Germany in the EU after Merkel: A view from the Baltics

As Germany welcomes its new governing coalition, the Baltics are cautiously optimistic that Berlin will do more to live up to its self-image as bearing a special responsibility for the EU. However, old reservations about Germany’s foreign policy persist.

As small countries on Europe’s periphery, the Baltic states have long valued the commitment to inclusive and cohesive European integration that largely defined Angela Merkel’s EU policy. Moreover, with little appetite for ambitious EU reform, the Baltics have generally regarded Merkel’s leadership in the European Council – whereby Germany would strike a balance between diverging member state views to pursue incremental and inclusive integration – as a reasonably effective and sustainable model of EU policymaking. Her departure thus creates considerable uncertainty in the Baltics about how decision-making in the EU will look and the outcomes it will bring.

This is not to say, however, that the Baltics had no problems with the former chancellor – far from it. In particular, Merkel’s insistence on promoting economic cooperation with Russia and China, whether due to narrow commercial interests or misguided idealism, consistently drew strong criticism from the Baltics. This was most visible in the ongoing Nord Stream 2 saga and, most recently, in response to Berlin’s push for the EU–China trade deal in late 2020.

In this context, the Baltics’ biggest hope is that Germany’s new government will maintain Berlin’s pragmatic, inclusive attitude towards European integration while asserting a more principled stance in external EU policy, especially towards Russia and China. The mixture of continuity and change embodied in the traffic-light coalition – with the experienced and moderate Olaf Scholz of the Social Democrats as the likely chancellor and the Greens’ outspoken Annalena Baerbock as foreign minister – has given the Baltics reason for cautious optimism. Yet the Baltics also have some serious misgivings about the new coalition, from its ability to act cohesively considering its apparently conflicted stance on Russia to its unwillingness to spend on defence.

Germany no longer the EU’s moderator?

To the Baltics, Germany’s continuing commitment to caution and compromise in the process of European integration matters across a wide range of policies, most notably defence, economic governance and the rule of law. The Baltics strongly favoured Berlin’s inclusive and modular approach to the negotiations for the Permanent Structured Cooperation over the alternative, ambitious and exclusive design championed by Paris. The Baltics similarly shared Merkel’s scepticism towards President Emmanuel Macron’s ambitious eurozone reform and supported Berlin’s commitment to mediating and moderating the standoff between Brussels and Warsaw (the Baltics were not particularly vocal about Hungary).

While there is relatively little to signal a significant change in Germany’s EU defence policy, the new government may occupy a different position on fiscal policy and the rule of law. The new coalition agreement draws no red lines for the upcoming negotiations on the Sustainability and Growth Pact and acknowledges that EU fiscal rules could be developed further to foster growth and green investment. Notably, the agreement also stipulates that member state financing through the EU’s Recovery and Resilience Facility should be made conditional on the independence of the judiciary in the country and takes an overall harder stance on the importance of upholding the rule of law across the EU. Assuming that these promises result in substantive policy shifts, Latvia (which recently joined the call for greater fiscal responsibility in the EU) and Lithuania (a key strategic partner of Poland) may find themselves opposing Germany rather than relying on its mediation at the EU level.

Germany’s seemingly more ambitious agenda for European integration may also result in divergences between Berlin and the Baltic capitals on the broader questions regarding the future of Europe. The coalition agreement signals an embracing of institutional reform and potential treaty change following the Conference on the Future of Europe. The Baltics, meanwhile, have recently defined a joint position on the matter, urging member states to focus on concrete policy proposals “where the EU can demonstrate unity and deliver tangible results, rather than […] institutional issues or reforms.”

One should not, however, overstate the potential divergence between the Baltics and post-Merkel Germany. Berlin’s leadership change occurs amid a more fundamental transformation of the EU’s policy agenda, brought about by the climate crisis, digitisation, rising geopolitical contestation and COVID-19. In response to these global trends and events, Berlin, as well as the Baltic capitals, began adjusting their policy agendas well before the German election (e.g. by focusing on investment in the green and digital transitions, embracing the greater use of trade defence instruments). Even if the new coalition promises to accelerate some of these changes, the Baltics and Germany will continue to have a robust shared agenda.

