2013 was a good year for Mrs Merkel, she was reappointed Chancellor for the third time.  Her Christian Democratic Union (CDU) party fell just five seats short of an absolute majority, a feat that has not been achieved since Konrad Adenaeur in 1957, and she now leads a ‘Grand Coalition’ which includes the Bavarian right leaning Christian Social Union (CSU), and the leftist Social Democratic Party (SDP).  Germany has continued to luxuriate in low interest rates designed to boost less well-off Eurozone countries, enjoys the lowest youth unemployment rates in the EU (7.2% versus EU average of 24.2%) and an exchange rate that serves well its exporting economy.  With a GDP of €3.4 trillion, Germany represents 5.5% of the world economy.  But did the year end with a political bump to match the one she suffered while out skiing?

Trying to maintain a balance between the three parties in the Coalition will always be tricky, but Mrs Merkel will also have to keep a healthy relationship with the European Commission.  While the Fiscal Compact could be seen as a defining moment of German influence in the manner in which the EU is run, since then relations between Berlin and Brussels have become frosty.  German negotiators have thrown cold water on the Banking Union proposals slowing the whole process down. The CSU have made the implementation of the Data Retention Directive a matter of ideology, and delayed its absorption onto the statute books, and there are severe rumblings over inter-European immigration.

Germany, like the UK, has a Day One benefits system that allows people to take out without having first put in, and with high standards of living and geographical proximity is becoming an attractive destination for immigrants, potentially burdening the state and depressing wages.  Germany is the second most popular destination for immigrants (the UK is number one), attracting just under half a million a year, compared with 250,000 emigrants (data taken from Eurostat), and with no border control thanks to European legislation, this is becoming a thorny issue for Mrs Merkel and her Government.

(In absolute terms, the largest numbers of non-nationals living in the EU on 1 January 2012 were found in Germany – 7.4 million persons)

Elmar Brok, a CDU MEP of long standing, lit the fuse by calling for immigrants to be fingerprinted and told Bild that those coming to Germany with the sole purpose of claiming benefits should be sent back home, antagonising the SDP.  Mrs Merkel felt it necessary to interrupt her holiday and discuss the matter with the SDP’s leader Sigmar Gabriel, and has put it at the top of the agenda for the Coalition’s first cabinet meeting in 2014, bringing conflict with Brussels ever closer over the free movement of peoples as enshrined in the 1986 Single European Act.

The brewing spat over immigration is, however, just another skirmish in a growing war between Germany and the EU. The cross-party policy of moving away from nuclear power to renewables, Energiewende, and its imbedded subsidies, have been attracting unwelcome attention from the EU and its competence of competition, and harsh words were exchanged at the December Summit.  The issue is how best should Germany be governed?

At the core of European thinking is the ‘Monnet Method’, whereby powers are communitized wherever politically feasible, and with the Commission being the custodian of the Treaties, this means that powers move away from the nation-state to the supra-national.  Reporting that Germany’s relationship with the EC is as bad as it ever has been, Spiegel writes:

In her (Merkel’s) view, the member states should remain in control when it comes to the further restructuring of Europe.

The Commission’s response has been sharp:

“Although Germany is the largest member state, it’s still only one of 28. Following the Lisbon Treaty, majority decisions in the EU have increased. This is why Berlin must show a willingness to compromise, just like everyone else.”

In other words, the Commission is hunkering down for a long and bloody campaign, and 2014 will be a challenging year for the Chancellor.

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