Why Berlin won't come to UK's rescue on Brexit

With the German election around the corner, the United Kingdom appears to be holding out hope that a fourth term for Chancellor Angela Merkel and a potentially more pro-business coalition partner could come to its rescue in divorce talks in Brussels.

Such wishful thinking is understandable given London’s precarious negotiating position, but it reflects major misconceptions about Berlin’s ability — and its willingness — to push for a softer Brexit.

For most Germans, Brexit is still a bit of puzzle. How does retreating from a club of like-minded democratic countries allow Britain “to take back control,” they wonder.

When German voters look at the economic and political challenges facing Europe — the threats to its security and the disdain that U.S. President Donald Trump and Russian President Vladimir Putin show for its institutions and values — they want more cooperation in Europe, not less.

Britain’s Brexiteers have claimed they don’t want to leave Europe, just the European Union. But that statement only proves how little they understand about how Germany sees the bloc. For Berlin, the EU is a core national interest and the only permanent and effective solution for political cooperation in Europe.

In theory, of course, European nations could work together without common institutions. But for the Germans especially, history has shown us that this doesn’t go smoothly in practice. And the more complex the issues at stake, the more pressing the need for common institutions and shared sovereignty becomes.

As a result, all major parties in Germany are, by British standards, strongly pro-European. The differences between them are subtle and mostly concern the eurozone.

When it comes to Brexit, all parties more or less agree: Germany doesn’t want to punish Britain and wants a good relationship in the future, but it won’t stand for “cherry-picking.” In other words, Germans don’t like the idea of selective participation in the single market, and they will try to make sure the EU27 remain united in the talks.

Some in the U.K. have expressed hope that a coalition government of Merkel’s Christian Democrats (CDU/CSU) and the pro-business Free Democrats (FDP) will take a more pragmatic approach and put the country’s economic interests first.

But that theory is the result of another major misunderstanding: The Brits believe the economic case for a softer German stance is strong. The opposite is true.

To be sure, German businesses would like to minimize the economic disruption that comes from a hard Brexit  — but not at the cost of setting a dangerous precedent for the EU.

For German businesses, whose complex supply chains criss-cross the entire EU, nothing is more important than the single market, with its common rules and institutions. If forced to choose, business will always choose to protect the single market over tariff-free access to the U.K.

Nor is it true that the British market is more important for the German economy than vice versa. Despite Germany’s sizeable trade surplus with Britain, both countries’ economies depend roughly equally on each other’s markets.

It is highly unlikely that the liberal FDP would use its precious bargaining chips with the CDU/CSU on the Brexit question. If the FDP takes a stance on Europe to set itself apart in coalition talks, it will do so on eurozone issues.

The party is strongly opposed to the integrationist plans of French President Emmanuel Macron, as is a sizeable chunk of the German population. Its young leader, Christian Lindner, is far more likely to focus on pushing through its vision for European reform than stick his neck out for the Brits.

Yes, Germany is the largest and most powerful country in Europe, and yes, perhaps it could push through a softer stance on Brexit if it wanted to. But David Davis was wrong to suggest before the Brexit referendum that if the U.K. voted to leave, it would negotiate a deal with Berlin, not Brussels.

EU policy is not determined by Germany alone, nor could it be. Neutralizing the potential for German dominance by creating common European institutions was one of the EU’s main founding goals.

An EU that follows a solely German agenda would be unappealing to its members and harmful to Germany’s national interest in the long run. Berlin knows that.

The eurozone and refugee crisis have already pushed Germany into a leadership role it was reluctant to take and undermined the EU’s appeal in some countries.

Berlin will be reluctant to put itself once again ahead of the rest of the pack. Indeed, even if the next German government has a notably softer view on Brexit than other countries, it would not be in its interest to strong-arm the rest of the EU into following its lead.

However you look at it, the German election will have only a minor effect on the Britain’s divorce talks. Brexiteers would be well advised to focus on preparing their public for the hard political choices to come rather than hoping for a new Merkel government to come to their rescue.

Such a belief — popular among British Conservatives — was false when David Cameron tried to renegotiate Britain’s EU membership, and it is false now.

Christian Odendahl is chief economist and Berlin representative at the Centre for European Reform.