Coronavirus: the German fallback

On March 23, 2020, Germany had nearly 30,000 cases, but only 115 deaths related to the virus, while at the same time France had officially 19,856 cases and already 860 deaths related to the epidemic. This early identification of carriers saved precious time to increase the number of beds, particularly in intensive care systems, and mobilize the available healthcare personnel, while the country still seemed relatively spared. With one of the oldest populations in Europe, Germany is aware of its vulnerability and its health system is preparing for a real "tsunami".

Repairing the German economy

Even before Europe became the epicentre of the pandemic, Germany realised the risk that the health crisis was representing for its economy. The spread of the virus in China and the closure of the country involved a particularly painful shock for the large Industrienation, undermining production lines at a time when the spread of the virus was leading to a reduction in demand for German products. Over the past week, the DAX, Germany's main stock market index, has fallen on an unprecedented scale. In an attempt to reassure the markets, Economics Minister Peter Altmaier (CDU) and Finance Minister Olaf Scholz (SPD) presented an arsenal of measures to mitigate the consequences of the pandemic on the German economy.

An easier access to partial unemployment, the possibility for companies to defer the payment of their taxes and the guarantee of credits offered to companies in difficulty through KfW, the public investment bank, for an amount equivalent to more than €500 billion constitute a first set of measures described by the Minister of Finance as "Bazooka". The German Government does not rule out supplementing these measures in the near future with equity investments in companies in difficulty or direct subsidies to companies, while already outlining the prospect of a recovery plan.

The dogma of budgetary discipline, one of the last markers of German conservatism, is now being eroded in favour of fighting the epidemic and protecting the economy. But is this a real turnaround? In an interview published on the website of the newspaper Die Zeit on March 18, 2020, German Finance Minister Olaf Scholz explains the government's position: "In the past, there has been criticism of my commitment to a balanced budget and my refusal to maintain public deficits. I have always explained that this is not an end in itself, but that it would enable us to cope if a crisis arose. Today, thanks to the strength of our public finances, we can face the crisis with a free hand". And indeed, with a budget surplus of almost €50 billion, Germany is in a position to provide lasting support for its economy.

Putting Europe on hold

But what about the support from other Member States? While confirming that the Federal Government now advocates a "flexible" approach to the European Stability Pact, which in principle limits the public deficit of the individual Member States to 3% per annum, the German Finance Minister considers it premature to activate the European Stability Mechanism (ESM), used to manage financial crises in the euro area. "At this time, I do not deem it necessary to activate the ESM. Member States are confident that they can solve their problems on their own. If it were otherwise, we would know how to take our responsibilities". For Germany, responses to the crisis remain for the time being national responses, and the country is distancing itself from a possible European solution.

On Sunday March 15, the German government finally announced its decision to partially close its land border with France, Switzerland and Austria, restricting crossings to cross-border workers and goods transport. This historic decision to re-establish the borders, reinforced on March 18 by the ban for all European citizens to enter German territory, is a symbolic turning point, reflecting Germany's desire to put the European project on hold. While legitimate concern is growing in the country, the European idea is now fading behind the temptation to withdraw.

For the first time since she took office, the German Chancellor chose to address the Germans directly, in a speech broadcasted on the evening of March 18. In this call for compliance, self-discipline and solidarity, Angela Merkel stressed the gravity of the situation, described as the most important challenge Germany has faced since the Second World War. A solemn speech marked by a worrying lack of reference to the European dimension of the crisis, which the President of the Munich Security Conference, Wolfgang Ischinger, did not fail to point out.

The European Union overcame the crises of the last ten years because it had at its centre a power that continued to nurture a certain idea of Europe. But a form of lassitude and disillusion seems to be gaining ground among the German elites: while the crisis requires a new capacity for action at the European level, Germany is now choosing to stand back.

Copyright : Tobias SCHWARZ / AFP