Germany gears up for EU presidency as bloc navigates coronavirus pandemic

Jill Petzinger
Jill Petzinger, Germany Correspondent, Yahoo Finance UK
Berlin: Chancellor Angela Merkel giving a government declaration at the Bundestag on Germany's priorities for its upcoming presidency of the European Council on 18 June. Photo: Jan-Philipp Burmann/City-Press GmbH via Getty

When Germany takes over the rotating presidency of the European Council on 1 July, it will be tasked with shepherding a 27-state bloc still battling the human and economic cost of the coronavirus pandemic.

As Europe’s most powerful economy, expectations for Germany’s turn in the presidency are high. What could have been a six-month stint championing environmental and digital progress, will now be mainly dominated with handling the ongoing impact of coronavirus.

"The German presidency of the Council will take a different course than we had planned,” German chancellor Angela Merkel said last month. “It will be clearly dominated by the issue of combating the pandemic and its consequences.”

Merkel told the Bundestag that Germany’s job was to ensure that the coronavirus pandemic did not threaten EU integrity or weaken the single market, what she called “Europe’s core element.”

Currently in her 15th year at the helm, Merkel is riding high in the polls, with her approval ratings soaring after her timely and adept handling of the coronavirus pandemic in Germany.

The country’s relatively low number of COVID-19 deaths has boosted Merkel’s popularity in her final term. However, Germany is not out of the woods, with states forced to impose several new localised lockdowns this week.

READ MORE: Coronavirus: Early testing and swift lockdowns prevented 'up to 100,000 deaths' in Germany

Germany’s robust financial response to the crisis was to finally waive its strict debt brake. It will now borrow to partially finance its €130bn (£118bn, $146bn) stimulus package to help the German economy recover from the crisis. That follows its €750bn initial rescue package, deployed in March.

Merkel’s stamina for negotiation and hammering out compromises honed over the years will stand her in good stead when it comes to the biggest challenge of the presidency: getting the member states to agree on the EU’s coronavirus recovery fund and next seven-year budget.

That is a gargantuan task as the 27 member states are at odds about how to offer financial support to countries that have been worst-hit by COVID-19, such as Italy and Spain.

The European Commission has proposed a €750bn EU recovery fund, with €500bn of that earmarked as non-repayable grants for countries in need.

Germany and France support the proposal, but a group made up of Austria, the Netherlands, Sweden and Denmark — known as the Frugal Four — are against borrowing and assuming joint debt to support other states.

Working together with European Council president Charles Michel, Germany is pushing to get agreement on the recovery fund at the next meeting on 17 July, an ambitious goal given how far apart countries are on the issue.

Once the EU recovery plan and its next budget are approved, Germany still has to guide the bloc through Brexit trade deal, which will also happen during Berlin’s high-pressure presidency, not to mention ongoing interactions with a fractious Washington and redefining the EU’s relations with China.

The German government has already urged other EU member states to get ready for a potential no-deal Brexit. In a document, first reported by Reuters, Berlin wrote that member states have to start putting contingency plans in place for what it called a “no deal 2.0.”

It also said that EU states should not agree “at any price” to the UK’s plans for a rapid trade and security deal this summer, and that negotiations will “enter a hot phase” from September.

READ MORE: Germany advises EU to prepare for potential no-deal Brexit 

The German government says it will also work to promote the EU’s digital sovereignty, by boosting the bloc’s digital infrastructure and tech competencies to make it less reliant on US giants, for example for Cloud and data services.

Environment-wise, Merkel told the Bundestag last week that she would push for an EU climate protection law, with the goal of making Europe climate neutral by 2050.