World - Germany suddenly isolated on key issues

Ian Traynor

CAUTIOUS: German Chancellor Angela Merkel is out of step with her partners on NATO expansion and Afghanistan.

Angela Merkel arrived in Brussels on Wednesday night a lonely figure. For years, German chancellors have been consensual participants at EU summits, drawing on Germany’s formidable status as the paymaster of Europe and the powerhouse of its economy.

Not any more. The pastor’s daughter from east Germany suddenly finds herself isolated on the biggest issues of the times — economic gloom and global warming. She is out of step with her partners on NATO expansion and Afghanistan. She disagrees with the British Prime Minister, Gordon Brown, over how to rescue economies facing recession. She is at odds with the French President, Nicolas Sarkozy, on everything from the EU’s relations with non-Mediterranean countries to the single currency and the independence of the European Central Bank.

The confluence of disputes may be no coincidence. After decades of self-effacing, low-profile projection of German national interests, Merkel appears to be putting Germany first.

“There’s now a much more assertive position for Germany in international relations,” said Jan Techau, Europe analyst at the German Council on Foreign relations. “It’s getting much easier for Germany to further its interests. This is a good sign, the sign of a normal country.”

For years, unlike the other big EU countries, Germany has been the patron of the European Commission and also the protector of the smaller member states. That appears to have changed. Berlin increasingly acts like Paris or London.

It is not difficult to see why. Ms Merkel’s policy choices reflect what’s good for Germany. The problem is that others such as Mr. Brown and Mr. Sarkozy see her decisions as not so good for them. Directly or indirectly, one job in seven in Germany depends on the car industry, so in the current disputes over bailouts and climate change policy Merkel has fought to soften new EU laws curbing car emissions.

In the row over “fiscal stimulus,” Germany also has widely divergent priorities from Britain and France. The traumas of the economic chaos and wheelbarrow inflation of the 1920s, which paved the way for Hitler, have bequeathed a fear of living beyond your means and vast public spending programmes.

As the world’s champion exporter and with an industrial and manufacturing sector bigger than Britain and France’s combined, Germany sees less utility in cutting taxes or reducing VAT. Some 60 per cent of German economic output derives from selling things abroad. Unlike Britain, there is little shopaholic culture, relatively little use of credit cards, no boom and bust property markets, low rates of home ownership and mortgage-lending. If, broadly speaking, German households save and British households spend, VAT cuts might spur economic activity in Reading, but they are unlikely to in Dusseldorf.

All of these factors colour the German approach to crisis management of an economy that constitutes about a fifth of the EU whole of 27 countries. The fact that Germany was out of step was reinforced when, last Monday, Merkel was not invited to a mini-European summit in Downing Street. Europe’s biggest country and strongest economy was excluded from a meeting devoted to “global Europe.”

Ms Merkel has also become sceptical about the carbon trading and auctioning system that is the heart of the EU’s climate change package being argued over last night because it could hurt German industrial competitiveness and cost jobs.

On foreign policy, Ms Merkel has taken on George Bush and won, blocking the U.S. push to put Georgia and Ukraine on the path to membership of NATO. The Germans are also in dispute with the Americans over Afghanistan and the role of the Bundeswehr’s troops there.

They don’t want to enlarge NATO, unlike the U.S. They don’t want to enlarge the EU, unlike Britain. But most strikingly of all, Germany wants a close and special relationship with Vladimir Putin’s Russia.

Germany is intertwined with Russia like no other country. While thousands of German companies are operating in Russia and exporting there on a scale more than five times that of the U.S., for example, Germany is the biggest market for Russian gas supplies. Berlin salivates at the prospect of a grand strategic bargain with Moscow that marries Russian raw materials with German industrial might.

This causes goose pimples in central and eastern Europe, particularly in Poland and the Baltic states who have a wretched history of being battered, partitioned, and occupied by the giant neighbours to their east and west. “We’re now at a bit of a watershed, with the emergence of a new German Ostpolitik towards Russia,” said Ulrike Guerot, of the European Council on Foreign Relations. “Berlin wants the other European countries to take the German line on Russia, rather than Germany adopting the European line.”

The expansion of the EU from 15 countries only a few years ago to 27 and growing has also shifted the German perspective, putting Berlin in the centre of the union, rather than on its eastern frontier, and weakening the centrality of the Franco-German alliance that has been the backbone of the EU. French and German leaders have always fought over European policy, Guerot points out, but ultimately with a joint purpose in mind. That has changed, she said.

Munich’s Suddeutsche Zeitung newspaper complained on Wednesday that the summit in Brussels would be a wasted opportunity unless Paris and Berlin put aside their differences. “Europe has only ever been strong when Germans and French pulled on the same string in the same direction,” it said. But Guerot said: “These [Franco-German] disputes are no longer embedded in the achievement of a common goal. Their national interests are diverging.”

It is difficult for the two core EU countries, for example, to develop a common European energy policy when France is largely nuclear-powered and Germany is committed to giving up nuclear power.

Analysts say that the trend for Germany to put itself first is hardly surprising and was started by Ms Merkel’s predecessor, Gerhard Schroder. He was the first chancellor with no direct experience of the Nazi era and less encumbered by German postwar guilt. Within months of leaving office he worked for the Kremlin as head of a consortium building a gas pipeline from Russia to Germany under the Baltic Sea and bypassing the countries of eastern Europe.

Ms Merkel, said Techau, had spoilt her reputation in Europe by not subscribing to Mr. Sarkozy’s and Mr. Brown’s activism on the economic crisis. “She’s much more cautious. That reflects her personality, but it also reflects the way Germans prefer to react to a crisis. It’s all partly Germany getting a normal sense of itself.”