From the inception of the European Union, a Germany driven by war-guilt has been the motor driving integration. Ashamed and apologetic of its Nazi past, for Germany the EU has been the vehicle through which it has sought to regain legitimacy. EU membership has allowed it to act on the European and world stages without setting off alarm bells and it has thus unsurprisingly been the most ardent supporter of the European project.
Support has often translated into financial assistance. For decades whenever the EU found itself in need, it was Germany that reached for the cheque book. The German role in both the development of the eurozone, the group of 16 countries that share the euro as a common currency, as well as in European expansion (to include several eastern European states) has been crucial.
But with a new generation - the 89rs whose identities were shaped by the tearing down of the Berlin Wall rather than the atrocities of World War-II – reaching adulthood, the “normalization” of Germany has continued apace. Over the last decade, first with Gerhard Schroder at the helm and now Angela Merkel, the signals from Germany indicate that it is no longer willing to engage in public acts of self-denial in exchange for legitimacy.
But a more confident, assertive Germany acting on its own perceived national rather than European interests has serious implications for the future of the EU. As Germany’s need for the EU wanes, so has its support for the success of the European project.
Last summer Germany’s constitutional court ruled that the EU lacked the democratic legitimacy to push European integration any further, a volte face from the country’s earlier lubricating role in expansion.
The Greek debt crisis has now placed a spotlight on Europe’s strongest economy and the picture from an EU perspective is worrying. Rather than come out in support of a bail out for flailing Greece, Germany is fighting to delay financial assistance. It is also insisting on the involvement of the International Monetary Fund, a move that Brussels is keen to avoid believing that IMF intervention would send out a negative message about the EU’s ability to set its own house in order.
All reports indicate that the idea of giving aid to Greece is deeply unpopular among Germans, who are loathe to spend their hard-earned taxes to save an undeserving foreign government, and moreover are no longer afraid to publicly say so.
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Germany has made some hard choices in recent years to attain its preeminent economic position within Europe, introducing substantial reforms to the labour market and welfare systems. The country has held down real wages with the result that despite the recession, unemployment is lower today than it was a few years ago. It has emerged as Europe’s largest exporter by far and as a share of GDP its current account surplus will likely be larger than China’s this year.
Germany believes that its muscular economy has been achieved by its willingness to suffer the pain of opening up labor markets and controlling costs, something other European economies like France have proved unable and unwilling to do.
As a result, Germany has emerged as not only confident enough to insist on the supremacy of its national prerogative in taking decisions, regardless of their wider European implications, but even to assert that the solution to Europe’s woes are a Germanisation of the region.
What Germany is saying in essence is that all the countries in the eurozone need to sharply cut back on fiscal deficits, reduce unit labour costs and increase their exports- in short recast themselves in Germany’s image.
But many analysts in Europe counter these claims, asserting that Germany is failing to recognize its own role in the problem. The argument is made that much of the recent German economic success has been at the expense of its European eurozone partners.
Almost half of Germany’s exports are to other eurozone member states who have been unable to resort to currency devaluation as a means of countering German competitiveness.
The charge is that Germany’s huge trade surplus has been enabled by the very deficits that Berlin is now pointing to as the root cause of Europe’s brewing economic crises.
Much as China with its large trade surplus is constantly harangued by its debtor countries to adjust its economy through higher consumption and less saving, Germany now finds itself fending off similar demands. And like China, it is reluctant to do so, insisting the problems lie with those who consume beyond their means rather than with those who save.
But were the euro to collapse or even merely loose some of its luster, German interests will be hurt along with those of the eurozone as a whole. And a weakened EU in general will only mean a more muted voice for Germany on the global stage.
Regardless, that Germany’s sense of “duty” to Europe appears to be weakening is clear. For Brussels the challenge of accommodating and adjusting to this potentially destabilizing development lies ahead.