Europe 'on hold' over key German election

For months now Europe has been on hold.

Time and again it has been said that the big challenges must await the outcome of the German election. Germany is Europe's indispensable power and no major decision can be taken without it.

Yet the election campaign does not reflect that: the politicians seem curiously reluctant to debate Europe's future and Germany's role in it.

There has been more passion spent in debating whether public canteens should once a week have a non-meat day than in discussing future eurozone bailouts. The opposition has been keener to focus on portraying Germany as a low-wage economy and arguing over the shortage of skilled labour than discussing Europe.

On Angela Merkel's part this is quite deliberate. She is by far the most popular politician in Germany. Her approval ratings at 60% - after eight years in power - are the envy of every other politician in Europe.

She is - as her posters remind voters - a safe pair of hands. Her deliberate, cautious, step-by-step style suits the German mood. The impression she gives is of wanting to park any European issue which might ruffle the voters. She is relying on the German economy, with unemployment at its lowest for two decades, to retain the chancellorship.

A commentary in Der Spiegel, however, says "the German election campaign has paralysed the continent in a way never before seen in EU history".

That is debatable, but there are many European issues confined to the political slow-lane. Discussions about banking union (and a common resolution fund) - a giant step for the EU - rarely surface.

The admission that Greece will need a third bailout only briefly flickered into life. There has been little argument about austerity and whether it has helped save the single currency or whether it has condemned parts of Europe to long-term stagnation.

The election on 22 September is drawing close. Almost certainly Angela Merkel will be the next chancellor; the only question is which party she will be in coalition with.

The polls suggest a narrow lead for her party, the Christian Democrats, and her current partner - the Free Democrats.

The country, judging by the polls, would quite like to see a grand coalition of the Christian Democrats and the opposition Social Democrats.

Seen from other European capitals, that is regarded as the best outcome. The political class in Germany is solidly committed to the European project, and a grand coalition might be more willing to shoulder the European burden than the previous German government.

But writing for the European Council on Foreign Relations, Ulrike Guerot argues that the Germany that many in Europe hope for is not on offer.

"Berlin quite simply lacks the political ambition to provide clear leadership in turbulent times," she says. She cannot see any new government "accepting significant short-term sacrifice to buy into a far more uncertain vision of long-term political stability".

The very concept of leadership stirs memory and awakens history. The German voters have seen what happens when Berlin insists on austerity combined with reforms. Old stereotypes return. They are deeply hurt and offended by the images of Angela Merkel dressed as a Nazi that have appeared on the streets of Athens or Madrid.

Also the years of economic crisis have seen a rebalancing of Germany's trade ties. Whilst trade with other members of the eurozone has slumped, it has increased with the rest of the world.

German exports to Italy remain 10% below the level of where they were in 2008. Meanwhile, exports to the United States are sharply higher, and they have almost doubled to China.

And a recent poll by Open Europe Berlin found that 52% do not want the next government to commit to further loans for crisis-hit eurozone countries. That reluctant mood is unlikely to disappear.

That being said, the German chancellor remains absolutely committed to the survival of the euro. She sees it as a core German national interest.

But what kind of Europe she envisages is far from clear. She does not do "vision", as one of her closest aides told me. These days she no longer talks of "more Europe". Instead there are hints that she opposes transferring more rights to the European Commission in Brussels. She seems to favour more intergovernmental agreements.

That caution seems to chime with the views of Martin Schulz, the President of the European Parliament.

"I agree," he said in London this week, "with those who say the EU in Brussels must not do everything. I was 11 years a mayor in Germany. What you can do locally, do it there".

So, when it comes to Europe, a post-election Germany might just be similar to what came before. Cautious; only backing further integration when absolutely necessary; insisting on reforms in exchange for solidarity.