Chartbook #54 Addendum on the new German government's European policy

The second passage on Europe

As an addendum to my earlier Chartbook newsletter, it turns out that the coalition agreement in fact contains not one but two significant passages on European financial policy.

The one that I cited in newsletter #54 is from Section VIII, where it is placed in relation to broader financial policy.

There are another set of remarks specifically on European finance in Section VII.

In large part these are identical to the text from Section VIII, but they add one or two other significant phrases and they are framed by a vision for Europe, which is surprisingly bold.

The overall impression is an odd mixture of conservatism and radicalism.

“Next Generation EU (NGEU)” package is described, in passing, as an instrument that is limited in time and size. That is not quite the same as saying that it is a one-off instrument not to be repeated. But could be interpreted in that direction.

After the passages I have already quoted about the stability and growth pact, which are repeated verbatim, Section VII adds the further passage:

“Price stability is elementary for the prosperity of Europa. We take very seriously the worry of people about rising inflation. The ECB can best fulfill its mandate, which is above all the goal of price stability, if budgetary policy fulfills its responsibilities both at the EU level and in the member states.”

Again, that could be construed in a profoundly conservative direction, or not. What, after all, are the responsibilities of budgetary policy?

On Europe’s future as such the coalition program is downright radical.

“We will use the Conference for the Future of Europe for reforms. We support necessary changes to the Treaties. The Conference should open the way to a constitutional assembly leading to the development of a federal European state (föderalen europäischen Bundesstaat) that will be organized on the principles of subsidiarity and proportionality with a charta of basic rights as its foundation. We want to strength the European parliament … We will give priority to the community method, but, where necessary, go forward with individual member states. We support a unitary European franchise with partially transnational lists and a binding Spitzenkandidat-system.”

These passages are, in fact, taken straight out of the electoral program of the FDP.

There they declare:

“This path is an explicit alternative (Gegenmodell) to the retreat of Europe into nation state particularism (nationalstaatliche Kleinstaaterei), or the creation of a centralized European super-state. Until this is realized we want to see European integration deepened in parallel on the model of a “Europe of different speeds”.

It will be interesting, indeed, to see what this amounts to in practice.