Germany is not England: it should show more courage to save the euro

Germany is not England: it should show more courage to save the euro

The rebirth of Europe will rely upon Germany. Starting off in 1990 as humble freshman among post-national states, the country managed to claim a central role in the continent. Germany exploited the “good side” of the euro, introducing a commercial model that was capable of integrating with the new Asian commercial patterns, and facilitating its coordination with the economies of Northern Europe.

The latest successes of Germany celebrate its industrial personality: the economic engines of the South and the West are the diamond edge of the system. Yet, if Germany is the strongman of Europe, and Bavaria is the strongman of Germany, Berlin seems to be still in its happy teens: German continental politics is not at par with its industry. For need or interest, Germany shall start expressing a real political personality abroad soon.

The financial turmoil, the Middle-East revolts, the soon-to-come slowing down of Asia, the uncertainties in the US call for a broader role of Europe, and for the most successful state within. Germany should compromise between domestic and international interests.
The survey-led style of chancellor Angela Merkel does not seem to help towards this priority. Facing uncertain electoral variables, she opted to weigh pivotal political choices on popular perceptions. Such strategy led to the dramatic turn of approach about the nuclear issue in the last two years, from prolonging nuclear plants residual life, to anticipating step-out; and to an uncertain path in the management of education and labor reforms.

Survey sensibility nevertheless did not help avoiding heavy electoral losses in Baden-Württemberg and North Rhine-Westphalia, and is proving even worse in the international arena. Popular judgment on international matters is normally affected by short-sightedness, provincialism and fantasies of nationalist expression (other than “national-socialism” though). The choice of not intervening in Libya, abstaining from voting on UN resolution 1973 last March, is an epitome of the problem: more than realpolitik, surveys mattered. A pure sense of “German isolationism” emerged: as evidenced by Heinrich August Winkler on the last issue of IP, the journal of the German Council on Foreign Relations, “The subordination of long-term foreign-policy interests to short-term internal political considerations has damaged Germany’s international image”.

Somehow, Germany decided to calibrate its international approach to the great isolationists, rather than on the fathers of post-war Germany. Thomas Jefferson and Bill Clinton inspire Angela more than Konrad Adenauer and Ludwig Erhardt: Berlin believes to be an island, and that it can manage Europe’s problem as Castlereagh did with continental Europe after the collapse of the Napoleonic system.
Such hedonism also affects economic issues. In restructuring its industry to become the “export power-house” of Europe, Germany – for better or for worse – substituted its traditional Italian, French and Spanish suppliers with Chinese counterparts. Such move proved great for the trade: it helped achieve high quality production with an efficient cost structure. Yet, as the post-2008 German surge took off, no one followed suit. Germany grew by 3.6% in 2010, while France, Italy and Spain had to cope with mere 1.5%, 1.3% and -0.1% respectively.

The isolationism virus seems to have affected also Germany’s model towards the PIGS rescue plan. Surveys are a dead-end here: if Merkel hints to be available to offer aid, she must suffer the infamous “Das Bild” gigantic headlines about “Angela wanting to pay off retirement to those lazy Greeks”. If signals that she wants to keep her purse shut, FT Deutschland enjoys taking a few swings. Actually, there is no way-out, and Angela would merrily have somebody else suffering the (domestic) political burden of saving the PIGS from themselves.

Nonetheless, the German political leadership has the painful task of convincing people that, if Berlin helps Athens, this is for Berlin’s sake. More than surveys, GDP now matters: in 2011 Germany will grow 3.1%, yet in 2012 the impetus will be reduced to a mere 1.5%, with a decisive imbalance towards exports. If European demand falls, Berlin falls.

This is a duty and an opportunity for Germany: the country is given the responsibility of keeping the continent together. Europe may collapse, or political unity may commence now. It is harsh, yet true: monetary unions are alliances among equals (although one prints the money), whereas federal unions normally result from the dominance of one cultural model above the others. This is not to say that the French and the Italians will disappear, but rather that their chances of economic success and affluence will rely upon the capability of coordinating with Berlin.

All in all, in large federal states not all territories are prone to exports: there is space for different structures. We cannot complain if all of Europe’s economies do not enjoy large trade surpluses: it is all right if Germany exports for all (of for the most), and the others enjoy being carried by it. Nonetheless, Germany should focus on sustaining its domestic demand, as much as the domestic demand of its closest geographical partners. Germany is not an island, and mocking England will not bring us far. 

*Stefano Casertano is professor of International Politics at Potsdam University in Berlin