Germany and the EU’s external policy

Above any other issue, the Baltics are extremely sensitive to potential changes in Germany’s stance on the EU’s foreign, defence and security policy. The Baltics positively receive the more assertive stance on Russia and China exhibited by the new coalition’s junior partners. Lithuania especially finds Baerbock’s emphasis on democracy and human rights concomitant with its ‘value-driven’ foreign policy and expects that this will amplify Vilnius’ voice and influence at the EU level. Germany’s increasing ambition to cooperate with democratic countries in the Indo-Pacific also promises a new agenda for cooperation between Berlin and the Baltics, which have made significant efforts to expand their presence in the Global East in the last few years. Lithuania and Latvia opened embassies in Australia in 2020 and 2021, respectively, while Estonia and Lithuania both established embassies in Singapore in 2021.

Moreover, the strongly transatlantic Baltics can be satisfied with the new coalition’s emphasis on EU–NATO cooperation and close EU–US ties. Indeed, while the new government embraces the concept of strategic autonomy, it does so primarily on non-military terms and stresses the importance of complementarity between any new EU defence initiatives and existing NATO structures. The Baltics remain cautious of the term primarily due to its association with Macron’s calls to reduce EU dependence on the US. Even if they do not invoke ‘strategic autonomy’ per se, the Baltics are de facto in favour of the EU becoming more self-sufficient in energy and digital sectors.

Nevertheless, the Baltics’ two most vocally aired grievances vis-à-vis Germany – its support for Nord Stream 2 and its failure to meet NATO’s 2% defence spending goal – get no mention in the new coalition agreement. The notable absence is likely a reflection of internal divisions. It is also a worrying signal that Germany’s domestic politics may continue to impede a more ambitious and principled foreign policy. Furthermore, while declaring support for Ukraine and Belarus, Germany simultaneously emphasises the need for “constructive dialogue” with Russia. The Baltics are highly sceptical of this notion for fear that it signals Berlin’s growing desire to de-escalate tensions with Moscow at the expense of defending Ukraine’s sovereignty or supporting democracy in Belarus.

Berlin’s desire to foster dialogue with Russia is seen as going over the Baltics’ heads. With Merkel’s controversial calls to Lukashenko still fresh in their memories, the new coalition will have to do more to reassure the Baltics than mentioning that they will take “different threat perceptions” of Berlin’s partners in Central and Eastern Europe into account when defining its relations with Russia. In the last years of Merkel’s leadership, the Baltics have found it useful to criticise Merkel’s pragmatic relations with Russia as undermining Berlin’s self-image as the leader of the EU and, therefore, as having a special responsibility to promote its unity. Most notably, the Baltic approach to Merkel’s support for the Nord Stream 2 pipeline was to criticise it by appealing to Germany’s ambitions in EU energy and climate policy, as well as its declared commitment to the security of Eastern European members and Ukraine. Given the challenges noted above, one can expect that the Baltics’ appeals to Germany’s special role in Europe will continue well after the departure of Merkel.

In sum, as far as substantive policy issues are concerned, Berlin’s leadership change is unlikely to fundamentally alter the relationship between Germany and the Baltic states. Estonia, Latvia and Lithuania will continue to engage in productive cooperation with Germany across a range of substantive policy issues, such as climate action, digitisation, trade and security. The usual concerns about Germany’s foreign policy will remain. On the other hand, the new German government’s ambitions for EU institutional reform may create a yet unseen divergence between Berlin and the Baltics, prompting new – and needed – debates about the future of Europe in the latter.

Justinas Mickus is a Policy Analyst at the Strategic Analysis Centre of the Lithuanian Government.

The European Policy Centre continues to contribute to the analysis of Germany’s EU policy at this pivotal moment in German politics, with a series of Commentaries running from July to December 2021. It will feature views from various European capitals on post-Merkel expectations.

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