German Chancellor Angela Merkel attends the ceremony for the formation of a new coalition government in Berlin on Dec. 16 (Carsten Koall/Getty Images)
Analysis
Germany's new coalition government -- consisting of German Chancellor Angela Merkel's center-right Christian Democratic Union party, its Bavarian sister party, the Christian Social Union, and the center-left Social Democratic Party -- officially took power on Dec. 17 after the German parliament voted to confirm Merkel's third chancellorship. There were two surprises among a host of familiar faces in the revamped 16-member Cabinet: Christian Democrat Ursula von der Leyen as defense minister and Social Democrat Joerg Asmussen as deputy labor minister (he will need to leave the European Central Bank's Executive Board). Christian Democrat Wolfgang Schauble will retain his post as finance minister. The Social Democrats' most prominent appointments will be Frank-Walter Steinmeier as foreign minister and Sigmar Gabriel as vice chancellor and economy and energy minister.
It took three months to form the new German coalition -- longer than it took to construct Germany's two previous governments under Merkel in 2009 and 2005 -- mainly because the Social Democrats had to decide whether they wanted to be the subordinate party in this "grand coalition." While the current arrangement will likely make domestic decision-making more efficient, Berlin's actions will still be guided by the strength of external demand, the need to maintain cohesion in the European Union and its bilateral relations with Russia. Thus, despite having strong parliamentary backing, Germany may not be any more effective at navigating Europe's economic crisis than it has been since 2009.
Stratfor has been analyzing the short- and long-term realities that any German government would face since before the Sept. 22 federal election. Below is a compilation of our forecasts for Germany's new grand coalition.
German Involvement With the Ukrainian Opposition
Dec. 12, 2013
Germany has built relatively strong ties over the past years to one of the main Ukrainian opposition parties. However, given how sensitive Russia is to Western involvement in Ukraine, Germany is likely to settle for a balance in Ukraine between East and West to ensure the stability of the German-Russian relationship.
Germany's new government likely has not formulated a strategy regarding Ukraine. Merkel's party has been the main one seeking political ties with the Ukrainian Democratic Alliance for Reform, but the Social Democratic Party prefers favorable ties with Russia and will likely argue against interfering too much in Ukraine.
Berlin will not commit the same resources to Ukraine as will Moscow, and it will not seek to reorient Ukraine toward Europe. More likely, it will try to ensure that Ukraine maintains its balance between Europe and Russia.
Germany's Relationship With Russia Under a New Government
Nov. 27, 2013
Apart from preserving the cohesion of the European Union, Germany's main foreign policy challenge over the coming years will be managing its relationship with Russia during a period of European structural weakness and Russian resurgence.
The European Union will likely pressure Russia in the first quarter of 2014 through an investigation into the activity of Russian state-owned energy firm Gazprom in a number of Central and Eastern European countries. Germany is unlikely to openly interfere in this ordeal so as not to impair its good relations with Russia or undermine the European Union.
Berlin will defend its strong bilateral energy relationship with Russia at the EU level and try to ensure the pressure on Gazprom does not affect their relationship.
At the same time, Russia will likely make greater efforts next year to strengthen its industrial base and decrease its dependence on the energy sector. Given Germany's industrial competitiveness, Russia will likely try to partner with -- and potentially buy -- German companies to try to acquire technical expertise and set up production sites in Russia.
EU Issues Ahead for Germany's Next Government
Oct. 23, 2013
The next German government might be more efficient in its decision-making, but that does not mean it will be more effective in steering Europe through the ongoing economic crisis.
Once the grand coalition has defined a common position, it could implement policies with strong parliamentary backing. This will probably prove valuable in the coming years of the European crisis.
Germany can do little to mitigate the threat that Euroskepticism poses to the European Union as an institution. Berlin will allow moderate parties in Britain or France to adopt more Euroskeptical policies to prevent them from losing votes to nationalist parties, in hopes that many of the proposed policies remain largely rhetorical.
The next government in Berlin will likely find itself arguing at times to both weaken aspects of European integration and to strengthen the eurozone.
Germany is aware that it likely will have to provide more financial assistance to EU countries in the next few years. Thus Berlin will try to couple new aid promises with stronger oversight of national budgets and the strengthening of the eurozone as a fiscal union.
As one of the primary destinations for immigrants, Germany will be inclined to introduce stronger immigration controls and to crack down particularly hard on illegal labor and immigration. At the same time, Berlin will try to quell calls for aid from Europe's periphery by providing financial and technical assistance to these countries to deal with migration and long-term labor reform.
Germany's new government will continue to have trouble implementing a grand German strategy for Europe and will remain largely a reactionary power.
Berlin's central challenge in the coming years will be using its position as a creditor and economic power to strengthen its role in defining the EU integration process. This will continue to be difficult for Germany to achieve.
In Germany, Merkel Will Seek a New Coalition
Sept. 23, 2013
A new coalition government in Germany will have to find a way to cope with rising domestic Euroskepticism and continuing economic difficulties throughout the eurozone.
The next four years are likely to be more challenging for Berlin, given that the effects of Europe's unemployment crisis have yet to be fully felt.
Popular reluctance to help other countries will likely be a growing concern for Germany's political elite; Euroskepticism and opposition toward the established parties' strategies is likely to rise when unemployment increases.
Europe: What to Expect After Germany's Elections
Sept. 18, 2013
Any government in Berlin will continue to aid countries afflicted by the European crisis because Germany's economy relies on the free trade zone and on exports, which the rest of Europe can buy only if it can afford to do so.
The new German government will have three priorities: strengthening domestic demand, addressing Germany's immigration issue and re-evaluating Germany's energy strategy.
Ensuring unfettered access to Russian natural gas and oil will remain a foreign policy priority, though relations with Moscow will sometimes conflict with Germany's goal of integrating Europe.
Continued financial assistance is a crucial element in Germany's national strategy of ensuring cohesion in Europe and preserving the currency union. Although German aid to struggling countries will still only come as a reaction to pressure from financial markets and threats of political instability, Berlin will almost certainly continue providing funds.
To ensure the survival of the eurozone, Germany will also continue to try to preserve the Franco-German alliance.
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