June 6, 2016 / 11:32 AM / 2 years ago

German might gives way to angst over Brexit risk

BERLIN (Reuters) - Europe’s most powerful nation is suddenly powerless and worried.

Leader of the Christian Democratic Union (CDU) party and German Chancellor Angela Merkel (R) and CDU top candidate David McAllister attend an election rally in Berlin May 14, 2014. REUTERS/Tobias Schwarz

After shaping Europe’s response to the Greek debt, Ukraine, and Syrian refugee crises, Berlin is now unable to influence the outcome of the other big geopolitical risk on its doorstep: Britain’s June 23 referendum on whether to quit the European Union.

The outcome is a big worry for Berlin. A vote for ‘Brexit’ would undermine the integration of Europe, the grand project that has enabled Germany to forge its post-war identity. It would upset the EU’s balance of power and raise the danger of other countries leaving too.

In keeping with an informal agreement among continental European governments to hold their peace, German politicians are staying out of the campaign in the run-up to the vote, for fear of being seen to be bossing Britons around.

Chancellor Angela Merkel would like Britain to stay, but stresses: “It is naturally the decision of the British people how to vote.”

In the corridors of power in Berlin, the knowledge that the best thing to do now is keep out of the British debate is mixed with deep angst about losing a kindred free-market spirit that helps balance out the statist leanings of the third big EU power, France.

“We’re all crossing our fingers,” said David McAllister, a Berlin-born conservative ally of Merkel. “We would really miss them,” the half-Scottish politician said.

Another senior member of Merkel’s conservatives, speaking on condition of anonymity, was more direct when discussing the EU without Britain: “Everyone will say it is a club of losers.”

“We need a counterweight to France,” the same official added. “If the referendum result is negative, then we’ve got a real problem - it will be massive.”

Reflecting a deep desire to keep the UK on board, Germany played a constructive role in helping Prime Minister David Cameron reach a deal with his fellow EU leaders in February that he said gives Britain “special status” in the 28-member bloc.

That deal reinforced London’s reputation in many European capitals as an awkward EU partner. But for Germany, any awkwardness is far outweighed by the positives of the British contribution.

These include its strengths in foreign policy, developing the EU’s single market, holding down the bloc’s budget, rolling back bureaucracy and promoting free trade.

THREE‘S COMPANY

The prospect of wielding more power in a smaller EU with France as the only other major power does not appeal to Berlin. The EU’s traditional Franco-German axis has become uneven, largely due to France’s economic malaise.

Britain is seen as bringing balance.

“A three-way relationship is in this case definitely stronger than a two-way relationship, especially as one partner in the pair is more or less on its last legs,” said Michael Broening, analyst at the Friedrich Ebert Stiftung, a political foundation linked to Germany’s left-leaning Social Democrats.

For Roderich Kiesewetter, a conservative lawmaker who sits on Germany’s parliamentary foreign affairs committee, the EU would benefit from more British influence.

“The European Union is very much marked by the French approach,” he said, pointing to a top-down bureaucracy. “British output-orientated pragmatism is much closer to our approach.”

As one example of welcome British influence, Kiesewetter pointed to a deal Cameron secured earlier this year authorizing EU member states to limit in-work benefits - a mechanism for topping-up low salaries - for workers arriving from other EU states.

“Germany wanted this too, but we didn’t dare say so for fear of others complaining about ‘you rich Germans’,” he said.

FEAR FACTOR

Unable to stay completely quiet on the issue, Merkel said last week Britain would lose out if it left the EU. Berlin’s bigger fear is what would become of the rest of the Union.

“The weight of the EU, but also confidence in the cohesion and the steadfastness of the EU, would diminish dramatically,” said Vice Chancellor Sigmar Gabriel.

Britain has supported Berlin taking a foreign policy role commensurate with its economic power. But Germany’s ambitions are eclipsed by its concerns that a Brexit could allow Russia to project its power into a destabilized EU.

“It would be a success for Russia,” Kiesewetter said. “It cannot be in Germany’s national interest for a British exit to weaken the EU and strengthen Germany.”

His view is shared by just about the entire political establishment in Berlin. Peter Tauber, general secretary of Merkel’s conservatives, summed up the prevailing sentiment: “Europe is only strong together. The British are part of that.”

Additional reporting by Andreas Rinke; Editing by Mark Trevelyan

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