The British government appears determined not to prolong the interim period for negotiating a trade deal with the EU, and equally determined to leave the Union at the end of 2020, with or without an agreement on future relations.
The second half of this year will therefore see the endgame in the EU-UK relationship.
Germany – which will occupy the six-month rotating presidency of the EU Council throughout this crucial period – is now playing a special role in these negotiations. So, the question can be asked: will Chancellor Merkel’s government push through a compromise with the UK, thereby reducing the obvious and dramatic damage that a no-deal Brexit would cause both sides?
Contrary to what leading Brexiters have repeatedly claimed, it was not the case during the negotiations between Michel Barnier, the EU representative, and his various British counterparts, that German politicians were pushing for compromises – notably those that permit German carmakers to continue selling vehicles to the UK on something akin to the current favorable terms. Why was this the case? Obviously, the UK has been an important – though already declining – export market for German producers: in 2015 German exports to the UK reached their peak, at €89bn; the figure for 2016 was €85bn and for 2019 €78bn.
What can be learned from these figures is that for the Government in Berlin the British economy is just not important enough to risk threatening the EU’s internal market which is Germany’s economic and political life guarantee.
Secondly, the Volkswagen Group which produced 10.97m vehicles in 2019, is now selling more cars in China than in any other country, including Germany; other growing export markets are Eastern Europe, Asia-Pacific and the US; similar circumstances now characterize the experience of other leading German car producers. Moreover, the ‘diesel scandal’ – which saw the country’s leading carmakers engulfed by the revelation that they had deliberately tampered with emissions data from their diesel models – has left the sector’s reputation badly damaged, and thus reduced its political influence in Berlin.
A mark of how the German government views the country’s car industry could be seen in the steps it took in response to the coronavirus pandemic: to deal with the economic consequences, the Government decided not to grant special subsidies to car producers, but instead to reduce VAT from 19% to 16 % across the economy, for the second half of 2020.
This step is a significant pointer as regards the ways in which Germany sees its car industry in the context of Brexit: the industry is not one which is so important that it deserves special favours. So, why would Germany endanger the cohesion of the EU’s internal market in the interests of striking a compromise on car sales, with stubborn English nationalists?
Moreover, while the UK is in the process of leaving the EU, the political equilibrium within the EU is already changing.
Prior to the UK’s departure, a kind of ‘power triangle’ existed within the EU, comprising France, the UK and Germany. In economic terms, the German ‘liberal’ attitude was rather closer to that of the UK than it was to the French ‘mercantilist’ outlook characterized by state-control. But this has changed, having become something of a ‘duopoly’ – that is, a French-German axis, and from Berlin’s perspective everything must be done to keep relations with Paris not only stable but productive enough to hold the EU-27 together as a union, and to move it forward.
The reality of this realignment can be seen in the new personalities President Macron and Chancellor Merkel have brought in: Ursula von der Leyen as EU Commission President, and Christine Lagarde as head of the European Central Bank. Further evidence can be seen in the recent French-German initiative aimed at assisting those EU member states most adversely affected by the coronavirus pandemic.
However, while taking these joint initiatives, Berlin and Paris have to be cautious not to offend other influential players within the EU-27, not least because most key EU decisions require unanimity: fishing industries in the Netherlands, Denmark and Spain, for example, would lose a great deal in a ‘no-deal Brexit’. France has nevertheless been rather strict in pursuing the negotiations on the UK’s exit: Paris seems to be ready to sacrifice its fishing communities in the interest of preserving the EU’s integrity.
Moreover, whatever it may wish for, the German government will find it has little leeway even if it sought a compromise agreement with the UK government – a Government seemingly stubborn and ignorant enough to sacrifice the economic and social well-being of its own citizens on the altar of a futile pursuit of ‘sovereignty’.
The EU-27 meanwhile remains an incomplete and difficult ‘union’, beset as it is by many unsolved contradictions which Covid-19 has served to intensify. Such was starkly illustrated when for several weeks most Schengen countries closed their borders, thereby – if only temporarily – removing one of the EU’s most advanced and beneficial achievements: freedom of movement.
For Germany, the best it probably hopes for during its EU presidency is to overcome the worst implications for the health of its citizens, and to achieve economic and social stabilization and recovery in the wake of the pandemic, particularly among the EU countries most affected it, specifically Italy and Spain.
Britain, meanwhile, might well find out that being ‘free but lonely’ under such conditions is not such a pleasant experience: with its new-found ‘sovereignty’, the UK has found itself Europe’s champion in having the highest number of deaths from Covid-19 – a truly sad ‘achievement’, stemming so clearly from the criminal neglect of its most vulnerable citizens.
With its resources contracting as a consequence of its loss of access to the EU single market, and the impact of the pandemic, England on its own can now look forward to the further diminution of its international reputation and the ‘soft power’ which has long-been key to attracting others to one’s side and inducing them to follow one’s example; as the political scientist Karl W. Deutsch wrote: “Those have power who can afford not to learn”. The English Brexiteers erroneously believe they still “have power”, and that they don’t have to learn and to adapt to today’s interdependent world.
Tragically, the UK population will soon be paying a heavy price for this attitude.
Helmut Hubel is a retired Professor and Chairholder of International Relations at the Friedrich-Schiller University of Jena, Germany; he now divides his time between living in Cheltenham and Stuttgart. His published works include studies of the EU’s decision-making processes, EU enlargement, and EU relations with Russia.