The Looming Post-Merkel Era

Germany’s Development Cooperation and Prospects forGerman-Japanese Cooperation
Izumi Ohno
Professor, National Graduate Institute for Policy Studies (GRIPS)
September 2021
German Chancellor Angela Merkel will retire from politics this fall after serving four terms
totaling 16 years since November 2005. During her tenure, Germany became the world’s
second-largest donor of official development assistance (ODA), boosting its presence as aleading provider of development cooperation. Given the changing environment forinternational development, including the “New Cold War between the U.S. and China,” Izumi
Ohno, an editorialist for this journal, summarizes how Germany’s development cooperation
has evolved under the Merkel administration and discusses future prospects for cooperation
between Germany and Japan.

Firmly maintaining the BMZ SystemIn 2016, Germany became the world’s second-largest ODA donor. This represents asignificant advance from 2005 when Merkel took office as chancellor. In that year, Germany
ranked fifth after the U.S., Japan, France, and the U.K. Germany’s ODA/GNI ratio exceeded
0.7% in 2020 (grant equivalent), reflecting Chancellor Merkel’s emphasis on multilateralism
in such areas as global health, climate change, African development, and acceptance ofrefugees in Germany (the first year’s budget was appropriated as ODA).
Since 1961, the Federal Ministry for Economic Cooperation and Development (BMZ) has
assumed overall responsibility for Germany’s development cooperation policy and budget
coordination. Implementing organizations include the German Corporation for International
Cooperation (GIZ) for technical cooperation; the German Reconstruction FinanceCorporation (KfW) and its subsidiary German Investment and Development Corporation(DEG) for financial cooperation; the German Foundation for Economic Development andVocational Training (SEQUA) and chambers of commerce and industry for vocational
training; NGOs; and research institutes (including political party think tanks).
Merkel, head of the centrist conservative Christian Democratic Union (CDU), has served
four terms as chancellor by skillfully forming a series of coalitions with other political parties.
During her tenure, politicians from coalition parties have been appointed as the Minister ofthe BMZ=see table. In recent years, aid implementing agencies in the U.K., Australia, andCanada have been merged with their respective foreign ministries one after another, but
Germany has maintained its BMZ system.
While the years of her tenure have seen a series of events that had significant impacts on
international development, such as the financial crisis, the Arab Spring, the refugee crisis,
and the new coronavirus pandemic, the author believes that she has consistently
demonstrated leadership, keeping in mind both multilateralism and Germany’s nationalinterests. The “social market economy” is a uniquely German concept that emphasizes freecompetition and market economy, while at the same time taking into account social fairnessand ethics. Merkel’s CDU, in particular, has long advocated this philosophy as a model for
postwar reconstruction. Differentiating itself from the Anglo-Saxon way in developmentcooperation, the German government has emphasized employment and social order,
supporting vocational training and empowerment of chambers of commerce and industry.
Sustainable development, including climate change, is where German companies havetechnological advantages. This is also a priority area for development cooperation.

