Newpolitik German Policy. Translated. ABOUT THE BERTELSMANN FOUNDATION The Bertelsmann Foundation is an independent, nonpartisan and nonprofit think tank in Washington with a trans-Atlantic perspective on global challenges. We engage policymakers and thought leaders through innovative projects, research and debate to shape practical recommendations and policy solutions for pressing political, economic and social issues. Introduction Germany has long had a powerful voice in the European Union because of its deep commitment to European integration, its size and, more recently, its economic clout. The Federal Republic’s influence has always been balanced by the strength of other European nations, namely the United Kingdom and France. In recent years, however, other EU member states have criticized Germany for exerting too much power. Chancellor Angela Merkel’s decision to welcome over one million ref- ugees strained Germany’s relationships with its neighbors and also polarized domestic public opin- ion. Right-wing movements gained momentum and internal party divisions created a complicated political landscape for leaders to navigate. With a British exit from the EU on the horizon, it seems likely that Germany will end up in an even more precarious position in years to come—compelled to lead an increasingly fragmented union and take on more power than many in Europe would prefer. Even many Germans feel uncomfortable in this role, especially when it comes to security policy. Germany now stands at a crossroads as it attempts to address both European and global challenges, while balancing domestic and interna- tional expectations for its leadership. Policymakers in Washington and across the European Union need to better understand the rationale behind Berlin’s policy decisions as Germany assumes the mantle of global leadership. Newpolitik is a guidebook for anyone seeking insight on Germany’s important and changing role in the European Union and the world. The chapters in this compendium explore not only the decisions being made in Germany, but also how and why those decisions are made. Each author offers expertise on a specific element of German policy, from economics to relations with China. The authors provide in-depth analysis of the current landscape and answer three cen- tral questions for each policy issue: • How is policy made in Berlin? • How is Germany carving out its place in Europe and the world? • What role will Germany play in the future on this topic? Germany has evolved significantly in recent years, and its allies and competitors alike must work to understand this evolution as it takes on a greater role on the global stage. We hope that this guide helps stakeholders in Washington, Brussels and around the world to more effectively work with the Federal Republic and its leaders as Germany embarks on a new era of greater global responsibility and engagement. How Does the German Government Work? How are Laws Created in Germany? Contents 1 61 Europe’s Reluctant Germany’s Security Policy: Leader From Territorial Defense to Defending the Liberal 9 World Order? Germany’s Response to the Refugee Situation: 75 Remarkable Leadership or Russia—A Threat to Fait Accompli? European Security? A View from Germany 21 Preserving an Old 85 Model in a New World: Echoes of History: German Economic Policy Understanding German Data Protection 31 The End of 93 Panda Politics Acknowledgements 41 A Surplus of Anxiety: TTIP and Germany 51 The Energiewende— A Success Story at a Crossroads 1 Newpolitik Europe’s Reluctant Leader Isabell Hoffmann An Evolving Union master domestic and external challenges without at the same When U.S. President Barack Obama visited Europe early time developing hegemonic tendencies.” German strength in 2016, he voiced concern about two central issues: recent was not the only threat in this context; a weak Germany would political and economic strife in Europe and Germany’s duty to translate quickly into instability for the continent. So European take on a more active leadership role in these turbulent times. states shared an interest in keeping Germany a stable, but The political landscape in and around Europe has changed not overpowering, center for Europe. significantly over the past decade, leading to a realignment in In the first half of the 20th century, two world wars added anoth- the balance of power between the European institutions and er layer of complexity to the “German question.” Germany’s the member states on the one hand, and among the individu- unbridled aggression and perpetration of genocide left deep al member states on the other. In the process, Germany has scars across Europe and the world. Furthermore, it created become the central player in the European Union, even more an identity crisis at home as Germans slowly came to terms so with the British vote in June 2016 to leave the EU. This with the atrocities that their country had committed. Not only evolving role comes with the potential for conflicts, misun- did its neighbors fear a strong Germany, but Germany itself derstandings and mishaps. Germany is now at a crossroads had lost its appetite for power and feared its own strength. as it navigates its newfound position as a leader in Europe. As a result of this shift, Germany’s foreign policy changed Hostages to History tack. Political scientist Hans Kundnani explains that Germany Although Germany’s role in World War II is widely seen as shifted its focus to “international integration in multilateralist the defining moment of German and European history, the institutions—in particular NATO and what became the complications of its position in Europe predate that conflict by European Union.”2 The Federal Republic prioritized setting centuries. In the 16th century, Germany—or, more accurate- international norms over pursuing its own interests abroad. ly, the collection of small German-speaking states in central Europe—attracted the attention of its neighbors because of Leadership versus Responsibility its central geographical position, economic strength and high In large part because of this long history, Germany has not population density. Historian Brendan Simms has described actively sought out its new leadership role and indeed has “the paradox of German power and powerlessness in Europe.” been reluctant to accept it. Germany’s responsibility for the Germany, according to Simms, was seen as “too important to future of the European Union is often talked about on official be left solely to the Germans.”1 Thus, Europeans occupied occasions and at public gatherings, but political prudence themselves for centuries with the question of “how to order the and the general code of conduct preclude overt discus- European centre in such a way that it was robust enough to sions of Germany’s interests or power. Expressions such as EUROPE’S Reluctant LEADER 2 “hegemon” or “leading power” are studiously rejected, despite any friendly adjective one might be tempted to attach to them. Germany’s Role in the Greek Bailout However, in private conversations one notices that the new state of affairs is starting to change the way that Germans In 2010, Germany led the way in establishing think about their role in the European Union and the world. a bailout program, which provided Greece with Political elites in Berlin may be wary of certain labels, but in a 110 billion euro loan on the condition that it the rest of Europe people are less reserved when it comes implement certain austerity measures. As a result to talking about Germany’s leadership role. Often Germany’s of continuing economic shakiness, Germany, along neighbors are critical of the Federal Republic and its strategy with the majority of other EU countries, passed two for taking on new responsibilities. subsequent bailout packages. Not only has Germany Germany’s evolution can best be explained as having three politically led the bailout effort to aid Greece, it is distinct phases: first, a phase of “reluctant leadership” between also the largest creditor, contributing 57.23 billion 2009 and 2013, followed by “confident leadership” between euros in the form of loans. 2014 and 2015, and finally “lonely leadership” from 2015 to the present. Each of these phases began with an external shock and emerged as Germany developed its response. and systemic approaches to crisis management, which pro- When the Global Economy Gives You ponents of an economics-based solution considered to be Lemons… flawed. Those advocates believed, instead, that crises should The global financial crisis set in motion dramatic changes in be addressed by stimulating the economies of the affected Europe. It began with the collapse of the American real estate states, which would require significant financial resources. market, and continued with convulsions of the banking system However, the German government believed that such a strat- in the United States and around the world. egy would not address the root of the problem. It argued that This crisis in the private sector soon created serious problems the fundamental problem was wanton deficit spending by gov- for public budgets. The strain was more than some EU mem- ernments. If this was not resolved, no sum of money would ber states could take, which could have led to their collapse lead to any appreciable improvement over the status quo. and insolvency if the eurozone states had not acted togeth- Despite opposition from some quarters, Germany was not er. They implemented a rescue policy against an extremely alone in its approach to crisis resolution. For example, the complex economic, political and legal backdrop. Netherlands, Finland and Austria agreed with the German There was no clear consensus in Europe about the root caus- strategy that emphasized cutting costs and reforming state es of or solution to the crisis. Furthermore, existing European structures. These states saw little need for financial stimulus treaties ruled out mutual financial assistance.