A Controversial Paragon :Europe Shudders at Germany’s New-Found Power

Germany, admired and envied for its economic success, has become a model for Europe in the debt crisis. The Continent is becoming more German as countries get serious about fiscal discipline. But the nation’s new dominance is also stirring resentment, and old anti-German sentiments are returning. By SPIEGEL Staff

A French tricolor fluttering on a video screen provides the grand backdrop for Nicolas Sarkozy, who is about to take to the stage to talk sabout the euro crisis. The flag is huge, almost as if the organizers were attempting to allay any doubts that the speaker really is the French president rather than a mere emissary of German Chancellor Angela Merkel.

When Sarkozy appeared in front of his supporters in Toulon last Thursday, he spoke of the “fear that France could lose control of its own destiny.” His dramatic words were an appeal to French national pride, but his response to those fears was anything other than nationalist: “France and Germany have decided to unite their fate,” he announced. So-called “convergence” — greater alignment of the two countries — was the only way out of the crisis. There is no doubt which country wants to align itself with which. Later that day, one of his advisers said Sarkozy wanted “supply-oriented economic policies and debt reduction modeled on those of Gerhard Schröder,” Merkel’s predecessor. In his speech, the president even announced a “jobs summit” between employers and unions just like the one initiated by then-Chancellor Schröder six years ago.

The very next day the French daily newspaper Libération ran an article under the headline “A President Modeled on the Germans,” which claimed “If you closed your eyes, you could hear Merkel speaking” during Sarkozy’s speech.

During a televised interview back in early November, Sarkozy uttered almost unimaginable words for a French president: “All my efforts are directed towards adapting France to a system that works. The German system.”

Speaking in Toulon, Sarkozy condemned the long-established French policy of buying economic growth by simply borrowing more. He said France could only overcome the current crisis through “work, effort, and controlled spending,” objectives that sounded eerily German. Fortunately the tricolor was still fluttering, and the event closed with a rendition of the Marseillaise. In these days of crisis in Europe, the “German model” has become something of a magic formula. Like it or not, the dusty, dry Germans now seem to hold the key to European salvation.

From ’Sick Man of Europe’ to Paragon

How has it come to this? For a long time, Germany wasn’t regarded as a model state. The nation has been plagued by guilt since World War II and by economic stagnation since the late 1980s. The Germans saw themselves surrounded by neighbors who seemed to be doing things better: The Scandinavians had their welfare state, the French their family-friendly policies, the Brits had their service industry, and countries to the east had lower taxes. As recently as 2002 Newsweek dubbed Germany “the sick man of Europe,” calling it a country hit by economic strife and unsure about its place in the world.

And yet suddenly, Germany is being held up as a shining example for everyone else. It is almost the only country in the Eurozone that the markets still trust. It is almost the only one that has a history of carrying out far-reaching structural reforms. Almost overnight, Germany has become the de facto center of Europe.

After the war, the French and the British sought to bind Germany into a united Europe to prevent it from ever becoming the dominant force in Europe again. But now its economic strength has made it the region’s natural leader for the first time since 1945, although neither the Germans nor the continent’s other citizens seem comfortable with this state of affairs yet.

As a result, Germany’s dominance in Europe has brought forth a paradox. As admiration for its economic successes has grown, so too has increasing criticism of the way it is handling its role as the leading force. Not only does it appear to have done everything right on its own. It is also the country that — still — refuses to consider saving the 17-member eurozone by printing money or issuing eurobonds. It is also forcing others to adopt its cost-cutting recipes.

In this, it is becoming clear that Angela Merkel isn’t the only person who wants to reshape Europe in Germany’s image. The chancellor has become less inhibited about expressing her determination to revamp Europe — but many countries have already decided for themselves that Europe must follow Germany’s example if the common currency is to be saved.

Europe Becoming More German

Europe’s Germanization can be seen all over the continent. In Italy, for example, the popular playboy Silvio Berlusconi has been replaced by a government of bland technocrats who appear to have consciously distanced themselves from any hint of being laissez-faire or Mediterranean. The new prime minister, Mario Monti, has been talking about introducing tough austerity measures ever since he took office a month ago. Monti himself is so down-to-earth and conservative that his fellow countrymen call him “more German than the Germans.” Even the Italian media — for instance the Sunday evening TV program Report — has taken to listing everything the Germans do better: Their waste-recycling systems, their competitiveness and their education system.

In Spain, the outgoing Socialist Premier José Luis Rodriguez Zapatero has cut public-sector salaries and welfare payments. But just like German labor-market reformer Gerhard Schröder before him, Zapatero has been voted out of office. His successor, Mariano Rajoy, has already pledged to bring the country’s national debt down to 4.4 percent of GDP in 2012, exactly as Merkel has demanded.

Greece, which is demanding drastic belt-tightening from its citizens, is the most reluctant to Germanize, not least because this would be more painful than in any other Eurozone country. Since November, a 30-man EU team known as the Task Force and headed by a German, Horst Reichenbach, has been teaching Greek civil servants how to survey land, run real estate registers and levy property tax. That hasn’t exactly reduced the animosity the local population feels towards Germans.

Nevertheless, politicians and the media in virtually every European country have for months been discussing German idiosyncrasies like its dual (theory- and practice-based) vocational training system and the social partnership between employers and unions, both of which have helped the country attain its current leadership. Everyone is keen to copy the best elements of the German system.

