Guten Morgen! 

Welcome to another edition of the Krautshell! In this week’s House’s View, our guest contributor, Dr. Steven E. Sokol, provides a tour de table of Germany’s and Europe’s strategic landscape, discussing to what extent 2022 has undermined past policy assumptions. In addition, our main articles cover French President Emmanuel Macron’s visit to Washington and what it could mean for EU-US trade relations, a polemic on perceived double standards in German politics (triggered by Germany’s disappointing ouster from the World Cup), and the heated debate about the latest government proposal to liberalize German immigration law – a topic Szilvia is taking up and apart in her WOOM. Enjoy!

Anna                                Christian

Trade Troubles

Green protectionism is a funny thing. Shouldn’t EU policymakers be cheering the US Inflation Reduction Act (IRA), which provides nearly $400 billion for clean energy (let’s call it “Planet First”)? No way. Macron, Scholz et al are reportedly fuming at the prospect of massive subsidies at the expense of European industry, and the French have even threatened a “Buy European Act” in response. This week, Macron visited the White House to wring concessions out of President Biden and avert a subsidy race or worse, an all-out trade war. And Biden delivered – though whether that will bring Washington and Brussels together remains unclear at best.

The bottom line is that Biden offered “tweaks” to facilitate European participation in the IRA, echoing Brussels’ demands that EU industry should benefit from tax breaks and access to aid the same way Canada and Mexico do. But this likely won’t cut it, for two reasons. First off, Biden’s promises are empty without Congressional action to back them up – which is unlikely considering that even some Democrats think Europeans should just “come and build plants here”. And second, it isn’t at all clear that all EU leaders want agreement on transatlantic industrial policy. In fact, Macron for weeks has been drumming up support for his “Buy European” proposal, and German Economics Minister Habeck has voiced some sympathy for it. In essence, the traditional EU balance between free marketeers and industry planners (read: protectionists) has recently shifted towards the latter, with German policymakers increasingly siding with their French counterparts. 

The upcoming Trade and Technology Council (TTC) meeting will have its work cut out finding substantial EU-US agreement on trade issues, and much will depend on both parties’ good will. Did we mention that EU industry commissioner Thierry Breton just pulled out of the event (reportedly because he wasn’t invited to the flashy Kennedy Center Honors)? We’ll keep you posted – and not just on the gossip, we hope.

Doubling Down on Doppelmoral

Remember last week’s House’s View on political posturing ahead of the soccer World Cup? Well last night, the German team was ignominiously knocked out in the preliminary round, and we figured now would be a good time to reflect on what we have learned about this unpleasant aspect of German politics. We’ll even throw in a nice German word to make it worth your while.

Doppelmoral is when a person’s professed moral ideas are at odds with their actions, and Germany of late has given the world no shortage of examples. Let’s take the World Cup itself: After months (years?) of outspoken complaints about the human rights situation in Qatar, the German team showed up, played, and shut up – apart from the shameful “One Love” episode covered here. What you may not have heard is that this Tuesday, Germany’s Greens Economics Minister Habeck announced a gas delivery agreement with the same morally questionable Qatar government, calling it a “great” contribution to energy stability. Apparently, there is no better way to fight human rights abuses than spending money on those responsible. 

What’s concerning is the fact that this duplicitous behavior has become an increasingly common part of German public life. For instance, there was no outrage when German President Steinmeier called on China to respect freedom of assembly, after he himself had repeatedly criticized anti-lockdown demonstrations in Germany. The same goes for Iran: What is the purpose of a “feminist” foreign policy (our Greens foreign minister’s words) if her party’s policy platform included appeasing the misogynistic Iranian regime through the circumvention of US sanctions? And finally, Ukraine: Many of those calling for weapons deliveries today openly supported Nord Stream 2 just last year, claiming it was a “European” project even though that was clearly false and the European Parliament had rejected it.

It’s well known that politics can be a shady business, but a bit less Doppelmoral would suit German leaders well. In the meantime, we wish our virtuous soccer stars a safe trip home.

Passport Please!

