Germany’s elections last autumn enjoyed an unprecedented degree of international attention; CNN plastered posters around Berlin that read “Sixty million voters but six and a half billion spectators”.

The world was watching because so much was at stake. In the US, the question was whether Germany under a conservative CDU-led government headed by Angela Merkel would again be America’s transatlantic junior partner. In France, the issue was whether a political shift in Germany would mean a less intimate Franco-German relationship. Some of the smaller EU countries were hoping that their own importance would grow in the eyes of a new German government, especially the Baltic countries who had felt brushed aside by Germany’s egocentric policy towards Russia, especially in the energy sector. Amongst other political grievances in Germany’s eastern neighbours, Poland was the loudest in seeking to overcome what it sees as deeper political tensions. As German voters went to the polls, there seemed an overwhelming consensus across Europe that the EU’s largest economy, which is also the No.3 worldwide, should once again be the driving force behind reviving both the European project and transatlantic relations.

Put simply, the main questions that hung over the elections were: Would Germany shift back to its formerly close ties with the US? Would it have the energy to create a new dynamic in European integration after the failure of the French and Dutch referendums? What would it do with the Turkish bid to join the EU now membership negotiations have started? And what kind of relationship would Berlin pursue with Russia?

The grand coalition that has been the outcome of the indecisive election has left the waiting world perplexed. Germany’s future foreign policy choices will probably now be much less spectacular that some had hoped. We’ll see more shadowy grey areas than we will U-turns, more continuity with the past than stark black-and-white choices. Perhaps we’ll also see a Germany that has even less energy now to devote to foreign policy.

So far, though, the CDU-SPD coalition agreement bringing together right and left respectively has sent out signals of the changes we can expect from Chancellor Merkel and her government. Although the coalition agreement is short and somewhat vague on foreign policy, with only some seven out of 192 pages dedicated to external markets, the key points include a clear commitment to improving relations with the United States. The decision not to appoint the SPD-affiliated former Secretary of State Dr. Klaus Scharioth as Germany’s new ambassador to the US was also a clear pointer to the changed policy line on transatlantic relations. Merkel will nevertheless need to be careful in her handling of this change of direction, as the German public remains strongly anti-Bush. That means we shouldn’t expect any drastic course alterations on such hot and heavy issues as Iraq or Iran.

The idea that the red line of a renewed transatlantic relationship will run through German policymaking is underpinned by a strong re-orientation towards NATO, and by the new government’s belief that the alliance is of key strategic importance to Germany’s security. This could well leave the European Union’s Common Foreign and Security Policy (CFSP) and its European Security and Defence Policy (ESDP) somewhat in the shadows. The coalition agreement spells out that NATO will remain the primordial and strongest security framework for Germany, a sentence that contrasts significantly with the wording of the annual “Wehrkunde” speech that former Chancellor Gerhard Schröder made in February last year at the security conference in Munich and that caused such massive irritation in the US. This was gently counterbalanced by the appointment of Christoph Heusgen, a specialist on European security and defence policy and former advisor to Javier Solana, as Chancellor Merkel’s chief foreign policy advisor.

Despite this focus on the US, France has not been neglected as some feared. With the aim of rebalancing the relationship between Berlin and Paris (and Washington), the coalition agreement underlined both the strategic importance and the irreplaceable character of Franco-German cooperation within the European Union. But the manner in which the coalition agreement approached the Franco-German question does not appear to some analysts to hold water, and the warm words of past years are missing from the text. The only specific item to be found in the agreement is Germany’s promise to stick to the Franco-German October 2002 agreement on European agriculture, which pledged basically that Germany would not lobby for further reductions in CAP agricultural spending during the negotiation of the EU’s 2007-13 budget. This may sound nice to French ears, but it was almost certainly an unwise limitation of Germany’s own room for manoeuvre in the EU budget talks, and was in any case not necessarily the right policy to adopt in the broader European perspective.

The only other countries explicitly mentioned in the coalition agreement as well as the US and France are Poland, Russia and Israel; three states that Germany has never before had special relations with.

There is much work to be done on improving Germany’s relationship with Poland and Merkel is well aware of it. Not only is Poland in a fragile political state following elections in September and October, but also the bilateral relationship has of late been poisoned by disagreements over the “Blue pipeline” deal with Russia, and by repeated outbreaks of tension over World War II-related issues. German plans for a centre for expelled ethnic Germans, and Polish talk of demanding reparations for the wartime destruction of Warsaw have done untold damage to the emotional ties between the two countries. The populist sentiment that Poland is experiencing after the recent elections seems likely to aggravate these frictions and complicate any political moves to initiate a healing process.

