BRUSSELS, 20 September 2005 — Germany’s razor-edge election result handed more bad news yesterday to the already crisis-hit European Union, leaving its largest member state in disarray at a time of deep turmoil in the bloc, analysts said.
With Chancellor Gerhard Schroeder and his conservative rival Angela Merkel both claiming a mandate to govern, questions arise over the pace of reform in the eurozone’s biggest economy and the future strength of Franco-German ties.
Reflecting concern in Brussels, EU commission chief Jose Manuel Barroso called on German leaders yesterday to act quickly to end the limbo — warning the instability threatens the bloc’s efforts to kickstart its stagnant economy.
“With all respect for the internal sensitivities of (Germany) I urge the German leaders to find as soon as possible a stable solution for Germany,” he said. “Without a dynamic Germany, Europe cannot recover.”
Provisional results gave Merkel’s Christian Union alliance 35.2 percent in Sunday’s election, just ahead of the ruling Social Democrats (SPD) at 34.3 percent.
In concrete terms, that means a three-seat advantage in the lower house of Parliament for Merkel, but not enough for a majority for her preferred coalition, nor Schroeder’s.
Several government formations are possible, and the period of uncertainty could not come at a worse time for Europe, itself in disarray over a proposed new constitution — its very future — and its long-term budget.
“Whatever the scenario, the government will be forced to compromise given its fragility,” said Yves Meny, head of the European Institute in Florence.
“Politically speaking, Europe is in the doldrums and these elections don’t help,” he said.
Jean-Dominique Giuliani, head of the Paris-based Robert Schuman Foundation, agreed.
“What is certain, is that it’s going to be more complicated and unstable than expected in Germany,” he said. “Instability in Germany is not a good thing for Europe” particularly the economy.
Under Schroeder, unemployment has risen to record postwar highs, domestic demand is moribund, and Germany could face a massive structural deficit of 60 billion euros ($75 billion) in 2007.
Daniel Gros at the Center for European Policy Studies think tank in Brussels said the poll result will mean business as usual; uninspiring business at that.
“There is going to be little change in economic and other policies,” he said. “Within Europe, Germany wasn’t exactly a leader for reform nor a leader in anything, and that will just continue.”
Politically, the key question remains: What new balance will be established in Germany’s relations with France?
Berlin and Paris have traditionally been the EU’s driving force.
But their shared economic woes under Schroeder and French President Jacques Chirac, their vehement opposition to the Iraq war, and French voters’ rejection in May of the EU’s proposed constitution have undermined that influence.
Sylvie Goulard, an expert in Franco-German relations at the College of Europe in Bruges, said they would cooperate closely whatever the result, but the French presidential elections in 2007 could add to the confusion.
“There’s really no need for concern about the future of Franco-German relations,” she said.”
Ulrike Guerot at the German Marshall Fund was more pessimistic.
“I can’t quite work out what sort of political mix could redynamize their ties,” she said.
The other main dossier where Merkel and Schroeder differ is on Turkey’s EU membership. Schroeder is a key backer of its long-standing attempts to join and he will still be in office if Ankara’s accession talks begin on schedule on Oct. 3.
Turkey’s hopes would suffer under Merkel, who demands a privileged partnership rather than full membership, but she has pledged not to renege on a promise by EU leaders to start the accession process.
