Germany causing growing consternation in EU over failed policy goals

Germany, once considered the EU’s vital engine, is causing concerns across the bloc as internal disagreements spill over and thwart key EU policy objectives.

The European echoes of the internal German bickering are seen as a symptom of something deeper: Germany’s unresolved quest for a new economic model following the end of cheap Russian gas and largely unfettered trade channels that fueled its export-oriented industry for decades after the Ukraine war.

An EU diplomat has characterized Germany as being in a phase of existential angst. The fear is that the country’s software itself is broken, compounded by differences in logic within the coalition members.

When Olaf Scholz struck a deal with the environmental Greens and economic liberals of the Free Democrats (FDP) in late 2021, the pact faced challenges, but few predicted their disagreements would emerge at the EU level.

Since then, only the Greens have managed to maintain their popularity, while support for Scholz’s Social Democrats and the FDP has decreased significantly. This decline in popularity is driving the FDP to seek ways to raise their profile in EU decisions to rally their electorate.

While German officials point to Berlin’s constructive role in securing Ukraine aid and reforming budget deficit rules, differences have made it difficult for the EU to implement its agenda, particularly regarding the green deal.

Germany’s FDP Transport Minister Volker Wissing reneged on a deal to curb CO2 emissions from cars last March, undermining partners’ confidence in Berlin. Additionally, a German constitutional court ruling created a 60 billion euro hole in the German budget, making everything with economic implications extremely challenging.

Furthermore, a FDP-led transport ministry forced last-minute changes to an EU law on curbing CO2 truck emissions, and Labour ministry’s objections contributed to the scuppering of an EU law that would boost gig workers’ rights. Germany also played a part in sinking an EU law that would require large companies to determine if their supply chains use forced labor or cause environmental damage.

A government source mentioned that internal coalition disputes led Germany to abstain in recent EU votes. The source indicated that Germany is not the only “blocker” of EU projects, as a long-mooted EU-Mercosur trade deal is also on hold due to objections in European capitals.

EU diplomats acknowledge that other countries are raising objections to various EU policies, however, they say that Germany’s actions have opened the door for others to do the same, creating uncertainty about whether deals would be respected.

Germany’s size and voting power make it difficult for the rest of the EU to work around if it decides to block EU legislation.

Among the conflicts between Germany and the rest of the EU, officials have pointed out that the FDP is fighting for the votes of the German industry, struggling to reinvent itself after higher energy prices took away its competitive advantage.

Due to the conflict of interest with the rest of the EU, the concern has turned into a balancing act for Germany in preserving its economic model while adapting it to the changing times.

The political calendar, including EU parliament elections due in June, creates further tension within the coalition as politicians fear that a voter backlash to the EU’s net-zero carbon economy goal will play into the hands of far-right populists in Germany and elsewhere.

Germany hopes that the situation will improve after the European elections, the government source acknowledged.