Germany's Presidency of the Council of the EU - Angela Merkel's big political finale: Brunswick ...
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Angela Merkel's big political finale:
Germany’s
Presidency
of the Council
of the EU
(C) BRUNSWICK GROUP 2020 | 1
Strong leadership who has pushed European integration EUR 500 billion together with French
to the next level. Moreover, she will president Emmanuel Macron, by
needed for a stronger be working closely with a trusted borrowing money on behalf of the
Europe political ally, the ambitious EU Com- EU. Finally, the EU Commission’s
The presidency of the EU council mission head Ursula von der Leyen, proposal worth EUR 750 billion was
rotates every six months, meaning who served as a minister in Merkel’s approved by the European Parliament
that each EU member state takes cabinet for 14 years. under the title “Next Generation
on the responsibility every 13 years. EU”, which will be linked with the MFF.
This constellation has raised hopes
Each country holding the presidency Together, these recovery packages
especially in some southern and
then sets the agenda and drives have a total financial firepower of
eastern European countries that
the negotiation of compromises EUR 1.85 trillion. It will be one of
Merkel will soften her stance over
between EU member states along- Merkel’s most important and chal-
austerity policies. On the other hand,
side the President of the European lenging tasks to finalize the complex
however, German conservatives
Council. While the presidency has financial package. She needs to
from her own Christian Democratic
an important role in structuring the change the minds of those member
party appear minded to warn that
agenda, it is obliged to take on a states currently against giving away
Germany shouldn´t give away even
more neutral stance to facilitate their taxpayers’ money to poorer
more money to European institu-
negotiations. Angela Merkel is one EU states, and to insist instead on
tions, and to countries deemed to
of the few leaders who will take on a system of financial checks and
have behaved in fiscally irresponsible
the role for a second time, from July balances, and the highest possible
ways.
1 to the end of this year – she was repayment rate. Merkel made clear
And so – the stage for Merkel’s big that brokering the recovery fund and
also Chancellor back in 2007 when
political finale is set! We in Berlin the MFF is one of her top priorities.
Germany last held the position. Once
have put together a briefing on a Under her leadership Germany also
again, Merkel’s aim will be to close
few of the sectors and topics that wants to negotiate the future legal
as many negotiations on pressing
will be key over the next six months, framework and regulations of the
issues as possible, which will be
with a mind to helping companies European structural fund, which will
essential if Europe is to emerge
adopt and adapt their own positions be a key tool to stimulate the recovery
effectively from the current crisis.
and to engage in the wider political of the regions with new investment.
Given the challenges Europe is debate.
currently facing, the moment couldn´t As host and moderator of the
be better for an experienced leader: budget negotiations, Merkel is in a
will the EU hold together despite Financial Framework position where she will have to reach
huge economic pressure from into her pockets to get an agreement.
Near the top of the agenda for the Our bet, along with that of many
COVID-19, growing populism and next few months will be the negoti- commentators, is on a last-minute
a yet unsolved migration crisis? Will ations on the Multiannual Financial
Brexit be executed by the end of the settlement.
Framework (MFF), the EU’s seven-
year with a well-sorted agreement, year budget for 2021-2027. Even
or will the U.K. crash out without a
deal? And will Europe be able to take
in ordinary times, this has always Ensuring European
proved a challenging task, with the
a more visible and powerful stance negotiations seeking to align the
digital sovereignity
on geopolitical and technological different priorities of the 27 EU Besides the overarching financial
issues with regard to the U.S. and member states, the Commission organization, digitalization will be at
China? and the European Parliament. the heart of the German EU Presidency.
In her final period, Merkel may act Merkel and her government need Faced with an ever-stronger U.S.
more independently as she finds to manage some extra challenges, tech sector and the rise of China as
herself in the unusual position of not particularly as the previous British the next digital superpower, the EU
having to consider the usual tactical financial contribution is gone and has a clear priority: fostering Europe’s
limits that politicians suffer from needs to be filled by others. The digital sovereignty. Germany
when eying re-election: Merkel has post-COVID reconstruction of the wants to promote AI and quantum
definitively ruled out running for a European economy also needs to technologies and lift the Franco-
fifth term as Chancellor in the Federal be planned into the budget. German cloud initiative ‘Gaia-X’ to
Elections next year. Moderating the the European level. But the Chancellery
Merkel has already surprised her
EU27 as the EU council presidency is careful to strike a balance between
friends and foes in May of this
will be her last big project, and she promoting these technologies and
year by announcing the idea of a
wants to be remembered as a leader avoiding falling into protectionist
post-COVID EU recovery plan worth
(C) BRUNSWICK GROUP 2020 | 2thinking. Reuniting the bloc behind a efforts. Transitioning to a sustainable offshore wind energy is another
common understanding of what this economy remains one of the core crucial issue. Germany will seek
means in practice will require long elements in Germany’s upcoming to establish European framework
debates and negotiations. EU presidency. Merkel and her team conditions for the joint renewable
are keen on driving forward the energy projects of the EU member
Germany has aligned its program
European Green Deal and explicitly states.
