Everyone take a deep breath: suggestions Merkel ready to accept Brexit following free movement row are wide of the mark

Der Spiegel reports that German Chancellor Angela Merkel warned David Cameron at last month’s EU summit that she would no longer try to keep the UK in the EU if Cameron sought to impose quotas or a cap on workers from other EU countries, as opposed to changing the rules around EU migrants’ access to benefits. The magazine also reported that the German Chancellery and Foreign Ministry fear that, for the first time, Cameron is pushing the UK towards a “point of no return” in terms of its EU membership and that a UK exit is “possible”. But there’s no reason to be get overly excited though.

• This was a report from one magazine which didn’t include any direct quotes from Merkel, but merely quoted unnamed sources. Moreover, as Sky News' Faisal Islam points out, the report isn't exactly front page either... its on page 36 of the print edition.
• The reported comments were specifically about reports in the UK media about Number 10 possibly considering putting outright caps on the number of EU migrants who can come to Britain to work, either via quotas or a points-based system. So one speculative media report leading to another.
• As we’ve argued repeatedly, there are two elements to free movement: volume – how many EU migrants come to the UK every year. And fairness: who can access what benefits and when. That Merkel doesn’t support an end to the basic right for EU migrants to come to the UK to work isn’t surprising at all. It’s been the German government position for ages. Stefan Seibert, Merkel’s spokesperson this morning re-stated Germany’s commitment to “the general principle of free movement”.

However, within that there’s a lot of scope for change and plenty of EU reforms that could fly in Berlin. Remember, the Bundestag will this week vote on a number of proposals aimed at tightening EU migrants’ access to benefits, including re-entry bans for those migrants that abuse of the German welfare system.

It’s interesting that since the stories in the UK media about a points-based system or quotas for EU migrants, FAZ and the Sunday Times note that the UK government is now looking to make its EU free movement proposals “Germany-compatible”. Also, UK Chancellor George Osborne told the BBC this morning,

“It was never envisaged that you would have such large numbers of people coming, people coming who don’t have job offers, people who move on to our benefits system…We are going to do this in a calm and rational way, but the British people want this addressed.”

The “job offer” part is interesting – the right to move to another EU country without a specific job offer hasn’t always been there. However, note there’s nothing about a cap – what the Der Spiegel report was about.

Similarly, at Downing Street’s briefing to journalists today, Cameron’s spokeswoman said:

“When the founding fathers established the European Union and introduced the principle of free movement, it was about labour and how you integrate the countries of the single market. The mass migration that we have seen with new countries joining, the impact on countries like the UK, the free movement to claim benefit – these are areas that have evolved and need to be addressed.”

There’s the point about wider “impact” but, again, the main focal point is benefits.

Which may suggest that No 10 remains primarily committed to looking at “fairness” – not actually ending free movement per se.

So only tweaks then? Not at all. Open Europe has today published a new pamphlet by Professor Damian Chalmers and Open Europe Research Director Stephen Booth which argues that the basic right to go and work anywhere in the EU should stand – on the whole, free movement remains a clear benefit to the UK. However, national governments should be able to limit EU migrants’ access to out-of-work and in-work benefits, social housing and publicly funded apprenticeships until after three years.

Incidentally, Der Spiegel did not claim that Merkel was now ‘ready to accept’ the UK exiting the EU, as some UK media outlets have reported. Instead, she now considers Brexit “möglich”, which translates as “possible”, which is more along the lines that it is something she fears.

In other words, whilst certainly a strong indicator of the mood music in Germany and the UK, on specific substance, this is much less of a story than the headlines suggest.

Handelsblatt: Britain a key driver of EU Reform

Britain: The critical voice of reason?

We've been monitoring how the British Europe debate is being received across the continent throughout the Juncker episode (here and here), and already noted how large parts of the German commentariat have come out fighting for the UK to remain in the EU, especially because it is in Germany's long-term strategic interest.

Today's Handelsblatt features a joint op-ed looking at the pros and cons of British membership of the EU, with the paper's political editor Jan Mallien writing:

"The British question [EU] bureaucracy, fight against agricultural subsidies, and ensure that any transfer of power to Brussels is discussed critically. Thus, they provide important impulses -- and make themselves unpopular. In a shared house, they would be in charge of the cleaning-rota. Of course, one can kick-out the person who is charged with the cleaning rota from a shared household. But it would be an illusion to think that the others would never have to clean again."

He continues:

"With their critical attitude, the British are a key driver of reform. Some German newspapers insinuate that Cameron is on an anti-European course. Those who say something like that are simplifying matters: The Brits are in favor of another [vision of the] EU. In many ways, they are fighting the correct battles."

Mallien concludes:

 "Sure, there are some issues where agreement would be easier without [the Brits.] The Financial Transaction Tax, for example. However, these are mainly symbolic issues. The EU is not much better-off with a Financial Transaction Tax. But without the British an important drive for reform will be missing. A Brexit would therefore make the EU poorer -- and not just economically."

