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Mon, Dec 15, 2008 - Page 9 News List

Germany growing more isolated on several key issues

Angela Merkel is putting Germany first, which leaves her out of step with her EU colleagues on NATO expansion, fighting the recession, emission curbs and more

By Ian Traynor  /  THE GUARDIAN , BRUSSELS

German Chancellor Angela Merkel arrived in Brussels on Thursday 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 British Prime Minister Gordon Brown over how to rescue economies facing recession. She is at odds with 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. Merkel’s policy choices reflect what’s good for Germany. The problem is that others such as Brown and 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 Adolf Hitler, have bequeathed a fear of living beyond your means and vast public spending programs.

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 value-added tax (VAT). Some 60 percent 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 color 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.”

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

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