• I. The Twin-track Strategy as the Core of Germany’s European Policy
  
  • 1. The Role of Germany
  • 2. The Agenda for the German Presidency of the EU
  • 3. Deepening and Widening: A Twin-track Strategy
    • 3.1 The triangle of reform for the process of deepening
    • 3.2 The triangle of reform and differentiation
    • 3.3 Step-by-step enlargement and a growth pact with neighbouring states
  • 4. Ability of the Twin-Track Strategy to Win Majority Support

I. The Twin-track Strategy as the Core of Germany’s European Policy

Germany is adjusting itself to its new role in Europe. It wishes to take up a place in the EU that corresponds to its size and weight. This is more credible for its partners than a policy that is, perhaps, believed by Germany itself or even one of feigned weaknesses with hidden claims to leadership. Germany also declares its willingness and its interest in binding itself to Europe, of subordinating its own scope for action to common decision-making procedures and of emphatically bringing its own creative political power into the EU arena.

Deepening: The German policy on deepening is based on three aspects of reform:

• Economic policy impulses (strengthened co-operation in economic and social policy);
• New expenditure priorities (restructuring of the EU budget in favour of innovative, growth oriented sectors, training measures and effective preparatory and complementary strategies); and
• Institutional reform.

Germany is striving for a more proportional representation of Member States within the bodies of the EU. As a consequence, this would give Germany a stronger formal position in the European Parliament and in the Council. At the same time Germany is prepared to accept majority voting in more areas. Germany is no longer going to block reform of the CAP and is seeking effective and concentrated implementation of EU structural funds.

Widening: Germany is striving for a criteria-led, step-by-step enlargement. Of particular interest to Germany are the accessions of Poland, the Czech Republic and Hungary. Accession negotiations should rapidly be concluded but not, however, at the price of undermining the present Acquis. Therefore, derogations to present rules should have a limited time span, and transitional periods which last more than ten years should generally not be agreed. The limits of the purposefully open process of widening the EU lie in the political-institutional sphere and are due to the modernisation and transformation needs of the applicants. Regardless of the EU’s widening policy in the narrow sense of the term, however, the EU has to pursue a policy of inclusion. Therefore the EU has to develop an effective preparatory and complementary strategy for its neighbours before they enter the EU.

1. The Role of Germany

In the first instance the Federal Republic of Germany has to define its future role in a changed Europe and in the world within the framework of the EU. The ‘multi-lateralisation’ of German foreign policy will be continued within changed parameters and with a new emphasis. Re-nationalisation and unilateralism are neither desirable, nor feasible.

The unified Germany stands by the concept of foreign affairs - and also increasingly domestic affairs (particularly home and justice affairs) - being bound into the EU system. With the implementation of the Euro the integration process further impinges on a core area of national state competence. Germany invests both politically and materially in the deepening of the EU. Because of the

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comprehensive nature and the intensity of integration, but also because of the renunciation of alternative options and opt-outs, the Federal Republic of Germany has an overwhelming interest in seeing the EU possess a high degree of functional competence and efficiency. It is for this reason, also, that the further development of the EU system is seen as being a key theme of the German EU agenda alongside policy initiatives.

The discontinuation of the military threat in Europe has, on the one hand, given the civil elements of power (money, diplomacy, trade) more weight. On the other hand, however, the tendency towards globalisation of the tasks and ambitions of the EU, and its role as Europe’s guarantor of order in Central and Eastern Europe, demand a new quality of EU policy. The EU has to collectively represent consistent policies that are accepted and supported by the citizens and a European public that is still overwhelmingly shaped by national discourse.

The old threat and deterrence system of the East-West conflict had an evening-out effect on the relative weight of individual EU countries. Post-1989 the weighting of large, medium and small countries in the internal structure of the EU plays a bigger role than it previously did. The increased centrality of Germany for the internal development of the EU and for its external scope for action demands the willingness to take on political leadership under the sign of self-attachment. A German policy manifestly aware of power, interest and responsibility can create trust and help to foster political solutions more than a hidden or mistrustfully imputed leadership-role would.

2. The Agenda for the German Presidency of the EU

In the first half of 1999 the German government is taking over the presidency of the EU.

During the German presidency:

• The third stage of EMU will be achieved, as will the EURO as a unit of account;
• The financial perspective for the period 2000-2006 will be agreed, possibly within the framework of a special summit;
• Key principles will be set for the reform of structural and agricultural policy;
• The fifth direct elections to the European Parliament (EP) will be held;
• The process of naming the President and the members of the Commission; followed by
• The screening of the accession states will be concluded, and negotiations continue;
• The summit talks with Asia (ASEM) will be continued;
• The Barcelona-Process will be continued; and
• The transposition of the TEU protocol on the institutions, added at Amsterdam, in view of expansion will be prepared.

The German Presidency should produce a clear programme which deals with these major themes on the EU agenda, as well as the many small ones, and which promotes both the deepening and the widening of the EU.

