Germany’s Central European Strategy Bites Back

Central Europe ca.1950

As 2020 opens with dramatic global events demanding attention and care, the countries of the European Union remain divided on crucial issues from climate change to foreign policy. The relationship between Germany and the countries of Central Europe is pivotal to many of these impasses. In this analysis, Zsuzsanna Végh examines the interplay of economic and political ties underpinning Germany’s relationship with the Visegrad countries of Czech Republic, Hungary, Slovakia, and Poland. Political differences, including over democracy and the rule of law, cannot continue to be skirted, if Germany and the EU are to effectively respond to the many challenges ahead.

Despite the rich legacy of German-Central European relations, current ties lack substance and vision. Over the past three decades, Germany’s role in the European Union has shifted from that of a leader in the Kohl years to that of a mediator in the final years of the Merkel era. More recently, the Central European “new member states” asserted their own prerogative to make their own ways as full-fledged members of the EU. Consequently, both Germany’s relations with the region and those countries’ attitudes towards Germany are today transformed.

After the regime change in 1989 and especially following the 2004 EU enlargement, Germany and the countries of Central Europe became highly economic interconnected. But while this gave rise to pragmatic cooperation, political ties were left to gradually hollow out. Once a reference point and model for European integration, Berlin has lost its normative influence in Central European capitals. In light of Germany’s recent muddling through attitude towards European affairs and the challenges it faces coordinating EU members as it assumes the rotating EU presidency in July 2020, German-Central European relations look to remain unaltered in the coming years.

From normative attraction to a rude awakening

Recent commemorations around the 30th anniversary of the fall of the Berlin Wall recall the ideals that once fueled cooperation between Germany and its neighbours at the core of Europe. Not only did the role of Hungary and, at that time, Czechoslovakia in allowing East German refugees passage to West Germany in 1989 make for a positive start to bilateral relations, the countries shared a vision about the region’s European future. While after its reunification Germany was no doubt a driving force for European integration and an advocate for eastern enlargement, the Czech Republic, Hungary, Poland, and Slovakia, that is the Visegrad countries, were themselves driven to “return to Europe” and undertake the challenges of democratic transformation and a shift from a planned to a market economy. With the promise of EU membership ahead, the permissive consensus in the countries of Central Europe embraced democratic values and principles as guidelines for political reform. In this context, Germany was not only seen as a supporter but also an example for these states.

Bilateral relations faded as new challenges emerged : the Visegrad countries neither see eye to eye with Germany on the potential solutions to one of the greatest challenges the EU currently faces nor do they fear to openly challenge the German position.

With their accession to the EU, the mission seemed accomplished. EU conditionality ended and the political component of bilateral relations faded as new challenges emerged. Barely more than a decade later, the peak of the refugee and migration crisis in 2015 was a rude awakening. The Visegrad countries neither see eye to eye with Germany on the potential solutions to one of the greatest challenges the EU currently faces nor do they fear to openly challenge the German position. Moreover, by this time, it had become evident that democratic transition was not a one-way street. Attacks on democratic institutions in Hungary under the Fidesz government and gradually also in Poland under the Law and Justice government began to provoke serious concern in the EU. The resulting Article 7 procedures regarding the state of democracy in the two countries are still ongoing, albeit with little impact so far. The criticisms made by German officials were equally to no avail, confirming that Berlin has indeed lost all normative leverage over the two former frontrunners of democratisation in Central Europe. Furthermore, the Polish Law and Justice government adopted a confrontative tone toward Berlin, reopening historical grievances such as German reparations for damages in World War Two. Overall, relations between Germany and the Visegrad countries hit their lowest point since 1989. At the same time, there have been clear differences among the four countries.