Multilateralism and Proactive Contribution to the G20A typical example of Chancellor Merkel’s multilateralism is her strong commitment to theG20. Germany has stepped up its involvement in the G20 since its presidency of theHamburg G20 summit in 2017. On many occasions over the past few years when thechancellor gave addresses at global think-tank meetings, the author was impressed by how
she responded in her own words to all sorts of questions including fiscal issues, climatechange, World Trade Organization (WTO) reform and relations with China. At this year’s
meeting (chaired by Italy), the chancellor pointed out that the G20 countries account for 80%of the world’s greenhouse gas emissions, saying that “International cooperation is vital forsolving global issues, and even though we have different economic systems from that ofChina, we should cooperate with Beijing in areas of global public goods such as climatechange and pandemics.”
The strategic use of think tanks in Germany is also proof of her emphasis on the G20.
Since 2007, the German Development Institute (DIE) has been running the BMZ-fundedManaging Global Governance Program, intended to invite young researchers from emerging
countries (Brazil, China, India, Indonesia, Mexico, and South Africa) to participate in training
opportunities at national and EU institutions to share with them such fundamental values assustainability. In addition, since 2017, the DIE has served as the secretariat for establishing
networks with African research institutions to assist advocacy activities for African
development that are directed toward the G20.
Striking a Balance between the U.S. and China
Germany is the EU member state that has the closest ties with China in terms of both tradeand direct investment. German companies see business opportunities in smart
manufacturing that combines “Made in China 2025” and “German Industry 4.0.” Germany isa founding member of the Asian Infrastructure Investment Bank (AIIB) that was establishedat the end of 2015, and the bank’s vice president in charge of policy and strategy is assumed
by a German (former World Bank Vice President).
With intensifying U.S.-China tensions in recent years, the German government formulated
in September 2020 its “Policy guidelines for the Indo-Pacific region” that signaled its
commitment to diversified partnerships. The EU-China comprehensive investmentagreement, reached in principle in December 2020, appears to have been facilitated by
Chancellor Merkel’s behind-the-scenes involvement. Merkel probably intended to urge China
to abide by international rules while maintaining economic relations. At the G7 summit heldin June 2021 in Cornwall, U.K., Chancellor Merkel is said to have expressed concern abouthuman rights issues in China, while stating that the large-scale infrastructure investment plan
agreed upon was not meant to be hostile to China’s “One Belt, One Road” initiative.
Prospects for Japan-Germany Cooperation Based on Common Values
What will be the future course of Germany’s development cooperation? Reportedly, there
are chances that the Greens will make a significant advance, but whichever party comes topower (unless a far-right government is formed), the foundation laid down during Merkel’s
era is likely to remain largely intact. Response to climate change and infectious diseases isof universal importance. Sustainability, already set as a core policy agenda, will be further
promoted if the Green Party joins the next administration. There might be a slight difference
between whether the upcoming administration will place more emphasis on fiscal disciplineor seek a bigger government. Nevertheless, no major change is foreseen in the basic
direction of German development cooperation policy, including African development andcommitment to the G20.
Furthermore, at the Industrial Development Board (highest policymaking organ) of theUnited Nations Industrial Development Organization (UNIDO) held in July 2021, Gerd Müller,
currently BMZ Minister, was selected to be the new Director-General of UNIDO. Müller will
succeed LI Yong of China, who has led UNIDO as Director-General since 2013. Müller has
said that he intends to seek a fair globalization, a sustainable industrial development as well
as job creation and perspectives for a prosperous future for developing countries. His
nomination for UNIDO’s top position suggests Germany’s strong resolve to take on globalleadership.
Then comes the question of what kind of partnership Japan should build with Germany.
The above-mentioned emphasis on Indo-Pacific cooperation by Germany is a welcome movefor Japan, which has been advocating a “Free and Open Indo-Pacific” (FOIP), as Berlin seeksdiversified partnerships in the region in a wide range of fields. While competing as rivals insuch industries as automotive and factory automation, the two countries are like-minded
partners that share such fundamental values as quality growth, human rights, andenvironmental conservation.
Therefore, building on common strengths and shared values, it is meaningful for Japan
and Germany to take initiatives in industrial development and human resource development
for developing countries, as well as in the protection of personal information in digitaltechnology development and standards formulation. These are key issues in African
development, as well.
Furthermore, Japan and Germany have many similarities with their approaches todevelopment cooperation, including the combined use of loans and technical cooperation,emphasis on the real economy, and field-oriented activities. In this sense, enhanced
partnership between the two countries in African development can also serve as a key toincreasing the strategic value of the FOIP.

＊ Chancellor Angela Merkel (term of office: Nov. 22, 2005–present), Christian
Democratic Union (CDU)＊ Successive ministers of the Federal Ministry for Economic Cooperation andDevelopment (BMZ)
Minister Heidemarie Wieczorek-Zeul(term of office: 1988–2009)

Social Democratic Party of Germany (SPD)Minister Dirk Niebel(term of office: 2009–2013)

Free Democratic Party (FDP)

Minister Gerd Müller
(term of office: 2013–present)

Christian Social Union (CSU)

Izumi Ohno is Professor of the National Graduate Institute for
Policy Studies (GRIPS). She served as Director of the Japan I
nternational Cooperation Agency (JICA) Ogata Sadako Resea
rch Institute for Peace and Development from October 2018 toSeptember 2020. Prior to joining GRIPS, she worked at JICA,
the World Bank, and the Japan Bank for International Cooper
ation (JBIC).

[Translated from the author’s article in Japanese, which appeared in The International Development
Journal, September 2021, No. 777, pp. 8-9}