It is a thin paper. In just under eleven pages, the CDU/CSU and SPD have listed the issues on which they want to reach an agreement in the upcoming coalition negotiations. Beyond the debt question, there is merely a smorgasbord of issues copied and pasted from the two parties’ election programmes.
Particularly striking is the fact that Europe is barely present. On the first page, it appears three times in the general statements of belief, then it only appears again in the section on migration. The crucial question, namely whether German special debts should be followed by European special debts, is not even asked. As with the corona debts in 2020, the slogan seems to be that what Germany can and does is far from applying to the others. For the largest country in a monetary union, this is both shameful and a huge strategic mistake.
It is particularly shameful because, right from the start of monetary union, this country manoeuvred itself into a situation that makes it particularly difficult for all others to incur state debt. This morning, the Federal Statistical Office reported that Germany’s foreign trade surplus in January of this year was again 16 billion euros, which means nothing other than that the surplus for the whole year will again be close to 200 billion euros. That is 200 billion new debts that are taken on by foreign countries. This directly relieves the German state, because otherwise it would have to be the main debtor for the savings of the Germans (as shown here). Only because this surplus has been accumulating year after year since the mid-2000s has Germany been able to keep its total public debt relatively low, namely around 60 percent of GDP.
No other European country (except the Netherlands) has such a debt relief, which has, for example, led to continuously rising government debt ratios in France and Italy. If Germany now issues itself a licence to incur government debt, but does not say what this means for the European debt brake, this is the highest form of contempt for European partners that one can think of. They will not leave this unanswered.
Even more surprising: competitiveness is the main economic policy topic in the exploratory paper in the country that, according to its enormous trade surplus and an incredibly high export ratio to GDP, is more competitive than most others. Since all Europeans are trying to become more competitive, the question is, against whom do you want to increase competitiveness without running into protectionist walls? Donald Trump has already threatened often enough to erect such walls and there is nothing to be done about China in terms of competitiveness anyway. If all Europeans want to export more and import less, they may have to find a second planet.
The new coalition plans to take on 500 billion euros in special debt over ten years for infrastructure investments. That sounds good, but it is not very much over the entire period and, in addition, it is fraught with pitfalls. Nowhere does it say that this amount will be raised additionally, which means that all public investors will pay their bills out of the special pot and perhaps not invest a single euro more than before.
One also wonders why special-purpose debt is needed to finance investments. Should these debts be repaid, even though they have brought about better transport routes and stable bridges, if the expenditure is truly additional? Infrastructure investments improve the productivity of an economy. On the other hand, the majority of expenditures are exempt from the debt brake, which are undoubtedly completely unproductive, namely military spending.
Why not just abolish the debt brake altogether instead of writing even more complicated new rules into the constitution? If Germany had a strategy to reduce its external surpluses, the state would have access to 200 to 250 billion euros of German savings each year that it could invest without any financing problem. That would be a programme for the future, one that could be used to pursue effective environmental policy for a modern society and that would be a blessing for Europe.
A final word on migration. Every sensible person knows that lasting solutions can only be found within the framework of the European Union and not against it. The SPD has at least persuaded Friederich Merz to recognise this fact in the exploratory paper. Anyone who wants to close the borders within Europe and at the same time believes that they can improve their own economy by improving competitiveness, which means worsening the situation of their trading partners, is a fool. If Germany, as a country in the centre of Europe, disregards all agreements and tries to use massive border controls to send every asylum-seeking migrant back to the neighbouring country from which he comes, then the European common market will also fail. Once again, Germany will suffer most from this.