As German chancellor Angela Merkel meets other European Union leaders in Brussels, her Social Democrat (SPD) coalition allies are stepping up support for a rethink of EU stability and growth rules spearheaded by European Commission president Jean-Claude Juncker.
After hosting Juncker at a party think-in outside Berlin, SPD Europe spokesman Axel Schäfer is hopeful an alliance with him will yield an “antithesis to everything Frau Merkel has served up in the last four years of summit democracy”.
That chimes with Juncker’s wish to pull the Brussels centre of gravity back to the commission after a crisis-era drift towards the Berlin-dominated European Council, where heads of state and government meet. It hasn’t escaped Juncker that his €315 billion EU investment plan earned greater applause from the SPD than from his ostensible centre-right Berlin allies, Merkel’s Christian Democratic Union (CDU).
Flexibility in fiscal rules
Now Juncker, SPD leader Sigmar Gabriel and European Parliament president Martin Schulz – also SPD – have spotted in the Greek standoff a chance to push for more flexibility in fiscal rules.
All have called on Athens to meet its reform commitments, but with some qualifications. Gabriel has warned that Germany was not in a position to “wag its finger” on budget rules, recalling how its SPD-led coalition had prioritised economic stimulus a decade ago in its “Agenda 2010” reforms, breaching Maastricht fiscal rules.
“If we’d had to meet the Maastricht criteria, then cuts of a further €20 billion would have been necessary and our Agenda 2010 reforms would have failed,” said Gabriel.
After years of Merkel-led fiscal debate in Europe, SPD officials see a chance to ally with France and Italy on greater budgetary flexibility and investment in Europe. These issues will be the focus of a high-profile conference later this month at Gabriel’s economics ministry in Berlin, with the minister giving the keynote address.
Reform paper
He will flag proposals Juncker is preparing for a euro-area reform paper to be presented in May, co-authored by Schulz, European Central Bank president Mario Draghi and European Council president Donald Tusk.
On the reform front, Der Spiegel said Juncker was already up and running, surprising his commissioners last month with proposals making it easier for member states to circumvent rules in the stability and growth pact.
The proposals, allowing EU fiscal watchdogs take note of parliamentary-approved reform plans rather than wait for reforms, prompted a frosty phone call from Merkel. When she asked why “her commissioner” Günther Oettinger had received the proposals only on the morning of the January meeting, Juncker reportedly replied: “Your commissioner? That’s my commissioner.”
Encounters such as that confirm the CDU’s worst fears about letting Juncker run the commission but have the SPD rubbing their hands.
The party urgently needs a new project: after more than a year in office it has delivered on pension reform and a minimum wage yet remains 15 points behind the CDU.
The challenge facing Gabriel is how to differentiate his party from the CDU on euro reform and on Greece without triggering resentment here about further assistance to Athens.
For SPD Europe spokesman Axel Schäfer the endless Greek crisis makes plain the need for a “certain flexibility in fundamental questions”.
"Germany would never have managed a decade ago, and we'd never be where we are today if we'd interpreted the stability pact as dogmatically as we do now," Schäfer told The Irish Times.
“The CDU is still in denial about that.”