The Visegrad Group is often seen as a coherent formation thanks to its earlier shared mission to join the EU and its recent common anti-immigration stance. The four countries, however, differ on many accounts. From the German perspective, bilateral ties soured predominantly with Hungary and Poland over the past years. So much so, that according to the European Council on Foreign Relation’s Coalition Explorer, German policy-makers saw these countries as the most disappointing partners in the European Union in 2018 – along with the Brexit-ridden United Kingdom. The feeling was reciprocated in Budapest and Warsaw, though policy-makers in both countries found France, and in Poland also the UK, more disappointing than Germany. Annoyance with Slovakia and the Czech Republic was significantly less present in Berlin. The Czech Republic launched a strategic dialogue with Germany just as relations with Poland and Hungary hit a low in 2015. And Slovakia began an enhanced dialogue in 2017 as Berlin and Bratislava neared the 25th anniversary of diplomatic relations.

Mending fences

Though concerns around democratic quality have not dissipated, with the direct conflict over the refugee crisis slowly fading, Germany’s relations with Hungary and Poland have shown signs of improvement in the past 18 months. In the Polish case, matters were helped by Jacek Czaputowicz taking over as foreign minister from Witold Waszczykowski. While German Foreign Minister Heiko Maas’s declared more active engagement with the region since 2018, he also contributed to the shift. Indeed, foreign policy communities across the Visegrad Group see their countries’ relations with Germany better in 2019 than two years earlier, according to the recent Trends of Visegrad Foreign Policy survey conducted by the Czech Association for International Affairs.

The fresh German approach to the region stems from the realisation that new dividing lines are emerging within the European Union. In today’s turbulent political and economic climate, these rifts undermine the EU’s global role and the ability of its member states to act as one. German worries are particularly apparent and explicit when it comes to the increasing external, primarily Chinese, influence in Central Europe and the difficulties of the EU in arriving at common positions on external affairs – partly thanks to Central Europe, especially Hungary. Thus, it is by no mistake that in calling for a 'sovereign, strong Europe', Maas puts great emphasis on the need to engage Central Europe, and not just rely on the 'Franco-German engine'. Seeking renewed partnership with the countries in the region is commendable. However, underlying these attempts at (re-)engagement is the fact that Germany no longer appears as – nor does it harbour ambitions to be – a normative influencer. While this strategy ensures German geoeconomic interests, it does little to bridge the gaps over crucial divides or to gather parties around a common vision for Europe – something that today is sorely lacking. This German role suits Eurosceptic leaders in Central Europe, like Viktor Orbán and Jarosław Kaczynski, who welcome economic cooperation but reject normative criticism and wish to follow their own sovereigntist path.

New dividing lines are emerging within the European Union : these rifts undermine the EU’s global role and the ability of its member states to act as one.

Business as usual

Central European countries’ economic development has been strongly supported by EU cohesion funds on the one hand, and German investments on the other. The 'Central European manufacturing core' ties the Visegrad countries and Germany into one supply chain. The number of German companies, their foreign direct investment (FDI) stocks, as well as their combined annual turnover steadily grew in all four countries in the latest reported period, between 2014 and 2017. FDI in Hungary showed the highest proportional increase. German manufacturing companies, particularly automotive firms such as Volkswagen, Audi, Mercedes, and BMW, are among the most important investors in the region and drive competition between the countries. These companies’ production and profits depend on these local factories. A recent strike in Audi’s Hungarian plant even caused a temporary shutdown in the company’s home plant in Germany.

Not independently from these investments, trade between the region and Germany has been on the rise. Germany holds a negative trade balance with the Visegrad states, except Poland. While its overall combined trade turnover with them – 295 billion euros in 2018 – has overtaken that with China, Germany’s single biggest trading partner with a turnover of 199 billion euros in 2018. With such interconnectedness, Germany is naturally interested in the economic stability and further development of Central Europe. The established economic ties, which continued to improve even as political relations hit their lowest point in recent years, serve then as an obvious foundation for strengthened cooperation. In practice, however, these ties already drive bilateral relations. While Germany’s economic influence potentially could and arguably should be turned into political leverage over illiberal tendencies, there is no appetite for that in Berlin as the German economy slows down. Opportunist leaders in Central Europe can therefore continue to benefit from close economic ties with Germany while facing no normative pressures from their European partners. In this light, it is no wonder they comfortably seek resources from third parties such as China, despite Berlin’s open unease.

