July 21, 2017
What can possibly happen to endanger Angela Merkel’s election victory? The policy of kicking cans down the road will come unstuck at the moment when the unsustainable is no longer sustained, and trouble will invariably arise when this is suddenly noticeable to a sufficiently large number of voters. There will be no eurozone shock ahead of the elections. Germany’s over-reliance on the diesel technology as the singular engine of the country’s industrial strategy (see below) will also not collapse before September. But the situation in Turkey is very dangerous, especially now after the imprisonment of the German human rights activist Peter Steudtner on trumped-up charges of aiding terrorists.
Merkel is lucky for now because of the SPD’s almost tragicomic lack of courage. Instead of seeking an open disagreement with Merkel on a point which would have popular support, the SPD’s main preoccupation is to avoid an open confrontation with Recep Tayyip Erdogan, the Turkish president. The fact that many Turks have German passports and can vote in the elections is presumably a factor.
Sigmar Gabriel, the German foreign minister, yesterday called Merkel to seek a coalition agreement to warn German travellers to be careful when travelling to Turkey. This is not an official travel warning, which would have significant consequences. It would, for example, have allowed people to cancel existing travel bookings for the summer holiday without penalty. It would have allowed travel insurance providers to exclude Turkey from the list of insured countries. It would have had severe implications for German investment in Turkey. This policy of issuing a de facto but not de jure travel warning is a rather weak response. The strongest response by Gabriel is the announcement that Germany would review whether it will be able to issue export guarantees for German companies in Turkey. We are still in the not-amused phased of diplomatic relations.
In an excellent political analysis of the situation in FAZ, Majid Sattar reminds us that there is one difference. Martin Schulz let it be known that he would no longer be prepared to discuss a further extension of the customs union with Turkey at a time when German citizens are under arrest.
To distant observers it must sound shocking to learn that the EU’s relations with Turkey have been almost business-as-usual. Merkel and the EU seem willing to do anything to ensure that the refugee deal with Turkey won’t collapse. The response to Turkey’s persistent human right abuses shows us how weak Germany, and the EU in general, have become after accepting the morally questionable refugee deal with President Erdogan in 2016. The EU has abandoned any pretence of having an interest in human rights, and regards the introduction of the death penalty as the only red line in EU-Turkey relations. The EU thus remains committed to maintaining the façade of a political process that could eventually lead to Turkish EU membership. We would presume that the Turkish leader regards the feeble response from Berlin and Brussels as encouragement to continue to wield the leverage he has over the EU.
What does this tell us about the German elections? The SPD’s has so far failed to extricate itself from the Grand Coalition, having missed one opportunity after another. The SPD might be more inclined temperamentally to reform the eurozone or emphasise human rights, but in reality the differences are too small to have any practical effect.
The only caveat to this observation is that there are still two months until the election, and an escalation of the crisis with Turkey could lead to situation where complacency turns into panic.
We also have stories on the IMF's conditions to stay on with the Greek programme; on Raiffeisen's challenge of a Croatian law voiding cross-border mortgage contracts; on Germany's economic dependence on diesel engines; on Macron's managerial reform; on the Irish fix for Leprechaun statistics; and on Mario Draghi being no more and no less dovish than at Sintra.