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An EU agenda: keeping British in, Russians out, Germans down

The first secretary-general of Nato, Lord Ismay, once said the Western defence alliance was created “to keep the Americans in, the Russians out and the Germans down”. The task facing the European Union now might be described as to keep the British in, the Russians out and the Germans down.

British in Prime Minister David Cameron’s demand to redraw Britain’s relationship with the EU and put the result to a referendum in 2017 means the next few years are bound to be dogged by haggling over Brussels’ powers and about opt-outs for London.

If Britain, Europe’s third largest economy, main financial centre and joint biggest military and diplomatic power, were to become the first country ever to leave the bloc, it would deal a severe blow to itself but also to the EU’s global standing.

Last month’s confrontation over the nomination of Jean-Claude Juncker as European Commission president against adamant British opposition was a foretaste of the fraught negotiations ahead if Cameron is re-elected next year. Under fierce pressure from Eurosceptics at home, the British leader risks overplaying his hand, misreading and alienating his main allies, as he did with German Chancellor Angela Merkel over Juncker, and demanding too high a price.

Some continental politicians, exasperated by 40 years of British efforts to block a federal Europe and secure favourable terms by hardball negotiating tactics, are tempted to let the UK go in a belief that their life would be easier afterwards. Yet keeping Britain in, provided it undertakes not to obstruct closer economic and political integration of the euro single currency area, must surely be a priority for the EU.

Russians out Russian President Vladimir Putin’s seizure and annexation of Crimea, cut-off of gas supplies to Ukraine and destabilisation of eastern Ukraine have put Moscow’s geopolitical challenge to Europe – and reducing the EU’s dependency on Russian gas – high on the policy agenda. Brussels officials fear Moscow may do more to punish Ukraine and fellow ex-Soviet republics Georgia and Moldova economically for signing trade and co-operation pacts with the EU.

Member states differ on how far to go in sanctioning Russia for its behaviour, whether to give Ukraine a long-term prospect of membership and what incentives to offer Moscow if it changes course. The Germans are reluctant to jeopardise their energy and trade interests, the French to cancel the sale of helicopter carriers and the British to endanger London’s role as an offshore banking centre and playground for Russia’s rich.

While former Soviet bloc states such as Poland and Estonia favour a tougher line with Moscow, others such as Slovakia, Romania and Bulgaria are wary of putting energy supplies and business ties at risk. Preventing Russia from destabilising the EU’s eastern neighbourhood is a common European interest, but where and how to draw red lines will be a major challenge for the bloc.

Germans down?Yes, but why the desire to keep the Germans down? Germany is in many ways a beacon of economic success and stable democracy, anchored in the bosom of Europe and Nato. But its growing political ascendancy over the EU in the wake of the euro zone crisis has stirred unease in many European capitals, ensuring that a tug-of-war with Berlin over economic and fiscal policy is likely to escalate.

French weakness, British detachment, the enfeeblement of the European Commission and the muscle-flexing of the German constitutional court have all contributed to tilting the balance in the EU, thrusting Germany uncomfortably into the spotlight. So too have impending changes in voting rules among EU states that give more weight to population size, and the growing power of the European Parliament, where Germans make up the largest contingent.

Long under-represented, Germans have secured an unprecedented grip on the reins of the main EU institutions that is raising concern in London and Paris. Former Merkel aide Uwe Corsepius is secretary-general of the EU Council of ministers; Klaus Welle is secretary-general of the European Parliament; Johannes Laitenberger, chief-of-staff of the outgoing Commission president, is to be deputy head of the legal service; Martin Selmayr is leading Juncker’s transition team in the Commission and is likely to be his chief-of-staff.

In addition, Klaus Regling heads the euro zone’s financial rescue fund and Werner Hoyer, a former German Europe minister, is chief of the European Investment Bank. The fact that these trained lawyers and economists all hold German passports does not make them pawns of Merkel. As EU civil servants, they are loyal to a vision of a federal Europe rather than to the Federal Republic of Germany.

But the dominance of German economic thinking, with an emphasis on austerity and a deep-seated culture of saving rather than spending or investing, needs to be tempered if Europe is to avoid a lost decade of stagnation and high unemployment. Just last week, the German government congratulated itself on approving the first balanced budget since 1969, at a time when many economists say Berlin should be cutting taxes to boost domestic demand and investing more in infrastructure.

Italian Prime Minister Matteo Renzi, trying to shake up a highly indebted country often seen as an economic and political basket case, is challenging Berlin’s policy prescription, using the rotating EU presidency to try to change the debate. His offensive, supported by France and other southern states desperate for fiscal leeway to revive growth, has drawn limited concessions from Merkel and offers the incoming Juncker a chance to make the EU’s economic policy mix a bit less German.

Paul Taylor, "An EU agenda: keeping British in, Russians out, Germans down," Business recorder. 2014-07-08.
Keywords: Political science , Political issues , Political relations , International relations , Ukraine issue , Ukraine , Germany , Russia