Germany eases Corona-lockdown and prepares to take over EU presidency

Germany eases Corona-lockdown and prepares to take over EU presidency: A newsletter from Charles Barker

Those believed dead live longer

Internationally and inside Europe Germany is perceived as a country that is managing the Corona-crisis relatively well until now. This perception is shared by German citizens. The handling of the crisis by the government receives rates of support rarely seen in democracies: 80 percent of the population support current protection measures, Merkel tops the list of the most popular politicians in Germany (again) with 64 percent and her conservative party (CDU/CSU) has gained 13 percentage points since the start of the crisis and now receives a 37 percent of the vote in opinion polls. Little wonder that first politicians are thinking aloud about a fifth (!) term of Merkel.

"80% of the German population

support current protection measures"

The popular support is all the more remarkable as German government has been caught as off-guard as most other governments, its Corona-response had a rocky start and some of the measures are hotly disputed: After some back and forth German lockdown measures began on March 13 (more than three weeks after Northern Italy and significantly later than in Austria and Spain) and were then gradually intensified till March 22 when a de-facto national lockdown was implemented. A few of the measures, especially restrictions of the right to demonstrate, were overturned by the courts very fast, in one case by the constitutional court. In addition, the ethical council of the government has criticized any attempts to mute the democratic discussion. Yet, somehow everybody seems to have settled along the lines of a commentary in German tier-1 Die Welt: “Only the debate on how best to fight this pandemic can give this fight the legitimacy it needs to last for many more months.” It is this high sensitivity to any curtailments of fundamental rights and the specific German legal framework which shaped the German middle-of-the road Corona-response since.

While many other governments have declared a state of emergency and compared the situation with a war (a comparison unthinkable for any German politician, especially not on 75th anniversary of the unconditional surrender of Nazi-Germany), pandemics like Corona in Germany are a clear case for the “Infektionsschutzgesetz” (Infection Protection Act) which hands important responsibilities to federal states, the Länder. Merkel and her government cannot take decisions on their own but need to coordinate with the governments of 16 federal states. While this procedure is slow and leads to many discussions, it grants all measures a strong democratic legitimacy and ensures fast implementation on local level.

Despite its slow reaction, Germany had a much better starting position than other countries in many respects and a lot of sheer luck: Seeing the tragedy unfolding in Northern Italy helped to push through unprecedented measures fast and gave Germany precious preparation time. First infection chains starting in January could be traced down well. The country entered the crisis with more than three times the number of intensive care beds per 100,000 people than Spain or Italy and more than double the number of France as well as with massive testing capacities, all of them well distributed in geographical terms – and has further and rapidly enhanced these resources. The result has been one of the lowest death rates in the Western world (60 percent lower than in the US and 85 percent lower than in Spain) despite a high absolute number in documented Covid-19-infections (close to 170,000), a hospital system which was never overwhelmed during the current first wave and a relatively “light” lockdown which is now being eased week by week.

Action on the economic side has been swift and decisive: On March 22 the German minister of finance Scholz announced one of the biggest support programs in German history and relative to the GDP the biggest worldwide: a package consisting of direct support payments, credit guarantees and short-time work subsidies valued 1,000bn Euros. Scholz promised that Germany had “a long breath”. It might well need it! The economy is expected to contract by 6.5 percent this year, to partially recover with a growth of 5.9 percent in 2021 and to not fully recover before 2022 – in an optimistic scenario. In line with the political management of the crisis, mood on the streets is muted yet serene. People are united by one conviction, which US political paper Politico sees as yet another sign of German arrogance: “About the only thing most Germans seem to agree on, at least in private, is that no matter how bad things get, they’ll still be better off than the rest of us.”

In political terms we expect a hot autumn, too. Germany will take over the EU presidency in July at a time of unprecedented turmoil – with Britain on the way out, France economically stricken, Italy staring into a public debt abyss and a once-in-a-century world economic crisis looming on the horizon. France, Italy and other Southern EU states have made clear that the new ECB bond purchase program (750bn Euros) and another 500bn package provided via other mechanisms are by far not enough and have made the future of the EU dependent on Northern Europe’s financial “solidarity” – which in the conservative circles of Merkel’s party rightly or wrongly translates into an unconditional grab into Germany’s pockets. To complicate matters, German constitutional court has just challenged ECB’s “whatever it takes”-approach – and the European Court of Justice.

"There is a general feeling that the EU’s reaction to the economic fall-out of the crisis will fundamentally shape the future of the bloc for the better or the worse."

Germany is just adapting its agenda for the EU presidency to the new situation and, in quite practical terms, there is a question on how to reach consensus among the 27 heads of member states with a highly reduced number of physical meetings (they also have their home office issues). There is a general feeling that the EU’s reaction to the economic fall-out of the crisis will fundamentally shape the future of the bloc for the better or the worse.

Against this backdrop the umbrella organizations of the industry from France, Germany and Italy (Medef, BDI and Confindustria) have declared as one, their rare joint statements: “We are deeply concerned about the social, economic and political impact of the pandemic. A huge shock to our economies and societies must be overcome. We need a comprehensive pan-European plan to lay the foundations for successful economies in the future. […] The EU response must be of unprecedented scale. In order to minimise the damage to the economy and society in this crisis, a strong fiscal response with a high degree of solidarity for the most affected countries is needed. […] We urge our governments and the European institutions to honour their commitments and use the Green Deal to encourage investment in modern infrastructure, digitisation and rejuvenated industrial value creation. They are essential to revitalise the European economy and make our industry sustainably crisis-proof.”

So, expectations on the EU and, thus, German presidency and Germany as the biggest economy of the EU, in the current situation are extremely high.