closely with the subsequent Presi-
set the UN 2030 Agenda for Sus-
dencies (Croatia and Portugal) and
tainable Development and its 17
set ambitious goals: establishing Shaping the future of
Sustainable Development Goals
European security standards on IoT
devices, creating EU-wide content
(SDGs) as a guiding principle of the globalization and
German Presidency. Europe’s relationship
moderation rules for Internet plat-
forms, and reaching an agreement On 18 June 2020, Merkel reconfirmed with rivals and partners
on European data privacy standards that Germany’s goal was to make
which have been stuck in the Council Europe’s climate neutrality by 2050 The most difficult task here will be
for more than three years. legally binding and to adjust the the Brexit negotiations with the
targets for 2030 accordingly. Talks United Kingdom. Only during the
The coronavirus outbreak in Europe beginning of the presidency will it
about increasing the EU’s 2030
overshadows these plans. Some become clear if there will be a hard
climate target face hurdles but need
key issues have been pushed back or a negotiated Brexit. The challenge
to be finalised before the year is out.
towards subsequent presidencies, is that the British Government is not
especially the comprehensive policy Approaches for achieving the newly being cooperative and has moved
framework on Artificial Intelligence. set targets need to be found. In away from previously agreed
Meanwhile, other topics emerged particular, the extension of carbon political declarations. However,
on the radar such as demands for a emission pricing to all sectors and the German government insists on
voluntary EU-wide contact-tracing the introduction of a moderate “a balanced relationship between
system that reflects the bloc’s high minimum carbon floor price in the rights and obligations and fair com-
privacy and cybersecurity standards. framework of the EU Emission petition conditions.”
Trading System (ETS) shall be dis-
And while Germany will be pushing China will be the second overarching
cussed under German leadership.
to reach its ambitious goals with- topic. The EU is far from having a
The question will be whether to put
in the Council, the Commission is common China policy. While China
more emphasis on reduction in the
gearing up in its fight against “Big is feared by many as a systemic
sectors covered by the ETS or on
Tech”. Competition Commissioner rival and competitor, the country is
the so-called effort-sharing sectors
Margrethe Vestager has launched also a partner, not only due to the
like transport and buildings. Many
several antitrust and tax cases sheer size of its market, but also
countries, including Germany, have
against Amazon, Google, Apple and because of the need for cooper-
struggled to bring emissions down
co. The EU has also committed to ation on climate issues and WTO
in these areas, and Merkel has said
pushing ahead with a digital services standards. Merkel has never given in
that difficult negotiations would
tax, despite Washington’s efforts to the growing wave of anti-Chinese
await on how to allocate responsibil-
to block a global deal. Vestager said politics across Germany or at the
ities to the different member states.
Brussels would “really, really prefer EU level and is keen on maintaining
a global consensus,” but will push In the energy realm, an important a proper balance, based on mutual
ahead on its own, “if we need to.” subject for Germany’s Council Pres- interests. She has kept the door
idency is hydrogen – a key element open for Huawei in Germany against
in decarbonizing European indus- strong external resistance from the
Making the energy try. The climate transformation of U.S. and in the Federal Parliament.
transition a corner- industry is a core German interest. On the other hand, she has success-
stone of the post- Therefore, Germany wants to press fully pushed Xi Jinping to stop his
ahead with the creation of the 16+1 approach across Europe which
COVID economic necessary markets and infrastruc- has been splitting the EU.
recovery tures for hydrogen within the EU.