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Special attention must be given to the mobilisation and motivation of voters in the context of the European elections. At least in Germany, approval of the European Union and of the European Parliament ought to depend upon the successful start of economic and monetary union (EMU). The political corollary to EMU should be taken on by the German Presidency. Although citizens of the European Union will not use the Euro as a means of payment until 2002, it would be short-sighted to adopt a strategy which trivialised and suppressed the issue.

3. Deepening and Widening: A Twin-track Strategy

German policy must adhere to the strategy of approaching deepening and widening in a parallel manner. Withdrawal from either of the two projects would entail considerable costs for German policy. Deepening and widening are processes which have to be in tune with one another. Both are important steps of adaptation to a world economy characterised by globalisation, and a new international system in which Europeans both have to and want to stand up for their own interests, more so than before 1989. Political and economic challenges preclude the pursuing of an inward-looking West European policy, which can neither secure current lifestyles nor prosperity.

It remains the goal of European policy to make the EU system both more democratic and more efficient. In addition to market integration, this includes shaping lifestyles and requires reforms at a European as well as at a national level. Widening and deepening will both result in short-term costs. They will, however, be useful investments if the EU combines them with specific structural reforms. The starting point in recommending action to be taken is the deepening of the EU.

The twin-track strategy recommended here suggests a consolidation and programmed reform of the EU and a step-by-step expansion process, as well as an intergovernmental conference in the year 2000 on the (particularly institutional) consequences enlargement will have for integration policy.

3.1 The triangle of reform for the process of deepening

Starting Point: The European Union cannot go back to the drawing board and be redeveloped. Instead there is every reason to believe that the EU Member States are holding onto a vision of the EU as an incremental process and will live long term with the ‘strange animal’. A pragmatic policy will not, therefore, shift the focus to constitutional projects, but rather look for pragmatic solutions to the burning problems of the EU:

• Loss of competitiveness of several EU national economies;
• Unemployment in the EU and, to an increasing extent, also in the candidate countries;
• Democratic deficit of the EU;
• Efficiency and effectiveness of the EU system;
• The limited role of the EU in foreign policy;
• Consolidation of democracy in CEE through enlargement and the complementary strategy.

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For these reasons, consolidation and further development of the level of integration are to be recommended.

Objective: A modern EU must be more democratic but also more successful than the present EU, both economically and politically. It must place greater emphasis upon social and ecological interests, without becoming insular and, as a result, uncompetitive.

The following triangle of economic policy impulses, new expenditure priorities and institutional reform target this objective.

(i) EMU and economic policy stimuli

The largest project of the next few years aimed at deepening will be the introduction of the single currency, the Euro, in 1999. The non-monetary effects of EMU are difficult to calculate. A high priority task, therefore, is the creation of political measures that support and shape monetary union.

The single currency creates the need for a stronger co-ordination of economic and social policy in the EU. The European level is increasingly important for the reform of the taxation and social welfare systems. It is necessary to find a balanced relationship between deregulation and social security. Minimum levels of social security for Member States must be defined which correspond to their level of economic development, in the form of the social ‘snake’ for example. At the same time, a flexibility of the labour market must be achieved. In other areas, e.g. employment policy, the EU can provide support and stimuli, while actual policies continue to be set on a national level. Qualifying and innovation initiatives, outlined as national or multinational co-operation projects, should be supported by EU programmes (loans). In order to achieve this, a reorganisation of EU budgetary funds is necessary, by cutting, in the main, the cost of the agricultural budget.

(ii) Redistribution instead of increasing resources

The following goals should be kept in mind for the reform of the finances for the period 2000 to 2006:

• Establishment of an upper limit of 1.27 percent of EU GDP;
• Improvement of Germany’s relative position as net contributor, and greater consideration of GDP per head as a factor in the determination of the prevailing EU contributions;
• Redistribution of expenditure through a step-by-step reduction of the share allocated to agriculture to 30 percent;
• Phasing out of the Cohesion Fund for participants in the third stage of EMU;
• Greater degree of concentration and an increase in the efficiency of structural policy, which is also to be established at 0.46 percent of EU GDP during the course of enlargement;
• Restriction of the costs of accession through the capping of transfers to 5 percent of the recipient’s GDP;
• Provision of funds for the complementary strategy (modernisation pact).

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(iii) Institutional reform

In order to proceed swiftly with the large-scale reforms and adjustments in the policy sphere and to come to terms with a larger number of members, the EU must reform its institutions as well as its decision-making processes and voting procedures. The aim is the creation of a bi-cameral system, in which the Council is the representative of the governments and the Parliament is the representative of EU citizens. The natural way to progress is by convening an intergovernmental conference in the year 2000, dedicated exclusively to institutional questions.

The German government should pursue the following aims at the intergovernmental conference:

• Reweighting of the votes in the Council according to a graduated proportionality model. The result would be a heavier weighting for the large countries: Greater proportionality, but without singling out Germany;
• New division of the maximum 700 seats in the EP according to a proportional system, and a minimum of two seats;
• Elections to the EP following a uniform European voting system;
• Setting the upper limit of the Commission at 20 Commissioners; election of the President of the Commission by the EP, on the recommendation of the European Council; authority in matters of organisation and personnel for the President of the Commission; hearing and approval of the whole Commission by the EP;
• General introduction of Qualified Majority Voting (QMV), to be determined by the Council;
• Replacement of the rotating presidency by an elected presidency.