Yet just such a process could be achieved through a rehabilitation of transatlantic relations. In any case the Franco-German partnership needs to become less dysfunctional and less suspicious towards the east if Germany is to act as bridge-builder towards the east. Poland would be the cornerstone of such a policy, as its involvement would be an essential first step towards improving Berlin’s relations with the smaller countries of Eastern and Central Europe, and of course with the Baltic states.

This so-called “Weimarer Triangle” needs to be re-animated, and that appears to be a priority for the new government. What is much less clear is whether there is any appetite for common proposals on EU policy issues. If one examines the EU’s budget issue, where Poland’s position is to hide behind the petrified French position blocking CAP reform, the situation truly cannot suit Germany’s own interests. Mutual suspicions and fears are high, with some French policymakers concerned over Chancellor Merkel’s seemingly unwavering commitment to improved relations with the UK and Poland. Merkel is apparently trying to reach out in a number of directions at the same time, bringing together the central players in Europe and positioning Germany as the great tie between them. Her ambition must be to bring France on board too, as this would be the only way to avoid marginalising the Franco-German engine in Europe.

Germany needs a new and active “Ostpolitik”. Its relations with Poland as well as the Baltic states are under strain, and there is room for German leadership in eastern Europe if only Germany will exert it. But two conditions have to be met: Germany must overhaul its relations with the US if it is no longer to be deemed “suspicious” by the eastern countries of “New Europe”, and it must take the interests of smaller states into greater consideration. There is above all a need to “Europeanize” German policies towards Russia; relations with Russia will remain key for Germany, but hopefully under Merkel they will become less emotional.

Germany’s approach to the future course of European integration remains an ambivalent area of the coalition agreement. It is especially important here to consider not only what is said in the foreign policy chapter but the deeper meaning behind the language of the text. The agreement sticks to giving Germany’s support to the EU’s constitutional treaty; there are also rumours of a pro-active German initiative to re-launch the institutional debate when it takes over the EU presidency in the first half of 2007. But there are no specific proposals outlining how this could be achieved, and in any event German ambitions regarding European policymaking remain fairly modest. Beyond its commitment to making the Union more transparent, efficient and democratic, the wording on European integration sounds significantly less communautaire than in the days of Helmut Kohl’s CDU government. There are also some strong German accents in the text. They range from strengthening the principle of subsidiarity to giving an increased role to the Federal Republic’s two national chambers – the Bundestag and Bundesrat – in the EU decision-making process. Promoting the German language and a better defence of German interests within the European institutions are two old sentences with a slightly new spin. It also suggests the European Council should use more frequently its right to invite the Commission to withdraw legislative initiatives when they are deemed unnecessary.

More worrying are the chapters covering domestic economic development where there are dozens of negative references to European regulation. “Unfair” tax competition, referring essentially to the eastern countries, is one point of criticism, and another is the excessive influence certain EU regulations are said have on regional policies. There are also notions of labour market protection that relate to bringing the 10 new EU member states into the Schengen treaty by 2007. All in all, some passages look suspiciously like unravelling tendencies rather than strategies aimed at pushing EU coordination policies forward.

What is missing is a clear geo-strategic picture of the EU, and an outline of what needs to be done in the coming years, especially with regard to enlargement. The mention of Romanian and Bulgarian accession as well as the perspective of the Balkan countries joining is hesitantly touched on rather than warmly embraced. It is immediately followed by an announcement that the transition period of seven years must be maintained so as to protect the German labour market from social dumping. The passage on Turkey illustrates the art of diplomatic language; on the one hand, the text sticks to the EU Council of Ministers’ October 3 agreement on starting accession talks with Turkey; but on the other it highlights the fact that there is no “automatic green light” for full membership and that, either if Turkey is not able to fully comply with the EU acquis, including the liberty of religious freedom, or if the EU happens for one reason or another to be unable to enlarge at that time, Turkey should be offered a privileged partnership. At no point does the German government’s text read like a document with a clear vision of Europe on its own geo-strategic goals.

This may contrast sharply with the new government’s aim of improving transatlantic relations, an area where the United States now has high expectations of Europe. What the US fears most is an inward-looking Europe that will have neither the energy nor the resources to be a strong partner for America. The US has its own geo-strategic interests in Turkey, the Balkans, Ukraine, the Black Sea and the Caucasus region, and sees an urgent need to agree a common transatlantic strategy towards these countries. But it may be precisely on these neighbourhood policies and on the EU’s enlargement agenda that Germany proves unable to deliver what the US most wants. What Washington least wants is a timid Germany that is sucked down by its own domestic economic reform agenda, and therefore sees further heightened commitments in the European near-abroad as unattainable. German-American relations may thus be headed towards a post-honeymoon depression in which Germany will fail to substantially upgrade its policy towards the US and deliver on content. The challenge facing Chancellor Merkel is that of bringing together the two essential pillars of German foreign policy – a courageous approach to European integration that is built into a strong transatlantic relationship. To do so will cost a great deal of political energy and political capital.