On the other side of the fence, Handelsblatt columnist Désirée Linde says:

"Why all the whining about the nightmare scenario of a British EU-exit? If the British want to get out of the EU, continental Europe should let them go. Because, contrary to suggestions of doomsayers and EU-haters, it would not spell the beginning of the end for the EU. Yes, it would be a shock, but one that provides an opportunity for the EU. The cost of a Brexit for the EU is undisputed. Great Britain is one of the EU's biggest net contributors paying over €7bn per year."

She continues that while a Brexit would be “uncomfortable for the EU,” it would be “fatal” for the UK, and concludes:

"From the outset, the British lacked commitment to integration... Brexit would not build a way back to the European Community for the British. So it is up for all of Europe's friends in the UK to perceive this as a cleansing thunderstorm and develop a whole new enthusiasm for Europe. The fact that Europe is not just a customs union, but also a political project is something that the British have not yet understood...It is time that the UK learns. And if it must be, the hard way."

Linde buys into the whole German "pro-integration" rhetoric. However, as we have noted repeatedly, one of the greatest ironies of the German-Europe debate is how to square the need for more integration, especially in the eurozone, with Germany's national interests. This is lost on Linde. 

As a post-script, it's not only the Germans who are coming out in favour of Britain. The French  commentariat has been speaking out too, fearful of the imbalance a Bexit would cause in the European club. In today's Le Figaro, French columnist Renaud Girard describes the appointment of Jean-Claude Juncker as new European Commission President as “an unnecessary affront” to the UK, and argues:

 “It is irresponsible to push London on the slippery slope of EU exit… As far as France is concerned, it has no interest in finding itself head-to-head with Germany.” 

The Juncker-episode has shown that the moment of truth on the UK's future in Europe is drawing closer - and it also appears to be focusing minds across the Channel that an EU without Britain may not be in anyone's interest.

Is Cameron the greatest pro-European of all EU heads of state and government?

As we've noted, the Juncker-hangover is already taking hold in parts of the German commentariat. In a hard-hitting piece, Lisa Nienhaus, the Economics Editor of Frankfurter Allgemeine Sonntagszeitung argues that the EU "needs more Cameron, not less".

"Hang on a minute, how exactly [was Cameron's opposition to Juncker] a mistake? He only said publicly what many think. Juncker may well be a jovial, cheerful bloke, but he is also an example of political mediocrity, who represents more of the same, a lack of ideas. Whoever wants to change Europe, and above all the opaque, hyper-bureaucratic European Commission, needs someone else in that post."

"Cameron did exactly the right thing. He did not only win the hearts of Brits but also of citizens in many other countries who worry about what will ultimately remain of the European Union, a bureaucratic entity that offers occupational therapy and valediction opportunities for veteran politicians. In this sense, Cameron is the greatest pro-European of all the heads of state and government."

She continues that Juncker did not enjoy a democratic mandate from the German people, and that Angela Merkel made a mistake by backing him:

"The Germans, for example, did not vote for the European People’s Party (of whom Juncker was the leading candidate) but the CDU. Juncker did not feature on the posters, it was Merkel. It is not the case that voters would have driven crazy if Merkel had ultimately arranged that someone else would have become the Commission President. In doing so, she would have shown that she takes this post seriously. Now she has only shown that she doesn't really care who takes this job."

As we have been arguing as well, Nienhaus adds that the European Parliament (EP) does not have more democratic legitimacy than the European Council, and the appointment of Juncker is effectively a power grab by the Parliament. She calls on Germans who share this view to support the UK:

"The heads of state and government are ultimately at least as democratically legitimised as the European Parliament. After all, they won national elections in their respective countries." 

"We can only hope that Angela Merkel does not take offence at [Cameron's] 'No’. We need the Brits in Europe, also for other reasons. The belief of the Brits that freedom is good for the economy, and that not everything has to be regulated by the state, is exactly that what the EU is currently missing."

Nienhaus concludes that the UK is vital for the future of the EU, and that the EU debate is missing some of the UK's beliefs:

"The suspicion among the Brits that the powers that have won want to initiate a redistribution of powers and favour a super-powerful state is widespread. That does not appeal to the liberal Brits. Those in Germany who share this view – and there are many – has to support the UK playing a greater role in the EU. We need more Cameron, not less."

Neinhaus's line is not universally accepted in Germany of course. Others have been sticking the boot into Cameron. Nonetheless, Berlin will be aware that last week’s EU summit is a foretaste of what life in the EU could be if the UK were to leave. Without Britain in the EU, Germany would face a bigger risk of being cornered by a block of Southern eurozone countries lead by Italy and France: something that is absolutely not in its long-term interests.

If you force 26 EU countries to choose between Berlin and London. 26 will choose Berlin.

The knife in the battle over the next Commission President has just been twisted a little deeper into David Cameron's side.

Both Swedish PM Fredrik Reinfeldt and Dutch PM Mark Rutte today announced that they will not seek to block Jean-Claude Juncker for the top post.

