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Enter the Post-Merkel Era

By Joachim Koschnicke
Joachim Koschnicke from the consultancy Finsbury Glover Hering. He was a campaign spokesman for Angela Merkel in 2017.

The 2021 federal elections in Germany not only mark a pivotal moment for German politics, they also will have implications beyond Germany. Outgoing chancellor Merkel was recognized and valued as a leadership figure and trusted partner by heads of governments around the world. In her 16 years in office, she worked with four US presidents, three EU Commission presidents, two Chinese presidents, and participated in over 100 EU Council summits. Former US President Barack Obama went as far as labeling Merkel the Liberal West’s last defender. So what will be the impact of Merkel’s departure and on international politics, in particular the EU-US-China relations? 

Five Theses on the Impact of the German elections on EU- US- China-Relations

1. Germany’s foreign policy will not change dramatically. There is a lot of speculation that with Merkel gone, Germany will change its foreign policy course and, in particular, take a significantly tougher approach towards China. While the proponents for such a shift have grown in numbers and extend from civil society groups to significant parts of the German business community, any policy shifts will be limited in scope. Why? Even though the German public is in principle in favor of a values-driven foreign policy, there is an even deeper underlying preference for dialogue and an outright aversion to policies that escalate tensions. Linked to this, a key reason for Germany’s relevance under Chancellor Merkel specifically derives from Germany’s positioning as a moderating force between East and West.

Add to this Germany’s export-oriented business model, and it is clear that Germany has both a strategic and tactical interest in remaining a trusted and independent interlocutor and partner for both East and West. So, while there may be some changes in tonality, a fundamental change in foreign policy is unlikely, as Germany’s top leaders know that that would make progress on key German priorities such as climate change and international stability even more challenging. For all these reasons, a major policy shift is unlikely – that is unless China was to take actions (e.g. on Taiwan) that would force Germany to choose sides. 

2. Electoral considerations will be top-of-mind for the Franco-German axis until mid-2022 Following Brexit, Europe more than ever depends on the functioning of the Franco-German engine, which is essential for progress on any major policy topic.

Even though building a German government will take some time, the fact that Germany is holding the G7 presidency from 1 January 2022 means the next Chancellor will seek to leverage the opportunity to quickly establish themselves as Merkel’s rightful successor. France’s President Macron is facing elections in May 2022 and will seek to present himself as a global leader in an uncertain world – for that to succeed, he will need close support of the next German chancellor, who is likely to provide a helping hand, given the stakes of the French elections for Europe. Hence, we can expect the Franco-German tandem active on the international front, but with a keen eye towards the electoral implications. 

3. President von der Leyen will seek to fill the vacuum by leveraging the EU’s regulatory powers. Merkel’s exit and Macron’s election campaign create a leadership vacuum that EU Commission President will try to fill. Having managed to increase the EU Commission’s relevance during the COVID crisis through the creation (and right to make access to funds conditional on member states’ compliance with EU fundamental rights) of the €750 billion EU recovery fund, von der Leyen is now seeking to leverage the power vacuum presented by Merkel’s leaving to increase the Commission’s influence in EU and international affairs. To this end, she is seeking to leverage the Commission’s powers in key areas from trade policy to climate change to legislation. 

A key initiative that will impact both EU and global businesses will be the forthcoming EU supply-chain legislation that could well become a game-changer for EU market access (still the world’s largest market) and global value chains, which will have to adhere to significantly increased transparency obligations and ESG/human right standards -aligning economic, ethical, and environmental aspects to establish a triple-E gold standard. Every corporate with supply chains and business partners, in particular in emerging markets, will face the challenge to ensure full transparency and force its partners to fully comply with ESG standards.  

Europe is no longer at the top of US agenda

4. Europe will emancipate itself from both the US and China. The Biden administration’s efforts to smooth over the transatlantic fallout over the AUKUS-alliance does not change the obvious fact underlying Europe’s exclusion: the US-EU relationship will not get back to where it was in the post-WWII era. The harsh reality is that Europe is no longer the US’s #1 priority.

The realization among European leaders following Trump’s election that Europe can no longer rely on the US has only been confirmed by recent events. And while the US and Europe may share common values, the EU’s interests, positions, and approaches with regard to China are certainly not identical. Biden has recognized this and has sensibly stopped spending political capital on some issues such as 5G. While the next German chancellor will still seek to strengthen transatlantic cooperation, Germany’s incoming leaders certainly share the view that Europe must take its fate into its own hands and do more to protect its strategic economy and interests. Interestingly, China, Europe, and the US all follow a similar playbook of reducing supply-chain vulnerabilities, strengthening their respective industrial bases, and investing in next-generation technologies. As a logical next step, Europe will invest heavily to decrease dependencies on other markets, including the military dependency from the US.  

5. The next few months will be critical for the path of global relations. At the UN Annual Summit last week, there was a palpable sense that we are at a critical juncture for global political dynamics. Both US president Biden and China’s President Xi emphasized that they do not aim to lead the world into another Cold War confrontation. The recent 90min phone call between President Biden and President Xi in which both emphasized the need for a sustained dialogue to carefully manage the relationship is a positive sign, but at best a starting point. Depending on how Europe plays its cards it can either be a marginal player in this great power arena or a relevant force that can help reduce tensions and help create dialogue on key challenges where cooperation is possible and essential – from climate change, to inclusive economic growth and human progress, to an ethical and human-centered approach to technological innovation in key areas, from AI to biotech 

Climate targets depend on cooperation with China

At the moment, the focus is almost entirely on what divides China, the US, and the rest. However, while power competition is here to stay and requires highest attention, there are numerous areas, where interests are or could be aligned. The upcoming COP summit in Glasgow is an obvious area where progress utterly depends on the ability of the world’s leading powers to work together.

Global and regional stability is another potential area, as the example of Afghanistan shows, where China fears instability could create security risks in China. Another aspect concerns what China’s President Xi has named “Common Prosperity“, a narrative with a long tradition in China, focusing on overcoming poverty and ensuring an equitable society. While approaches to economic policy and regulation differ, there are potential avenues for linkage, for instance, relating to the EU’s focus on fair labor conditions. As a founding member of the UN and signatory to the ILO conventions, China could demonstrate global leadership and recognize all international standards at the ILO, including labor and social standards, thereby aligning with the forthcoming European supply chain legislation.  

Conclusion: The world wasn’t flat under Merkel and will stay fluid without her. The 2020s started with the world facing a historic global crisis (COVID). Now, the next year will be critical in setting the path for global relations: it is critical that world leaders carefully manage existing tensions and find the courage to rise above national interests, and find avenues for consensus to tackle the challenges humankind and our planet are facing. The next German government will need to play a key role in ensuring Europe acts as a constructive and valued party

Joachim Koschnicke is a partner for government relations at the consultancy Finsbury Glover Hering (FGH) in Berlin, where he co-heads the China Desk. Prior to that, he advised Angela Merkel as a strategist in the 2017 election campaign. From 2013 to 2017, he worked in political communications at General Motors Europe.

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