This week debates surrounding integration and citizenship came to the fore again, when Interior Minister Nancy Faeser unveiled plans to abolish language tests for naturalizing seniors and ease the path to citizenship for other groups of foreigners in Germany as well. For example, the rules until now have required foreigners to reside in Germany for 8 years before being able to apply for German citizenship. The plans of the governing coalition now entail this time interval to be reduced to 5 years, with a possible reduction all the way to 3 years in cases where the applicants have demonstrated substantial language skills, job achievements or commitment to civil service. Children of foreigners will also benefit from the proposed rule changes, as they would be eligible for receiving German citizenship after their guardian spent 5 years in Germany instead of 8 years, which the current law requires.

Foreseeably, these changes sparked some heated discussions within Germany, including whether it was desirable for people to receive German citizenship without being able to speak the language. Those in favor of dropping the requirement argue that many of the senior citizens who do not speak German have lived in Germany for decades and their failure to learn German is a result of Germany’s failed or missing effort to integrate them. Decades ago, many so-called “Gastarbeiter” (guest workers”) came to Germany to replenish Germany’s diminished working population, but little to no systematic effort was made at the time to integrate and naturalize them. 

In contrast to the US, it is still an ongoing political discussieon whether or not Germany is an “Einwanderungsland” (country of immigration) and parts of German society remain skeptical of easing the naturalization process. However, as we have previously discussed, the need for Germany to attract foreign citizens to revitalize its dramatically shrinking labor force will continuously grow over the coming decades, making debates regarding integration and naturalization essential for Germany’s long-term economic future.

Source: Quelle (Financial Times)

By Dr. Steven E. Sokol

Germany’s Rendezvous with Reality 

As 2022 draws to a close, it is a good time to reflect on the year that is ending. And, what a year it has been! With the lingering effects of COVID-19 and Putin’s war in Ukraine, we are in a very different place in December 2022 than we might have anticipated in January of this year. The common global challenges have brought unity and resolve – and serve as a reminder that the transatlantic partnership is indispensable in addressing today’s complex and interconnected crises. But, this year has also been sobering inasmuch as, it has called into question some of the fundamental tenets of German foreign policy.

Setting the Stage

In recent months, one pundit after another has said that Germany’s long-term success post-World War II has been facilitated by three things: cheap energy from Russia, a security guarantee from the United States, and strong economic ties to China (both as a supplier and as a market for German goods). 

There’s certainly some truth to this perception, but let’s unpack it a little bit further. German industry has clearly benefitted from its ability to source reliable and relatively inexpensive energy from Russia, and before that the Soviet Union. For decades, Berlin has been able to rely on Washington’s force projection to provide a safe environment for Europe to prosper – and it has been able to get away without making adequate investments in its own defense. More recently, much of the success of the German economy has rested on trade with China. 

There’s no doubt: It has taken work to build an economy as strong and a country as affluent as that of Germany. I don’t want to belittle the model of export-led growth that contributed to Germany’s postwar reconstruction or the role of the “hidden champions” that dominate niche markets. This laid the foundation and has contributed to the overall success of the Germany economy for decades. But, whether conscious of it or not, Germany has benefited from certain advantages. 

And there’s the Rub…

The economic slowdown and supply chain disruptions brought about by the COVID-19 pandemic and exacerbated by Russia’s war in Ukraine have brought into stark reality some of the underpinnings of Germany’s economy and have highlighted some of the advantages that Germany has benefitted from. 

Despite its myriad global economic ties and the sense that trade could bring (political) change (Wandel durch Handel), the world is not a safe place. This year has been Germany’s rendezvous with reality. 

We’ve seen a new German coalition government made up of three political parties try to bring realism and pragmatism to addressing today’s challenges – and the slow recognition of the shortcomings of dependency (just think Nord Stream). From a more hawkish perspective on Russia and China in some corners of the government (even before the war), to Chancellor Olaf Scholz’s Zeitenwende speech outlining a new direction in German foreign, security, and energy policy – Berlin is trying to find a path forward. 

Next week – December 8^th to be precise – will mark the one-year anniversary of the Ampelkoalition. It set out with an ambitious agenda under the banner “Mehr Fortschritt wagen” (loosely translated as “Dare to make progress”). But, that progress was stymied with the war in Ukraine. Just three days after Russia’s unprovoked invasion of Ukraine, Chancellor Scholz gave his speech signaling a new era and announcing a new direction. As I have written here before, Germany has come a long way and has done a lot – but has it done enough? As the war drags on, I increasingly think that while the Zeitenwende speech sends the right signals, it may have been based on the flawed assumption that Russia would win in a matter of days. The question we are seeing play out is whether Germany is ready for a protracted conflict on its periphery.