Both countries have huge reservations, (Sweden and Hungary were the only two countries to oppose the idea of Spitzenkandidaten from the get-go), but they apparently don't want to be standing on the wrong side of the fence from Germany.

Speaking in the Dutch Parliament today, Rutte said:

I’m set on [Juncker. He is] in a position to implement important Dutch wishes.

A slight departure, then, from remarks Rutte made previously, that the Spitzenkandidaten process is “not my preference,” and that he wants to initiate a fundamental debate on it “possibly during the Dutch presidency” over the European Council in 2016.

Importantly, Rutte also remarked:

Under no circumstances, will I make agreements over adapting the fiscal rules, or making them more flexible, in order to make the nomination of a candidate possible.

Meanwhile, Reinfeldt told the Swedish Parliament:

If Jean Claude Juncker musters a qualified majority amongst heads of state and governments, and also has the support of the European Parliament, well then, the rules set out in the Lisbon Treaty have been followed and Sweden will also join this majority. 

Though Reinfeldt doesn't actually state how he would act in an outright vote, it probably means he will not vote against Juncker. 

So that only leaves the Hungarian Prime Minister, Viktor Orban, on 'Team Cameron'. Orban said "there is no way" he would vote for Juncker, even before the European Parliamentary election.

Absent changes, Cameron is now a long way off a blocking minority to Juncker in the Council. With Italy trading support for Juncker in exchange for more "flexible" EU fiscal policy, and the Netherlands and Sweden dropping out too, Cameron will lose the vote on Friday. This is the grim reality, even though most EU heads of state are far from convinced about Juncker, and of the Spitzekandidaten process itself.

The top line is that if you pit London against Berlin, and ask other EU member states to choose between them, they won't choose London.

So the trick is to avoid that choice - which in this case was rather difficult. For reasons we've explained numerous times, the likely consequence of repeatedly forcing this choice is that the UK will leave the EU. That most certainly isn't in Berlin's interest either - or Stockholm's, or the Hague's, or Copenhagen's, or Warsaw's...

You can't accuse Cameron of lacking principles while blaming him for taking a principled stand

There's something quite ironic going on in all this Cameron-bashing over Juncker. The charge against Cameron in Europe (and also at home) is often that he lacks principles. That he's pushed around by backbenchers or pursues narrow tactical personal or national interest.

Now that he has come out fighting for a principle - in this case whether powers should be arbitrarily transferred to Brussels and key decisions made by a fledgling transnational parliament with very limited democratic support, rather than democratically elected national governments and parliaments - he's being accused of blundering diplomacy.

Yes, of course, Cameron could have done things differently. But if he believes that the principle is wrong, can you blame him for, as he says, fighting "until the end". In contrast, Angela Merkel - who's a formidable power politician and who we have a lot of respect for in general - is flip-flopping like crazy over Juncker. And Matteo Renzi, the Italian PM, is busy striking back-room deals to let Italy off the hook on EU budget rules in exchange for backing Juncker.

On this occasion, Cameron wasn't even pushed around by his own backbenchers. In fact, Better Off Outers would probably love to see Juncker become President as it'll strengthen their cause. Also, some sceptics see this as a "pointless battle." So, Cameron seems to be taking a genuinely principled stance even if it comes with a political price.

In a sense, one could argue that, rather than the Spitzenkandidaten process falling victim to British politics, Cameron has fallen victim to German domestic politics.

Yesterday Handelsblatt's London correspondent Matthias Thibault sort of picked up on this theme arguing:

“We should thank David Cameron,” because, “at least we know where he stands – not only regarding Juncker – but also on the future direction of the EU. We still don’t know where the German Chancellor stands… But at some point she will have to decide, if, and how much, play-room she wants to give her British friend.”

So did a former judge at the German Constitutional Court, Udo di Fabio, who wrote last week in FAZ:

"The fact that there were candidates for the post of the Commission President is a fact created in the political realm, however with little proven resonance by the voters. This fact is neither legally nor politically binding for the Council’s suggestion [of the Commission President]."  

"Those who resent the British Prime Minister for having an opinion on personnel-related issues did not understand the system. Those who demand the British exit or approvingly accept it because the UK does not want to follow rules which are not to be found in the [EU] treaties want a different Europe than what is laid down in the treaties."  

"More centralisation in some areas is possible, but one has to soberly discuss the repatriation or a better separation of powers in areas such as labour and social law. Relevant proposals from the Netherlands or the UK should not be immediately viewed suspiciously as re-nationalisation programmes."     

Germany reacts to ECR vote "Britain knights AfD"

As soon as the news that Germany's anti-euro Alternative für Deutschland (AfD) had joined the Tories' ECR group in the European Parliament - as we predicted would happen - hit the Twittersphere, the German reaction has been swift and pretty condemning.

Although the vast majority of Tory MEPs voted against the AfD joining, they were outvoted by their partners in the ECR.  Nonetheless, the top line is that this is not going to go down well in Germany, and the Conservatives and David Cameron should brace themselves for a lot of backlash.

