Will Germany rethink defence, too? by Sophia Besch and Christian Odendahl
COVID-19 has forced Germany to rethink its economic orthodoxy. A similar rethink of its defence and security outlook will take time. For the last decade, Germany has not lived up to its potential in Europe. Despite its economic and political weight, Berlin was unable to escape ‘small nation’ thinking. It failed to acknowledge that its export-focused and fiscally austere economic model could not be replicated in the eurozone as a whole. Germany also failed to shoulder its responsibilities for European security, often avoiding difficult decisions. Then came COVID-19, and Berlin’s economic approach was turned upside down. Germany’s security and defence policy, meanwhile, appears stuck in a rut – but the same forces that led to the shift in economic policy may ultimately drive change here too.
Cover image: ©European Union
During the pandemic, Germany has provided wide-ranging support for its economy, its businesses and workers, with little concern for increasing its public debt. In early June, it announced an economic stimulus programme worth €130 billion, roughly 3.5 per cent of its GDP, when lockdowns and social distancing were eased. Most importantly, in April, Berlin agreed to a loan-based support scheme for struggling European countries; and then in May, Angela Merkel, together with Emmanuel Macron, proposed a €500 billion recovery fund for Europe involving fiscal transfers to the south (the size of the grants package was
reduced to €390 billion in the EU’s budget negotiations). There are several reasons why Germany has changed course. First, this crisis called for an exceptional response. There was little doubt that governments everywhere would need to spend a lot to prop up their economies. The economic debate in Berlin has also moved on. The shift has been driven in part by a generational change, with internationally-educated economists and commentators replacing the old guard; and in part by Europe’s experience with the muted recovery from the euro crisis. It helps, too, that the German finance ministry is headed by the Social Democrats (SDP), who are more open to international economic thinking. But most importantly, Merkel decided that this was the best course of action for Germany and Europe. She fought for the European recovery fund within her party, and she led the debate rather than followed as she usually does. The change in economic policy raises the question of whether Germany can make a similarly dramatic shift in defence policy. Signs that Germany might change its approach have existed for some time. At the 2014 Munich Security Conference, leading domestic politicians called for Germany to shoulder more