court’s judgement on the care with which Berlin would want any post-pandemic recovery package to be waterproof against any similar challenge in future. We were sceptical as to possible formal legal challenges to the legality of the Karlsruhe decision from the EU side.

Legal form apart, the pandemic would have a major impact on the structure and scale of the MFF. Mrs Merkel had already said that the MFF would be shifted to a new dimension, with a significant German contribution to a likely increased envelope. But scale would need to go hand-in-hand with a reshaping of the budget balance, for example shifting to incorporate climate-friendliness as a precondition in the subsidies given under the MFF. The German government still needed to take its domestic party base along, and then bring on board the likes of the Netherlands. We expected that a bigger German contribution would put irresistible pressure on the Hague. As to the focus of the added effort, health systems, and emergency management, as well as economic recovery were all very much in scope, as was green recovery and digital.

It was all too clear that the EU was not yet adequately equipped to manage effectively the multiple challenges of a crisis such as the present pandemic. There was not likely to be a debate on the constitutional balance of health competence under the Treaties, and no one expected a shift of competence in the year ahead. It was more probable that added funding for emergency preparedness and cooperation would be the lever with which stronger cooperation would be driven forward. However, added powers of coordination in circumstances of declared common emergencies would be needed, too.

On the Green Deal, it was important also to maintain the degree of urgency. This mattered, because the EU needed to keep up with global standards of coordinated climate management. There was a call from the Bundestag for a fresh debate on burden-sharing as part of any reinforcement of carbon-reduction goals.

For UK-EU talks, there were fears abroad in Berlin that the UK Government wanted to avoid any extension of the end-year deadline for the current talks. A departure, even without a full deal, in December 2020 would mean that the impact of Brexit became inextricably mixed up with the impact of the pandemic, shielding the Brexiteer groups from blame for economic damage. No speaker expected that the German Presidency, or the EU would be the one first suggesting a delay, but no one ruled out an extension of the talks, even beyond the written deadline of end-June.

As to the deeper impact of the crisis on global and national perspectives of decision-makers, we all felt that the EU Member States’ national and local reflexes, revealed at the onset of the pandemic, marked something of a failure and needed to be corrected, so that Europe once more spoke more consistently with one voice. This remained a live and urgent goal, for example in the management of the ongoing health crisis and in the management of vaccine discovery, production and distribution.

EU had to reassert its more open global perspective. China and US and Europe were currently pulling apart, and the management of a global health and economic crisis could not succeed on that basis -indeed, so far we had done better collectively a decade ago.

As to the pandemic’s impact on digital transformation, Germany was prominent among countries where fears for privacy were a parameter of the work to prepare virus-tracing apps. National public opinion did however seem to be moving towards accepting such apps, as part of deconfinement. There was also increasing openness to shared data curation in areas of public good, greater readiness to do remote medical consultations and deploy advanced med tech. Overall, we were optimistic for the digital impact of the pandemic.