Germany's Die Welt leads on the home page of its website with "British Conservatives cooperate with AfD."

Leading financial daily Handeslblatt also leads with the story on its front page, with the headline, "Britain knights the AfD."

It is also front-page news on the website of Frankfurter Allgemeine Zeitung, under the headline, "AfD to be in a faction with the Tories in future".

Süddeutsche hasn't missed it either. On their front page, the story is written up as "The AfD docks with Cameron's Conservatives."

Spiegel also puts it on their front page, arguing, "Merkel forced Cameron to say no, but the European Conservatives thought otherwise: The AfD is now a member of their faction."

As we have argued before, Berlin is London's most important ally in achieving a reformed EU. And news of the AfD in the Tories' Conservative group could prove to be a major stumbling block in that process.

Anti-euro Alternative für Deutschland now likely to join Tories' European Parliament group - what will it mean for Anglo-German relations?

Relations between Berlin and London are potentially about to become a lot more complicated.

The Tories raised some eyebrows last week when they allowed the Finns Party and Danish People’s Party – two parties with controversial histories, but who, according to Tory MEPs, have cleaned up their act – to join their European Conservatives and Reformers (ECR) group in the European Parliament.

Even more eyebrows could be raised soon as it now looks highly possible that Alternative für Deutschland (AfD) will also join the ECR.

A vote amongst ECR MEPs is imminent. Number 10 isn't keen at all on the idea, but doesn't actually have a veto over who joins. That’s entirely down to a vote amongst the actual MEPs in the group, with a simple majority needed to approve new applicants.

Number 10 will probably try to make Tory MEPs vote against AfD, but the Tories account for only 19 of 55 ECR MEPs. Most non-UK MEPs will likely vote in favour of allowing AfD to join. This means Number 10 is effectively powerless, short of removing the whip from Tory MEPs or withdrawing from the ECR altogether. Cameron could try to hit the phones to the national leaders of the other parties to try to get them to convince their MEPs to vote against AfD. If successful, he could maybe still block AfD joining.

If AfD joins, it will be explosive. The party would bring seven MEPs to the ECR group, allowing it to potentially overtake the liberals, ALDE, as the third-largest group in the European Parliament (unless ALDE also gets some new recruits). An enlarged ECR would attract additional cash and staff, as well as more important committee posts. Also, the group may well become a more influential voice by virtue of being bigger, and therefore much harder to ignore. It can serve to put significant pressure on the European People's Party (EPP) in particular. You can’t blame Tory MEPs for seeking to maximise their influence.

Also, the ECR strategy appears to involve a concerted effort to strip UKIP's EFD group of its member parties, leading to the its collapse, depriving them of cash and demolishing their platform. Denying them the DPP, the Finns and AfD as members (assuming AfD would even want to join Farage) is a key part of the strategy – which seems to be working so far.

However, with AfD, as with the DPP and the Finns, there’s a big trade-off here: numbers versus image. With the Nordic parties, it was the risk of turning off allies on the liberal right, who are vital to achieving EU reform.

With AfD, it’s all about Angela Merkel. She doesn't deal with AfD. In fact, she barely acknowledges its existence. She once said,

"We consider a collaboration [with AfD] to be out of the question."

Merkel wasn’t happy when Cameron left the EPP-ED group to form the ECR in 2009. Now, joining forces with her arch-enemy will be like chucking a tank of fuel onto the fire. It will also surprise Berlin, since Number 10 has previously ruled out this possibility. In fact, only in February he said:

"In terms of the parties that are going to join that, we have a sister party in Germany, the CDU/CSU. We’re not looking for a new sister party. So I don’t anticipate that situation arising at all."

With AfD, the Independent Greeks (interesting to see whether the two of them will get along) and 'Germany-wary' Law & Justice, the new-look ECR could perceived by some in Berlin as outright anti-Merkel. It's hard to see how this will help Cameron's 'stop Juncker' campaign.

But is it a deal-breaker for a wider Anglo-German bargain on EU reform? Well, to some to some extent the European Parliament follows its own logic. And by having Tory MEPs vote against AfD joining, Cameron will seek to convey a “I did what I could” approach. Indeed, if the plan is for the ECR to become a vehicle for pushing a reformist agenda, there was always going to be a time when the group was no longer going to be “owned” by David Cameron.

Here's a second big potential risk though: yes, these parties share a basic scepticism of current EU. However, parties like the Danish People's Party, Finns Party, Law & Justice are, at best, lukewarm on issues like free trade, reflecting their social democratic core for the first two, and the small 'c' conservative base of the last one. Even AfD has come out against the EU-US trade deal - TTIP - as currently proposed. Remember, TTIP is one of the key items in Cameron's reform package. So, much like the AfD itself, there will be a massive struggle within the ECR over whether it wants to be a solid force for EU reform and free trade or a catch-all sceptical block with a penchant for populism, protectionism and illiberal economics.