Towards the German EU presidency

As Germany readies itself for the rotating presidency of the European Union in July 2020, potential areas of conflict are taking shape. Berlin will likely have to deal with challenging dossiers, such as migration, the reform of the EU’s asylum system, the newly-presented European Green Deal, or the next seven-year EU budget. Germany is also hoping to develop a common China strategy and move towards qualified majority voting on foreign affairs, proposals which do not enjoy unanimous support. Although Berlin aims to find common solutions, conflict among member states and specifically with the Visegrád countries is foreseeable and, given the political nature of certain questions, even inevitable.

As a cross-cutting issue, climate policy is set to dominate the European agenda in 2020. Working out the details of a common climate agenda will be a time-consuming effort. Mitigating Poland’s objection to the 2050 target of climate neutrality will likely remain on the table even during the German presidency if the European Council fails to bring Warsaw on board with the rest in the June 2020 summit – which it likely will. Although following the December 2019 summit, the 26 can now move ahead without them, allowing Poland to opt out could have serious consequences for the EU’s overall goals. Germany will need to do more than express understanding for Poland’s reluctance as Chancellor Merkel did to keep sceptical Czech Republic and Hungary engaged. To do so, it will need to consider the targets in a broader perspective, in connection with the negotiations of the EU budget – another major issue for the coming year.

Even if Germany’s non-confrontational regional re-engagement smoothened cooperation, it is at the expense of leaving contentious issues unaddressed. These are now set to come back to bite Germany on the EU level and hamper the EU’s ability to speak with one voice on global challenges.

One of the most substantial and decisive debates of 2020 will unfold around the EU budget, upon which the future of EU policies depends. Connected to the budget, the potential introduction of some form of a rule of law criteria is set to provoke serious push-back, especially from the countries of Central Europe. Whereas in the past years Germany avoided direct engagement with rule of law issues, prioritising its bilateral partnerships in the region, it will now not be able to escape the uncomfortable task of brokering an agreement on the European level. At the same time, the Visegrad countries also worry about a possible decrease in the cohesion and agricultural funds they receive. Being closely interlinked with the Visegrád countries’ development, Germany also has a stake in limiting the cuts they could experience. However, as one of the biggest net contributors to the EU budget, it equally has an interest in making sure that EU funds are spent in a politically accountable manner. For this reason, Berlin should aim for a mechanism that can keep member states accountable and avoid watered down approaches. Considering the issue in a broader context and identifying potential linkages to deal with objections will be key.

A particularly challenging to advance area will be the foreign policy dossiers. Germany will have a hard time pursuing goals like a common European position on China or a move away from unanimity voting on EU external affairs in the face of sovereigntist leaders in Central Europe and without normative leverage. Berlin will struggle to win the argument for a sovereign Europe against leaders who stand for the sovereignty of nation states. On the other hand, supporting accession talks with Western Balkan countries that meet the requirements, such as Albania and North Macedonia, could be an item on the foreign policy agenda where Visegrad countries’ and Germany’s broad interests fall in line and where constructive coordination could be possible. Nonetheless, Germany should emphasise the importance of democratic conditionality in this process, complementing Visegrad countries’ push for accession talks.

Given the challenging European agenda and the desire to move policy forward, it is a reasonable attempt from Germany to mitigate conflicts and seek common ground with all member states, especially its neighbours. However, even if on a bilateral level the country’s pragmatic, non-confrontational regional re-engagement smoothened cooperation, it is at the expense of leaving contentious issues unaddressed. These are now set to come back to bite Germany on the EU level and hamper the EU’s ability to speak with one voice on global challenges, the exact opposite of what Germany wanted to achieve. Although the strategy advocates bringing in all views, it falls short of achieving greater unity because it, in itself, is void of a political compass or ambition. If Germany seeks to re-engage with the countries of Central Europe to strengthen the EU and its sovereignty, it cannot shy away from the issues that undermine that very strength and sovereignty, that is, contestations of the EU’s common values and principles and a commitment of the EU as a political community. Germany’s EU presidency is an opportunity to add that missing political compass to the re-engagement. In the longer term, it would strengthen not only the EU but Germany’s standing in Central Europe too.

This article has been published in cooperation with the Green European Journal.