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#5392, 15 November 2017
EU: Prospects of Reform Post the 2017 German Election
John Schabedoth
Former Research Intern, IPCS

The European Union (EU) and its institutions are at a crossroads. The Euro and refugee crises have revealed that its countries have different views on intra-community solidarity and the future of the EU as a whole. With Brexit, for the first time, a country wants to leave the EU altogether. There are also worrisome developments in individual member states regarding their respect for rule of law. In the elections of many member states, Euro-sceptic parties are on the rise. The refugee crisis is only paused due to a questionable deal with Turkey and is currently breaking out again in the Libyan Sea.

Nevertheless, 2017 also brought some developments that could strengthen the EU. In France, Emmanuel Macron won the presidential election with a strict pro-EU agenda. After the September 2017 German elections, the next election in a larger member state - Italy - is scheduled to take place only in May 2018. The intermediate period is ideally suited to tackle a basic EU reform.

In a September 2017 speech at Sorbonne University in Paris, Macron proposed several partially extensive reforms for the Eurozone, the EU and the relationship between France and Germany, to be implemented by 2024.

According to Macron, the Eurozone should be provided with a common budget equipped with an amount of several percentage points of the European GDP (in comparison, the EU budget is equipped with 1 per cent of the European GDP). This budget, managed by a mutual minister of finance, could provide help for individual countries in crises. Macron also wants to expedite the plans for a common European defence union. For this purpose, a joint defence budget will be provided, which would fund a mutual high readiness unit.

Additionally, Macron proposed a common European asylum authority, which could coordinate and align asylum procedures in Europe. He also suggested a European tax policy, particularly a common minimum tax rate for companies and a financial transaction tax. Ambitiously, Macron wants to establish a Europe-wide uniform minimum wage and a common unemployment agency. Macron also called on Europe to cooperate more closely in the areas of counter-terrorism, environmental protection and digitisation. Furthermore, Macron has called for Germany and France to completely adapt their legislations on companies, by 2024.

Macron wants to implement these ambitious plans only with an agreeing "coalition of the willing" among the member states if necessary. He thereby refers to the concept of a multi-speed Europe, according to which individual member states work together more closely in certain areas, while other states maintain status quo.

Macron certainly chose the timing for his speech - two days after the German elections - deliberately. German Chancellor Angela Merkel and her center-right party Christian Democratic Union of Germany (CDU) are currently in coalition negotiations with the regional center-right Christian Social Union (CSU), the economic liberal Free Democratic Party (FDP) and the left-liberal Alliance 90/The Greens (Green party). At present, it seems that these parties will form a governing coalition. By the cleverly chosen time of the speech, Macron's proposals inevitably became points of discussion in the coalition negotiations.

Principally, Merkel is open to Macron's plans. However, at the moment she cannot give a binding statement for future government policies. Before the elections, the FDP expressed reluctance to any European reform that would lead to a stronger German financial contribution. A separate budget of the Eurozone would therefore not be possible for the FDP. The CSU and parts of the CDU are also sceptical about these plans. Only the Greens are principally in favour of Macron's ideas.
In 2013, the FDP lost so many votes that it was no longer represented in the German parliament. Many of their politicians attribute this to the fact that the FDP had previously entered a coalition with Merkel's CDU, in which they could not enforce their campaigned goals. Insofar, it is expected that they will strongly resist compromises on this issue, one which is important to them.

Other proposals raised by Macron, such as a uniform minimum wage throughout Europe, are politically unviable. A Europe-wide paid unemployment benefit also arouses the fear of setting false migration incentives in the richer states. Many useful proposals are rejected at least by individual states. For example, countries like Hungary and Poland refuse to accept any asylum seekers. They would also reject a European asylum authority, which could impose on these countries to admit asylum applicants.

Other countries will then have to decide, if they want to form a "Coalition of the Willing" to enforce the respective plans. This multi-speed Europe is being rejected by many eastern EU countries. They fear being generally left behind as well as the weakening of the EU's central institutions.

Nonetheless, Macron's proposals show his enthusiastic drive to reform the EU, which is extraordinary for a domestic politician nowadays. With his courageous determination on concrete steps and a timeframe, he can and will be measured by the results. The political style of Merkel - who has been the German Chancellor since 2005 - however, is characterised by a policy of pragmatic, small steps. Europe needs both styles. Finally, Macron's visions could bring the European project forward, while Merkel's balancing and non-dogmatic style could take as many states as possible along.

At the EU summit in late October 2017, the President of the European Council Donald Tusk developed a roadmap for further talks. By the end of 2017, the basics for a common defence policy will be presented. Its implementation is considered to be likely, as its necessity was fundamentally denied only by the UK. By mid-2018, there will also be an agreement on migration and a common asylum policy, albeit the countries will not have to give up their decision-making powers on asylum applications. Additionally, concrete measures will be submitted by then to make the Eurozone more stable in times of economic crises.

It seems that the furthering of the European integration process will continue in a typical European fashion - through small-scale compromises. With such diverse members and interests, this might not be a bad thing for Europe.

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