You can say that Cameron has no control over his party, or you can say this is an example of a type of devolved democracy (if you’re a federalist, ‘European’ democracy over national politics: this is the system you want) but only time will tell whether this trade-off will be worth it for the wider goal of sweeping reform in Europe.

Merkel and Cameron won't run out of conversation topics any time soon...

What happens when four EU leaders get into a rowing boat?

Swedish PM Fredrik Reinfeldt is today hosting David Cameron, Angela Merkel and Dutch PM Mark Rutte, in Harpsund, Sweden - a recreational estate for Swedish PMs throughout the years. The summit apparently features a trip on the "Harpsundsekan" - a worryingly small rowing boat. The tradition involves various world leaders holding on for life and limb in the boat, and was introduced by Tage Erlander, Swedish PM in the 1960s. Nikita Krushchev, Willy Brandt and Kofi Annan have all been in the boat.

Merkel has already had the dubious honour of going on a trip with Reinfeldt in 2008. It should be said that getting four people into any rowing boat is actually a bit of a mission. Given that Rutte is 6'4, Reinfeldt 6'2 and Cameron not a small guy either, this will require some focus.

So what will be discussed?

Well, the summit was decided ages ago and pre-dates the ongoing Juncker row. Initially, the idea was that the leaders of the EU's most competitive economies were going to meet in order to hammer out the priorities for the next European Commission in particular and the EU in general, with a focus on the jobs and growth agenda.

Reinfeldt has said that there won't be any "discussions about personalities" at the summit, but no one really believes that. It'll probably be a mixture of the two. If Cameron can get a better idea of whether Merkel can find a away out of the corner the SPD has pushed her into (a very rare occasion) over Juncker, as well as some reasonably concrete commitments on EU reform, linked to the mandate for the next Commission, he should be happy.

Is it wishful thinking to see this as the "EU reform quad"?  If they could speak with one voice, it would no doubt be a very powerful group which would be hard to ignore. Together with Finland, they are the only EU countries on the World Economic Forum's list of the top 10 most competitive countries in the world. They also account for 41% of the gross contributions to the EU budget (much more if we count net).

The four leaders formed a formidable alliance in February, achieving the first ever cut to the EU's long-term budget. Sweden's Reinfeldt has been very helpful to Cameron on numerous occasions, including shooting down a bunch of proposals for financial regulations. In those EU budget talks, Stockholm deliberately positioned itself further out than London so as not to isolate the Brits. Reinfeldt was also quite helpful after Cameron's "Bloomberg speech" (in contrast to the Swedish Foreign Minister, Carl Bildt). If Juncker is stopped, it'll be in no small part due to Reinfeldt's willingness to stick his head over the parapet, giving Cameron much needed political cover. However, Reinfeldt will probably lose the Swedish elections in September, meaning Cameron will have to negotiate with a centre-left coalition ahead of the potential 2017 referendum.

Likewise, Rutte was key in the EU budget talks and the Dutch have very much emerged as the thought leaders on EU reform, not least when it comes to the role of national parliaments in the EU. In fact, the Hague has been more vocal on many occasions than London itself. Encouragingly, EU reformers in the Netherlands did better than expected in the European elections in May.

As for Merkel - well, we've written endlessly on the need for Germany to row behind EU reform. As the debate over Juncker shows, the country is currently embroiled in a hugely complex debate about how Europe should be governed, and what role Germany should play within it. The Juncker episode was Cameron's first real encounter with Germany's grand coalition politics. It won't be easy.

What's clear is that if Cameron is to achieve the sweeping change needed for the UK to stay in the EU, these four countries will have to be able to agree a common position.

German media turn on Cameron over Juncker - but what are they arguing for?

We pointed out on Friday that a powerful coalition between media and politicians was forming in Germany in support of Jean-Claude Juncker becoming the next Commission President and the Spitzenkandidaten experiment more generally. More worryingly for Cameron, he has emerged as the pantomime villain of the piece due to his opposition to both.

What's interesting though is that German commentators seem to argue more against Cameron than in favour of Juncker - who, we suspect, most of them realise that the idea of Juncker as the saviour of European democracy isn't entirely intellectually sound. A widely reported pre-election opinion poll for Bild showing that only 7% of Germans actually knew Juncker was a candidate, is no longer cited.  Here is a round-up of some of the key pieces from the past few days:

On Friday, the big news was the endorsement of Juncker by Axel Springer (the parent company of Bild and Welt). In a piece headlined “Juncker has to become President", the group's chairman Mathias Döpfner wrote:

“Are the results of the elections in Europe the sovereign decision of the citizens that politicians ought to implement? Or are they a form of non-binding suggestion that in the backrooms of powers can be interpreted and then gladly twisted into something opposite?”

"The issue is clear: Europeans want Juncker as the EU president. Schulz got the second-best result. A third [candidate], who didn't stand for election, can't be allowed to get the job. Otherwise that would make a farce out of democracy. You may get away with something like that in the DDR or in far-right banana republics. But not in the EU. Otherwise it will abolish itself."