This shall spur investments into new The transatlantic boundaries be-
Against the backdrop of the so- tween the EU and USA are still under
called “coronavirus presidency”, technologies and make European
companies a global leader in hydro- pressure. The German govern-
climate and energy issues might ment has called the U.S. its “closest
at first seem to play second fiddle, gen. As vast amounts of renewable
foreign and security policy partner
but they are very much set to play a energy are needed to produce green outside the EU”. Merkel believes in
strong role in the pandemic recovery hydrogen, the rapid expansion of
(C) BRUNSWICK GROUP 2020 | 3this partnership but has no illusions of the European Green Deal, the pressure from populist parties,
about her shattered relationship SDGs and the significant financial causing them to react with tougher
with President Trump. Until the U.S. firepower of the corona recovery investment legislation and regula-
presidential elections in November, fund, which is linked to a sustainable tion. But – for Germany at least –
there will be neither a new approach business approach, also represent these policies are more cosmetic
on a bilateral trade agreement nor an enormous investment opportunity. than anything else. Governments
hopes to strengthen international The new funding opportunities and ultimately want to facilitate inter-
multilateralism or climate diplomacy. loosened EU state aid rules also national investment, so long as they
The German presidency will take open more opportunities for busi- have sufficient oversight – not block
that time to work towards an ambi- ness. it entirely
tious climate diplomacy among the
Besides this, there is already a And please also note: the German
EU and its member states. Germany
reinvestment in supply chains andpresidency will put in place initiatives
also wants to relaunch the EU’s
for ensuring greater equality and
production in the health sector. This
Africa policy and support the African
includes a reset towards a more diversity in business. This will allow
Continental Free Trade Area.
companies with successful gender
sustainable agriculture and fishing
or diversity strategies to raise their
industry under the EU heading “Farm
Why corporates to Fork Strategy”, which Germany profiles as best practice cases.
will support in its presidency. Others will have to monitor closely
should engage how they can make their senior
Beyond the headlines about growing
Europe knows it needs to strength- protectionism and Foreign Direct management and board structures
en technology-wise to catch up with Investment controls, our impression more diverse.
U.S. and China and to avoid further remains that Europe continues to
dependencies. Therefore, compa- be open to and keen on investment
nies with promising technologies from abroad, especially after COV-
– especially in the health, tech or ID-19. Of course, governing politi-
energy sectors – can expect a lot cians in Germany and across many
of political goodwill. The framework European countries are under
(C) BRUNSWICK GROUP 2020 | 4The complex relation-
ship of EU Institutions Executive Legislative
and national member The European Council sets the
policy agenda and consist of
The European Parliament is
the co-legislator. It has 751
states the EU’s 27 national leaders. members, directly elected by
The European Commission EU citizens. Together with the
The complex matrix made up of EU
proposes and implements leg- Council of the European Union
institutions and the competencies islation. It consists of 27 Com- (Council of Ministers) it reviews
of national states is somewhat diffi- missioners, nominated by the proposals, amends them and
cult to understand. Therefore, some European Council and approved eventually passes legislation.
words of explanation: by the European Parliament. The European Council con-
sists of 27 national ministers,
The allocation of competences grouped by policy area.
between the EU and the member
states is defined by the EU treaties.
The EU is solely responsible for
monetary policy (for Euro mem-
bers), establishing competition
rules; for trade and customs policy Judicial Financial
and the conclusion of international
The Court of Justice of the Eu- The European Central Bank
agreements. Shared responsibility ropean Union interprets EU law maintains the stability of the
exists in a number of areas includ- and settles disputes. There are euro and oversees the Eu-
ing the internal market; agriculture, two courts with judges appoint- ropean financial system. Its
the protection of the environment, ed jointly by national govern- President and executive board
consumer protection, transport, en- ments. The European Court of are appointed by the European
ergy, and research. Many decisions Auditors audits the EU budget Council.
still lie with national governments and has 27 members, appoint-
ed by the Council of Ministers.
and parliaments, particularly on the
details of the implementation of EU
legislation or on matters such as
national security and the protection
of citizens.
EU citizens
Elect Elect
Nominates Approves
European Council president or rejects European Parliament
Nominates
leadership
European European Council of the EU
Central Bank Commission (Council of Ministers)
Sets policy Proposes and Approves Approves
agenda implements or rejects or rejects
EU laws and budget
Interprets and Audits
settles disputes budget
Court of Justice European Appoints
of the EU Court of Auditors
Source: European Union
(C) BRUNSWICK GROUP 2020 | 5Brunswick Group
Friedrichstraße 95
10117 Berlin
Germany
Tel. +49 30 2067 3360
Contact: Ulrich Deupmann
udeupmann@brunswickgroup.com
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