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Germany should face the German question

Sunday 19 May 2013

By Philip Stephens

Berlin must show willing to carry the responsibilities of power

You might think that an enfeebled France would engender quiet satisfaction in Berlin. François Hollande’s domestic travails, after all, eliminate any challenge to Germany’s economic prescriptions. The tangled politics of Europe and the eurozone, though, are more complicated than this. French weakness is also Germany’s problem.

True, you can catch a hint of condescension in the way German politicians talk about Mr Hollande’s predicament. Thirty years ago, you hear them say, François Mitterrand squandered two years in a vain attempt to buck economic orthodoxy. His successor had surely learnt something from the experience?

The same officials, however, acknowledge that France’s troubles are deeply discomfiting for Berlin. Angela Merkel needs the Franco-German motor – or at least the appearance of this fabled engine of European integration. A weak France leaves Germany exposed as the overmighty villain. It casts Berlin as the hegemon. Anyone with a slight acquaintance with European history knows there is no upside in this role for the German chancellor.

Europe has been in the grip of Germanophobia. In Greece and Cyprus protesters wave banners emblazoned with swastikas. Ms Merkel is drawn with Hitler’s moustache. Demonstrators in Spain and Portugal rail against the austerity imposed by a new “reich”. In Paris, resentment simmers at the loss of France’s leadership role – never mind that an equal partnership with Berlin has for long owed more to nostalgia than reality.

The harsh conditions imposed on Cyprus in return for its bailout were widely seen as representing a diktat from Berlin. The truth was more nuanced. The International Monetary Fund set the basic terms and Cyprus was friendless. The finance minister of another troubled state told me that not a southern European soul took the side of Nicosia. Why should those with financial problems of their own volunteer to bail out Russian depositors?

German power does not flow from the euro. German weight and geography vexed the continent even before the principalities of the Holy Roman Empire were soldered together by Otto von Bismarck. Unification, and then reunification, turned the German question – how to balance a nation too big for its neighbourhood – into the abiding dilemma of European geopolitics.

The irony is that a single currency was supposed to restore the balance of power. The euro was not a German project. Quite the reverse. German voters wanted to hold on to their currency. It was pressed by those, led by France, who wanted to break the D-Mark zone. I recall a conversation with a Dutch central banker who cheerfully admitted his job during the 1980s was to watch the Bundesbank and then follow suit. The euro was the price Helmut Kohl paid to Mitterrand to win his blessing for reunification.

The 2008 crash did not start in the eurozone. Much contemporary comment seems to have forgotten that the crisis began with a global liquidity glut, uncontrolled credit expansion, toxic debt instruments and greedy bankers. The epicentre was the US. Sure, monetary union gave Europe’s peripheral economies cover for the credit and property booms that later laid them low. If it was all driven by the euro, however, why is Britain’s economy in such a mess?

Such corrections to the historical record are scant consolation for Ms Merkel. When the Cypriot finance minister says, as Haris Georgiades did in an interview with the Financial Times, that the island was author of its own misfortunes, it is downpage news. The crisis has thrown German economic power into the sharpest possible relief. It is much simpler for those suffering from austerity (and for many self-serving) to see the euro as a sinister German plot.

The progressive integration of the German economy with those of former communist neighbours in the east is beginning to play to the same conspiracy theory. Some hear distant echoes of the imperialist ambitions of the German politician Friedrich Neumann, who called in 1915 for a Berlin-dominated “Mitteleuropa”.

For all this, criticism of Berlin is shot through with ambivalence. In the earlier stages of the euro crisis, the gripe was about an absence of leadership. Radoslaw Sikorski, the Polish foreign minister, said he feared German inactivity more than German might. That is quite something for a Pole. Many of those who stir up fears about Germany’s supposed ambitions complain in the next breath that Berlin prefers the role of a greater Switzerland to that of a big player in European defence.

Today’s Germany has neither hegemonic nor territorial ambitions, even if the late and lately beatified Margaret Thatcher once warned that reunification would see the Wehrmacht march into Pomerania, Silesia and East Prussia. But the fact of German power cannot be denied – least of all by its own leaders.

Power carries responsibilities. The criticism of Germany that sticks is about the self-righteous assumption that all will be well only when feckless Greeks, Spanish, Italians and the rest behave like Germans. Ms Merkel must accept, if only after this year’s election, that adjustment has to be symmetrical. For others to cut their deficits, Germany must shed some of its surplus.

Beyond this, if Berlin is not to be accused of building a German Europe, it has to develop a narrative about its willingness to carry the responsibilities of a European Germany. The return of the German question and the balance of power to Europe cannot be banished as facts of geopolitics. They can be managed – but only if Germany shows itself willing to address them.

philip.stephens@ft.com

Copyright The Financial Times Limited 2013.

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