In another comment piece on Saturday titled “Merkel must keep her word”, regular Bild columnist Ernst Elitz - who has often been critical of EU over-reach argued that :

“Before the elections it was clear: The Commission President will be decided by the voters and the EU Parliament. Afterwards some national leaders don’t want to hear about it anymore.”

On Monday, Handelsblatt’s Brussels correspondent Thomas Ludwig argued that:

“Whoever listens to the Brits in the debate about the personnel for Europe’s top posts is allowing the notorious spoil sport to take charge of the game... “It is impudence that the British Prime Minster David Cameron called the vote of the people an ‘unnecessary restriction’ for the political manoeuvring in the personnel poker. What kind of democracy understanding is that!”

Die Welt's Brussels correspondent Florian Eder - another German journalist and commentator who is often sensitive to the need for EU reform - also had a piece on Monday in which he argued that:

"It would in any case be a risky move [for member states to put forward an alternative candidate] which would delight the strengthened anti-Europeans that David Cameron and Francois Hollande want to keep at bay. The sceptics could already by the first vote get that which they could never achieve alone: a hamstrung, institutionally paralysed EU. Is that supposed to make sense?" 

"the European Council is by no means set against Juncker. Many of its members, including social democrats, have come out in support of the Luxembourger. That was how it had been agreed: the election winner would become Commission President. Cameron is voting against this as he blames his defeat at the European elections on the EU, which should show consideration towards him and his party interests... whoever blocks Juncker is duping the voters who believed in a political promise."

German magazine Spiegel went the furthest, with its English-language version publishing an editorial yesterday entitled "Decision Time: Britain must now decide if it will stay in Europe", which argued that:

“The EU cannot allow itself to be blackmailed by the British for another three years and refuse to give the people of Europe what was assured to them before the election - that they could use their vote to determine the next president of the European Commission. If the EU doesn't fulfill that promise, it will lose all credibility and acceptance… Britain is important to be sure. But the choice between a more democratic EU and Britain's continued membership is clear. Europe must choose democracy.”

There are a others who take a more nuanced tone. For example FAZ’s Brussels correspondent, Werner Mussler, points out that:

“The future of democracy in the EU does not depend on whether [the European Commission President] is called Jean-Claude Juncker, Martin Schulz or something else.” 

Anglo-German partnership on EU reform could prove crucial at the negotiating table

Die Welt's Economic Editor Tobias Kaiser has an opinion piece in today's paper entitled entitled “Stay with us, Brits”, in which he argues that:

“Berlin needs London as a partner in the fight for fiscal reason [in the EU].” 

Kaiser highlights that:

“Berlin and London have to put their ideas of Europe against the French coined version of European etatism... The openness of the European economy has to be guaranteed and the protectionist regulations and national rules – which still prevent the development of a genuinely free exchange of goods, people, and ideas within Europe – have to be dismantled.”

This is an argument we have been making for a while. In 2012, following the election of Francois Hollande as French President, Open Europe Director Mats Persson argued that:

"Hollande simply rubs the Germans up the wrong way. His spending rhetoric is an outright challenge to German Chancellor Angela Merkel’s vision of a euro firmly grounded in Prussian budget discipline."

"Therefore, though it won’t be easy, the scope for a new bargain between London and Berlin – based on Britain needing new terms of EU engagement if it is to remain inside, and Germany needing the UK’s quiet support for a more economically sustainable euro – is possibly greater than ever."

While Hollande's push against austerity has waned, the process of Anglo-German cooperation has gained pace - exemplified by the recent joint op-ed in the FT where George Osborne and Wolfgang Schäuble agreed on the need for safeguards for the single market in the face of tighter political and economic integration in the eurozone.

Kaiser's call for greater economic openness within the EU also echoes the argument in favour of greater services liberalisation by Die Zeit's London correspondent John F. Jungclausen, who cited Open Europe's report which found that removing barriers to cross-border services trade could alone produce a permanent increase to EU-wide GDP of up to 2.3% or €294bn.

It's good to see the process beginning to bear fruit and gain wider traction in the German media, particularly on the specific areas where reform is necessary. As we pointed out ahead of Chancellor Merkel's recent visit to the UK, there is scope for a wide ranging 'Anglo-German bargain' in areas such as EU migrants' access to benefits, greater powers for national parliaments, and the devolution of some EU back to the national or local level. According to a recent Open Europe/YouGov poll, an EU reform agenda built on these pillars would enjoy significant public support in both countries.

With all this in mind, now would seem the perfect time for the UK government to begin road-testing specific reforms in Germany and other countries. 

