India relations set to climb new heights as new coalition assumes charge in Germany

The ‘traffic light’ coalition of the SPD (red), FDP (yellow) and Greens in Germany has set out a 177-page coalition treaty. It is more elaborate and detailed than ever before. This is mainly because putting three disparate parties together in a common agenda is indeed a challenge. They call it an ‘innovative alliance’.

The detail in which the coalition treaty has gone indicates that the government would have to keep looking at it to ensure that what was agreed upon was not violated. The traffic light could have a start-stop governance style.

The SPD led by Chancellor Olaf Scholz provides continuity in government because they were the junior partners of the CDU in the last two governments of Angela Merkel. Scholz was himself the Vice Chancellor and Finance Minister in the last government. The FDP and the Greens have returned to power after a hiatus. They have more youthful and ambitious leaders and agendas. They represent the change in German politics for now.

Besides the coalition treaty, Chancellor Scholz’s maiden speech in the Bundestag also provides indications of the directions to be taken by the new government.

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Five salient points emerge from reading these documents. First, the coalition aims to focus on domestic issues particularly Covid management and economic recovery. Green ideas like an earlier withdrawal from coal energy, greater digitalization and infrastructure redevelopment are among the priorities. The Greens got a faster phase out of automobiles than the EU target of 2035. A higher minimum wage and other social issues which are important to SPD are covered. The FDP secured a deal not to raise taxes nor breach debt limits. The recognition that Germany is indeed an aggregation of civil society is mentioned in the coalition document.

Second, in order to maintain German policy, there is a clear desire to integrate it with the European Project. Thus, the EU will be extremely important for Germany even now. Already Chancellor Scholz and Foreign Minister Annalena Baerbock have visited Brussels early in their term. Germany will make an effort to bring its policies in line with the European Common Foreign and Security Policy and work towards the common goals of that policy.

On the economic side, ‘The EU’s Stability and Growth Pact … to ensure growth, maintain debt sustainability and provide for sustainable and climate-friendly investments’ is preferred. Thus, an alignment with Europe without any hint of Euro-skepticism is anticipated.

The third salient fact is that for Germany, the neighbourhood is extremely important. France, which will lead the EU in the first semester of 2022 will have elections in April 2022. The French-German management of the EU has in the past worked, but after Brexit it is now not easy for them to manage all the other members. The rise of the smaller members is noteworthy. Therefore, Paris has been the first port of call for the coalition leaders.

Poland which is having internal dissension regarding EU laws and a refugee problem with its neighbour Belarus is important to Germany as a neighbour. Italy and Austria follow the same pattern. While Germany has put in place a firm coalition, domestic political changes in their neighbours can cause them dismay since they would have to put extra energy into managing the relationships. It is likely that the German coalition would like to manage the neighbourhood, leaving larger EU management to Ursula Van der Lyn in Brussels.

The fourth significant point is the management of Russia and China. Both these countries challenge the Green emphasis on values and rules to determine international relations. At the same time, the SPD is aware that the relationship with both these powers is important for economic reasons.

China is a major trading partner of Germany. German companies have a say in the country’s China policy, even though the EU has declared China a systemic rival. Similarly, with Russia, there are strategic differences on how Russia views its periphery in Europe and challenges German values; but the gas pipeline and energy supplies from Russia are important for Germany. Once the Nord Stream II comes into operation, the geo-economics between Germany and Russia will alter. If Russia invades Ukraine and China does not reduce its aggressive intentions in Xinjiang, Hong Kong and the South China Sea, Germany would find it difficult to balance the approach it is carving.

Finally, though India and Germany are strategic partners the relationship is mainly a green one, dominated by metros, Namami Gange, green transmission lines, solar rooftop projects and the like. There is little strategic visibility in the relationship. The next round of the India-Germany inter-governmental consultations, which was established during Merkel’s time in 2011, is now due.

If well prepared, it will be a good occasion for the Indian and German leadership to exchange views on global matters and add a strategic, practical substance to the partnership.

The coalition document acknowledges India more than earlier such documents. India’s role in the global order is mentioned but the other aspects covered are essentially via the EU in Brussels. These include the FTA called the BTIA; the connectivity partnership and the Indo-Pacific policies. While Germany has its own Indo-Pacific guidelines, its policies will harmonise with the EU policies on it. These accord India importance, particularly in the economic field. What is now required are major projects which show strategic intent. Under the India-EU connectivity partnership these can be achieved by aggregating with the efforts of the EIB as well.

What role Germany can play to achieve the BTIA at an early date may well determine how much they are ready to energize the economic relationship with India, the way they have so far done with China.

Putting India on the coalition treaty is significant. What will matter is how that intent is strategically achieved.

The writer is a former Ambassador to Germany. Views expressed are personal.

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