As a result of enlargement, there will be a pressing need for a redistribution of the votes in the Council. This is the most important building block of the institutional reform of the EU. The aim of the reform is to secure majority coalitions for EU policy in the long term and to reduce the possibilities for blocking legislation.

The greater the extent to which the European Parliament is built up as a second chamber, the more important it is that its composition reflects the principle of proportionality. In order to increase efficiency, a reduction in the size of the Commission is desirable. However, in comparison to the other reforms, this is of secondary importance.

The general extension of QMV in the EC-pillar in conjunction with the co-decision procedure, as set out in Article 251 of the EC Treaty [Fn.1: According to the Treaty of Amsterdam.] , is, in comparison, of prime importance. With regard to Common Foreign and Security Policy (CFSP), an improved ability to negotiate depends above all on an improved agreement between the UK, Germany and France (and soon Poland as well?)

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3.2 The triangle of reform and differentiation

More political energy than ever before needs to be invested in this three-angled reform process. If no agreement can be reached within the EU, ad-hoc co-operation outside the EU becomes more interesting for German policy. These differentiation options should be used particularly in the area of CFSP on a case by case basis, but should not be pursued systematically. Although it is understandable that a larger and more heterogeneous EU cannot adhere to a uniform principle, there are few valuable starting points for the practical application of differentiation/flexibility.

In general, the greatest movements towards differentiation can be expected in the context of step-by-step integration, following the model of different speeds within an enlarged EU. This applies to the criteria-led participation and non-participation in EMU, especially if social and political flanking measures are adopted. It also applies to the transfer of social and environmental policy and also, relatively soon, of the Schengen Accord to the new Member States. The transitional periods and temporary derogations will create the most far reaching differentiation in nature and duration, which will, however, fall short of the Acquis. However; the closer co-operation which is foreseen in the EU/EC Treaty (TEU) is oriented towards the intensification of existing policies and activities. The possibility of flexibility which introduces avant-garde solutions and reform initiatives into the EU is of interest to Germany.

3.3 Step-by-step enlargement and a growth pact with neighbouring states

Germany is not interested in an enlargement strategy which endangers the EU’s ability to function. On the other hand, the accession of Poland, the Czech Republic and Hungary is desirable if it is negotiated according to sensible conditions. From a German point of view, it is not a priority to take in further countries, although, following appropriate reform of the EU, the smaller countries such as Slovakia or Estonia will represent no great economic or financial burden. In the case of Cyprus, a clear consultation process must take place with Turkey and Greece before accession, which would ensure that no new conflict would be created and that old ones were put to rest.

To set a clear limit on the financial burden and to increase the awareness of the candidates to this, transparent, firm criteria should be formulated, which underline German and European interest in peace, social cohesion and the ability of the EU institutions to function. Ethnic and cultural criteria are to be clearly rejected.

The EU should offer a growth and modernisation pact to accession candidates and its other neighbours, which takes their material interests into consideration without promising them a rash and often unconsidered accession in the near future. The following should be included in such a pact:

• A reliable opening of EU markets;
• Monetary co-operation; and
• Assistance to improve the conditions of international competitiveness which does not further increase foreign debts.

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4. Ability of the Twin-Track Strategy to Win Majority Support

Voters and public opinion can be won through the success of the twin-track strategy of deepening and widening. Success must be achieved in economic and social fields and also in foreign policy. In addition, this policy should also provide a presentation of German European policy which reflects more closely the reality of it. Citizens must, indeed, learn to live with the complexities of the EU system; they also, however, have the right to more information and an insight into the decision-making structure.

The German government should outline clearly, and in public, its basic position on the reform of the institutions and the decision-making process and, more importantly, on the political content – agricultural policy, structural policy, CFSP issues, social and employment policy. The European Parliament must not be allowed to be a consensus machine, with no recognisable difference between the large political groups. Political alternatives and profiles must be recognisable to EU citizens along party political or group lines or according to regional/national allegiance. Traditionally, the Commission has been an important partner in implementing German interests in the EU. The objective of German policy must be to create a robust coalition for deepening and widening. Key states in this process are France and the UK, which are influential in the groups near to them. While a large scale pay-off to those sceptical about enlargement is discounted, and the use of the veto can only have limited effectiveness (e.g. in matters of structural policy and the budget), a balanced package must be defined. Germany would show concessions in the phasing out of cohesion resources for the four southern countries, accept losses in the areas of agricultural policy and Objective 2 areas, but be strict in the application of the new criteria und restriction of the resources.

With regard to its concrete reform wishes (a reorganisation of the EU budgetary contributions system, a more gradual reform of the CAP and a redistribution of the votes in the Council), Germany finds itself playing the role of petitioner, above all with respect to the goal of widening. The German government must work towards objectives and steps to reforms defined on a European level which prevent the emergence of harmful competition between closely-linked national interests.