Why Germany’s Coalition Woes Are Also Brussels’ Problem

In recent months, Germany’s stance in the European Union, characterized by indecisiveness, unpredictability, even a certain degree of obstructiveness, has been the source of interrogations and befuddlement in Brussels. The country is the bloc’s first economy, a stalwart supporter of European integration, and an essential leg of the Franco-German engine. Any turbulence in Berlin is always keenly felt throughout the rest of the continent. This explains why the strains within Germany’s governing coalition are a source of concern for the country’s European partners. Indeed, Germany’s domestic turmoil has already affected key EU legislation such as the ban of combustion engines by 2035, the new CO2 norms for heavy-duty vehicles, and the due diligence directive.

A domestic model under stress

Prior to entering into government in November 2021, the Social Democrats (SPD), the Greens and the – liberal – Free Democrats (FDP) agreed upon a binding coalition contract for the duration of their mandate. While this contract heavily favored European integration, it was drafted before Moscow’s invasion of Ukraine forced Berlin to abandon cheap Russian gas. In addition, the worrying economic situation in, and worsening relations with, China are putting German exports at risk, notably in Germany’s all-important automotive sector. Berlin’s woe are not only in the economic field as the possibility of a second Trump presidency puts the United States’ security umbrella into question. Adding pain to injury, 2023 saw Germany experience economic contraction, persistent inflation and a massive shortage of skilled labor. In early fall 2023, some commentators went as far as to call Germany the “sick man of Europe”.

A coalition under stress

In this fraught context, the dynamics between the three ruling parties is paradoxical. On the one hand, the majority of the coalition’s commitments have been, or are in the process of being, fulfilled. This was reflected in a positive September 2023 assessment by the Bertelsmann Foundation. However, dissatisfaction, reflected by poor polling numbers, is brewing, while regional elections in 2023 were major defeats for the members of the federal coalition. The situation is especially precarious for the FDP, as it risks falling below the 5% threshold needed to sit in the German Bundestag, the lower house of parliament. All coalition members now believe that they need to assert their interests within the government. For the FDP, this assertiveness is potentially a matter of political survival.

The FDP’s intractable intransigeance exacerbates the difficulties of coalition negotiations and joint policy-making in Berlin has become particularly protracted, with frequent about-turns and last-minute decisions. In turn, this has reverberated at the EU level, where German representatives’ inability to take a firm position until the eleventh hour has complicated and left minimal time for negotiations between member states. This was made publicly apparent in March 2023 on the ban of combustion engines by 2035.

The difficulties brought on by Berlin’s domestic turmoil was once again made apparent in early February 2024 when disagreements between the FDP-held Transport Ministry and the Greens-held Ministry for the Environment on reducing heavy-duty vehicles’ CO2 emissions by 90% by 2040 resulted in Germany’s inability to take a position in the EU Council. In a very unusual turn of events, this domestic hold-up intervened after negotiations between the Parliament and the EU Council had already concluded, by which point a legislative file is normally considered closed. It took a last-minute deal that added an exception clause on synthetic fuels, or e-fuels, to finally enable Berlin to vote in favor of the measure.

European decision-making under stress

Germany’s indecision and repeated U-turns in Brussels brought on by internal struggles between coalition partners creates a vacuum in European decision-making. As the bloc’s first economy, Berlin’s opinion carries a particular weight among its European partners. In addition, as the bloc’s most populous country, Germany is a key player in decisions taken under the qualified majority voting process that requires a majority of member states representing at least 65% of the bloc total population. German abstentions potentially make it easier to constitute blocking minorities of four or more countries representing at least 35% of the bloc’s total population.

This is what happened at the end of February 2024 when 13 member states took advantage of Germany’s last-minute decision to abstain from voting on the EU’s corporate due diligence legislation to postpone a vote on the text at the Council. In Germany’s defense, Italy, the bloc’s third largest economy, was part of the blocking minority while France also tried to introduce a last-minute amendment to the text that would have drastically reduced its scope. With the current term of the European Parliament ending in June 2024, such delays may put this text on hold indefinitely.

Conclusion

Germany’s domestic coalition squabbles add further intricacy to the EU’s already complex decision-making process. The developments out of Berlin are especially concerning coming from a country habitually considered a pillar of European integration, yet they underscore the need to keep in mind the interplay between EU and national trends. However, they also open new avenues for negotiation, based on a nuanced approach to local politics and coalition dynamics, as well as on a renewed focus on states that can step in to fill the Berlin-shaped vacuum.