The war brought unity – on a domestic level in Germany but also between the western democracies. One constant question has been how long will that unity hold. 

More Trouble Ahead?

As we look ahead to 2023, and the likelihood that the war in Ukraine will continue, there are other factors at play. Washington’s Inflation Reduction Act has ruffled feathers across Europe. EU leaders are going into emergency mode over what they see as protectionist elements in the Act. German Economy Minister Robert Habeck recently expressed concern over subsidies and tax cuts and also controversial provisions that would link subsidies to local content. It was reported that at a conference in Berlin he said that he did not want the EU to follow Washington down the protectionist path, but he went on to outline a policy that goes in that direction: He suggested that future EU green technologies might require the use of home-grown products or tech — a concept French officials call “Buy European.”

At a time when concerns about inflation and economic stagnation are high – and when Europe and the United States need to be in sync – such “irritations” have the potential to be disruptive in the year ahead. 

Over the past year, we have witnessed unity in Germany’s governing coalition government, the European Union, and across the Atlantic. As Austrian-American actor Theordore Bikel once said, “Unity is something to be desired, to be striven for, but it cannot be willed by mere declarations.” Much of today’s unity is based on declarations, but reality demands that words be followed by real action, commitments to change, and actually doing hard work of maintaining unity for the benefit of our societies.

• Gender Equality in Sports: The German men’s soccer team may have lost out on the playing field, but they have (inadvertently) achieved a major win for women’s soccer. This year (and for the very first time ever), the German women’s national team managed to attract more viewers for its European Championship final than tuned in to watch Germany play Costa Rice. Keep it up, guys!
• China Strategy Draft, Volume 3: The third time’s the charm, as they say. After the recent leak of the German Foreign Office’s China, it turned out this week that the Economics Ministry has been working out its own paper (both are quite hawkish, by the way). But any China strategy will ultimately have to be coordinated with the Chancellor’s approach, so much could change yet. Expect more on this in early-mid 2023.
• Defense Minister Under Pressure: Germany’s gaffe-prone Defense Minister Christine Lamprecht has done it again. After failing to ensure adequate munitions for Germany’s military (despite a growing defense budget) in recent budget negotiations, her ministry has had to ask the Finance Ministry for the necessary funds. Their response: You should have taken care of it yourself, and sooner.

Germany, the sleeping beauty 

After two busy days in Brussels, I just landed in Berlin. It is 8:30PM and I want to get home. But we are waiting for airport personnel to operate the bridge… again… seemingly every second flight at the Berlin airport struggles accordingly. So, when Germans talk about Fachkräftemangel, they do not only mean nurses, IT specialists and mechatronic engineers but also personnel for jobs operating basic logistics of our society. 

From this point of view, it is just double absurd that German liberals pulled out the verbal shotgun against the reform of citizenship rules. First, we have absolutely no reason to criticize any try for more flexible legal concepts when it comes to immigration and integration of qualified workers. And second: the FDP aimed (again) at its own coalition partner, the SPD with its harsh critique.

Don’t get me wrong: Germany must resolve the discussion on how to attract qualified workers while tackling the pressure that ongoing migration puts onto the social system. But couldn’t we just try to profit from the diverging opinion spectrum represented in the current government? Sort all these decade long debates out with an approach of trusted partners? No. Whether it is migration, nuclear power or financing military support for the Ukraine, the “Ampel” (traffic light) government never achieves harmony. 

The unwilling coalition of the three governing parties will be one year old next week. And it is in such a bad shape that not even the opposition likes the situation: They have nothing to do. The similarity of the German government with the national soccer team is stunning. Strong symbols 🙊, no teamplay, no good score. But do not expect the German government to collapse! Nobody is interested in holding new elections. My take: Three more years of heavy debates and no progress on crucial dossiers to come. Let’s hope that the world waits for us and there is no bitter awakening of global irrelevance.