Merkel sagt 'Jein': German reactions to Merkel's speech

Merkel's big speech yesterday was being trailed in the UK media almost a week in advance while the German media only began to cover it the day before. Its fair to say it didn't completely dominate the news in Germany yesterday - not with the conclusion of the trial of former German President Christian Wulff - but it nonetheless attracted a lot of coverage, comment and analysis. Here is our round-up of key German responses:

#Merkel beendet Rede vor Parlament in London. Betonte mehrfach die starke Rolle Großbritanniens. Cameron dürfte insgesamt zufrieden sein.
— Stefan Lange (@st_lange) February 27, 2014

Bundeskanzlerin #Merkel hat bei ihrem #London-Besuch #Großbritannien dazu aufgerufen, in der #EU zu bleiben. http://t.co/thgGlonvaX
— Berliner Zeitung (@BLZonline) February 27, 2014

#Merkel lässt #Cameron hängen http://t.co/YAXkvsgoYz
— Politik bei n-tv.de (@ntvde_Politik) February 27, 2014

Besuch in Großbritannien: #Merkel beschwört die Rolle Londons für eine stabile EU. http://t.co/MJQ2RZ0Rkr
— Tagesspiegel.de (@tagesspiegel_de) February 27, 2014

In terms of the speech itself, German media and commentators broadly picked out Merkel's call for the UK to stay in and help shape the EU, although N-TV went with “Merkel leaves Cameron hanging”. Today's headlines and comment pieces make for interesting reading; FAZ headlined their write-up with ‘Chancellor Jein' - Jein, for those who haven't worked it out already is a combination of Ja & Nein. Süddeutsche Zeitung goes with “Merkel’s lecture in Europe realism” adding that “she didn't close doors but remained vague”. Die Welt says “Merkel meets the Queen and resists Cameron”.

In terms of the comment pieces, Handelsblatt's EU correspondent Ruth Berschens argues that:

“The UK and Germany share a staggering amount of common ground... the list of common interest has now even been extended by a very important point: both Germany and the UK want to readjust the institutional structure of the EU... [However] even if the Chancellor wanted to she could not give Cameron a special status [for the UK in the EU]... Merkel has offered a limited EU treaty change for the Eurozone and that the EU Commission will voluntarily commit to stay out of specific policy areas. Now the ball is in the British court.”

Die Welt columnist Alan Posener writes in the Guardian that:

“Cameron will get his treaty changes sooner or later. In return, he should learn to walk the European walk and talk the talk – as Merkel does, while pushing a German agenda.” 

In a separate comment piece in Die Welt, Posener argues that a more integrated eurozone but with the possibility of other powers flowing back to member states would

“not create a Europe of ‘two-speeds’, but a freer Europe of differences and choices. Those who want more integration should be able to go down that path; those who prefer a looser European ‘dress’ should not have to leave the EU for that”.        

Süddeutsche Zeitung’s Foreign Affairs editor Stefan Kornelius points out that:

“Those, like the British Premier David Cameron, who hope for a herculean reform effort of the EU, including comprehensive treaty change, do not understand the EU. Europe moves cautiously, step by step, fittingly like the German Chancellor, with or without crutches.” 

He adds that Merkel’s speech understandably left a lot of questions unanswered such as

“What are the concrete plans for the strengthening of the economic and monetary union? Should governments agree on a common economic policy or does this competence go to the [European] Commission? Above all in terms of the Commission: which of Cameron’s complaints about Brussels are justified? Where do competences have to be checked and be trimmed back?”

In conclusion the broad response of the German media is much as we argued yesterday - Merkel did not give much away but left the door open to reform.

New OE poll shows Merkel and Cameron should have plenty to talk about

We’ve put out a new poll this morning in conjunction with You Gov ahead of German Chancellor Angela Merkel’s visit to the UK tomorrow. The results make for some interesting reading and suggest there are plenty of areas of agreement between the Brits and the Germans. Whether this can translate into a new Anglo-German bargain and wider EU reform remains to be seen, but it provides a good basis for discussions.

The results suggest that Germans are split on the future development of the EU. While 38% say they’d like a more integrated Europe with more decisions taken at the European level, 31% say they’d like a less integrated Europe and 9% favour complete German withdrawal. 14% favour the status quo.

Among British respondents, a less integrated Europe with more decisions taken nationally or locally, is by far the most favoured option (37%). 24% want complete British withdrawal, 15% favour the status quo and only 10% would like more integration with more decisions taken at the European level. This illustrates that rather than a straight in or out choice, the British public has a clear desire for reform. It is now up to the UK Government to deliver a clear reform programme.

While more German than British respondents were sympathetic towards the prospect of more EU integration, a majority in both countries think that national parliaments rather than the European Parliament should be the ultimate check on new EU laws (see graph above, click to enlarge).

In the UK, 55% believe that every country’s national parliament should have the right to block new EU laws and 18% believe that a group of national parliaments working together should have the power to block EU laws – a total of 73%. In Germany, 36% favour a veto for the Bundestag over new EU laws and 22% are in favour of a group of national parliaments being able to block EU laws – a total of 58%. Only 8% of Britons and 21% of Germans think the European Parliament, rather than national parliaments, should have the right to block new EU laws.

 

Furthermore, in four out of six key policy areas – EU migrants’ access to benefits, police and criminal justice laws, employment laws and regional development subsidies – a majority in both countries said that decisions should be taken at the national rather than at the EU level (see table above).

 

Of the EU’s three flagship projects – the single market, enlargement and the euro – the single market was considered to be beneficial by the biggest share of voters in both countries. 52% of British voters said the single market is beneficial while 26% said it is not beneficial and 23% are undecided. 74% of German voters said it was beneficial, while 19% said it isn’t, and 8% said they don’t know.

Both British (55%) and German (48%) voters tend to view the impact of EU migrants on their country negatively. A smaller share of voters in both Britain (42%) and Germany (42%) said EU migrants negatively impacted on them personally, while a larger share in Germany (41%) than in Britain (30%) feel that EU migrants have a positive impact on them personally.

Plenty of scope for agreement then, but we’ll end on a note of caution. Merkel remains keen on a step by step approach and is somewhat hamstrung by her new coalition partners. Cameron will have to secure a much wider base for reform than just her, while she is also more likely to publicly back him if he has formed other alliances.

A new Anglo-German bargain on EU reform? Key opportunities and pitfalls

Ahead of German Chancellor Angela Merkel’s visit to London to meet David Cameron on Thursday, we've published a new briefing setting out the chances of an Anglo-German bargain on EU reform, the areas of possible agreement and also the potential hurdles to a deal.

In summary, Germany remains the most important ‘swing state’ in the debate about the EU’s future, and the outline of an Anglo-German bargain on EU reform is emerging. Angela Merkel’s CDU party is expected to argue in its European election manifesto that it should be possible for EU powers to return to national governments, and Germany and the UK are already among the most vocal advocates of reforming rules on EU migrants’ access to state welfare. Crucially, Germany’s desire to put further Eurozone integration on a sounder constitutional footing and enforce economic supervision on other Eurozone economies could also present David Cameron with his best chance of securing an EU Treaty change. Germany has already shown itself to be sympathetic to UK concerns about the Eurozone writing the rules for all member states.

Looking at this issue through the prism of individual policy areas, there is plenty of scope for Anglo-German agreement:

However, the presence of the SPD in Germany’s Grand Coalition has made matters more complicated and potentially limits how far Chancellor Merkel is able to go. This makes it all the more important that the UK wins support for its reform agenda in as many like-minded countries as possible, allowing Merkel the cover she needs to back it. There remains no guarantee that an EU Treaty change will coincide with Cameron’s 2017 referendum timetable but while this would be a blow, much reform can nevertheless be achieved without it.

All hail Angela Merkel – No 10 goes all out for the Chancellor

Painting in the Royal Gallery - the Duke of Wellington with Field Marshal Blucher at the Battle of Waterloo - harking back to an earlier age of Anglo-German cooperation.

Angela Merkel will visit London on 27th February, in what will be, no doubt, a much hyped affair. Though the details are yet to be confirmed, in addition to meeting David Cameron and the Queen, Merkel could also “be given the rare privilege” – as the Telegraph’s Chris Hope put it – of addressing both Houses of Parliament at the Royal Gallery, perhaps in an attempt to rekindle the spirit of the early 19th Century when Anglo-German cooperation was the norm (see painting).

 

The last head of government to address the Royal Gallery was apparently Nicolas Sarkozy – then French President – in 2008. We suspect that for Merkel this is more a case of “business as usual” rather than “privilege” but in any case, it’s significant.

There’s no doubt that the Tory leadership hopes for encouraging signs from the Chancellor, following Francois Hollande’s predictable comments last week that EU treaty change “is not a priority” (which nonetheless generated headlines). Far worse for Cameron et al was that the German Foreign Minister Frank-Walter Steinmeier proved such hard work when he was here on Monday – holding a rather awkward press conference alongside William Hague, which included some tempered language on Treaty change (which even came close to contradicting the German Coalition agreement).

As we’ve noted before, the German Grand Coalition isn’t a deal-breaker for Cameron’s plans but it does mean a lot more work. In contrast to the Steinmeier visit, which was barely publicised (most lobby journalists - the parliamentary correspondents who often set the agenda in UK press - were unaware of the meeting instead basing their write-ups on the news wires, which arguably triggered even worse headlines for Hague / Cameron), the Government will go all out for Merkel.

As we’ve argued since the start, Merkel holds the key to a new settlement in Europe, so No 10 is right to step it up. However, at the same time, it must be wary of not being seen as desperate – Merkel is by far the most important leader in Europe, and the big Europe questions are decided by the Kanzleramt and even the Finanzministerium, not the Auswärtiges Amt. Nevertheless, the strategy cannot entirely rest on Merkel, also keeping in mind that this is her last term, with her potentially getting weaker closer to the end.

Merkel’s visit will mark the start of a fresh attempt by No 10 to court EU leaders (read: explain to Europe what in the world Britain actually wants to achieve apart from creating emergency headlines to appease backbenchers). It won’t be a day too early.