French Angst

Nowhere is Germany as threatening to the national psyche as in France. For weeks now, the main focus of public debate has been why the Germans are doing so well and the French so badly. Day after day, the newspapers almost obsessively compare the two countries. “The German Europe” was the headline of a recent article in business magazine Challenges; an expression of wonder and dread alike.

When French auto manufacturing group PSA, whose brands include Peugeot and Citroen, announced plans to cut 6,000 jobs a month ago, viewers of the evening news in France were treated to a graphic that dealt another blow to their national pride: This showed that PSA’s production numbers have stagnated over the last 10 years while those of German competitor Volkswagen have risen sharply.

Economist Jean Peyrelevade recently published a book (’France: A State in Crisis’) on this very issue. The book is essentially an instruction manual detailing how France could become more like Germany. Peyrelevade’s conclusion is devastating: German companies are financially strong, French ones deeply indebted. Germany has been more rigorous in raising the retirement age than neighboring France, whose citizens have a mandated 35-hour work week. German salaries and wages have risen at a lower rate than productivity, while the opposite is true in France. “We in France have increased our national debt time and time again because the Germans enabled us to get such cheap loans,” Peyrelevade says. “Germany has therefore bankrolled our demise.”

France’s national debt now stands at 85 percent of GDP, and the country is poised to lose its triple-A credit rating. This is another reason why Sarkozy is at pains to chain his country to Germany, its historic rival. In the past, France was always proud of its combination of Mediterranean lifestyle and north European economic performance. Now Sarkozy warns of the danger of “being dragged down by countries in the south.”

A year-and-a-half ago, Christine Lagarde who was French finance minister at the time, criticized German wage-dumping practices. Today Ms. Lagarde heads the International Monetary Fund, and nobody wants to hear such talk. It has become fashionable to admire the German model. Centrist presidential candidate François Bayrou has written a book in which he demands Schröderesque reforms, and even Socialist Party candidate François Hollande praises attempts to cut non-wage costs.

But are the French and other Europeans really prepared to implement tough social reforms, extend their working week and make other changes to their pension system? Do they really know what it means for every single person if their state is forbidden from spending more than it collects?

Admired and Vilified

Throughout Europe, wherever austerity measures have been either announced or already implemented, Germany has been or is being blamed for it. After all, it is the Germans who are demanding these reforms. Very quickly, praise is being replaced by criticism that Chancellor Merkel is meddling in the domestic policies of other countries.

This is the flipside of Germany’s dominance in Europe. The right-wing Spanish daily newspaper ABC recently wrote about the alleged “Germanization of Europe,” and a journalist commented that Germany was in the process of “winning World War III: the money war.” Many in Spain were appalled by the wording of a telegram the German chancellor sent to Mariano Rajoy to congratulate him on his election victory.

“Dear Mr. Rajoy,” she had written in the message, which the left-leaning newspaper Publico quoted from both in German and in translation. Now that he had been given had a clear mandate, Merkel said, Rajoy should “rapidly” take the necessary steps. If, as seems likely, the text was leaked by someone close to the prime minister-designate, it was a shrewd move indeed, for the Spanish now have someone to blame for their suffering.

And so the specter of the ugly German has raised its head once more. In Greece, swastikas made out of the stars of the European Union flag have long been a popular motif at demonstrations, not to mention pictures of the German chancellor in a kind of SS uniform.

’Fourth Reich’

Georgios Trangas, one of Greece’s best-known journalists, said his country had become “a German protectorate of the Fourth Reich in southern Europe.” Anti-German sentiments are a key ingredient of his nightly talk show. He currently wishes his viewers a “Merry German Christmas” as marching music plays in the background.

Meanwhile Italian television is depicting Chancellor Merkel wearing a Kaiser-era spiked helmet, and even prominent politicians such as Frenchman Arnaud Montebourg, the rising star of the left wing of the French Socialist Party, no longer have any qualms about ridiculing the “German model” with all the demagogical tools at their disposal: “The issue of German nationalism is returning through the Bismarckian policies championed by Mrs. Merkel,” Montebourg said last week. He said France must stand up to Germany and defend its values against what he called “German dictates.”

Montebourg’s was heavily criticized for his words, even from within his own party, but the closer Sarkozy aligns himself with Merkel, the louder people in France can be expected to voice criticism of Germany.

The government in Berlin has been helpless in the face of such animosity from abroad. “It really is dramatic that all the positive capital we amassed over the decades is being destroyed in a matter of months,” a high-ranking government official said. There wasn’t much Germany could do about it, he added. Germany’s ambassadors throughout the EU have been instructed to spell out the German position more clearly and to nurture contacts with the foreign media.

The German government knows such PR work can only have a limited impact. Officials in chancellery, Merkel’s office, say the most important thing right now is to stand side by side with France to avoid creating the impression that Germany is dominating Europe.

Merkel the Teacher

Holding the reins of economic and political power in Europe is a new experience for Germany, but Angela Merkel isn’t just being criticized because she is calling the shots in Europe. She is also being accused of taking a one-sided view of Germany’s leadership role — of interpreting it simply as a kind of educational project.

She doesn’t seem to have any other solutions up her sleeve, nor does she instill trust or promise salvation. She demands a great deal without saying where the path will lead. Many countries therefore find themselves wishing for more guidance from Germany rather than less.

Ironically enough, these also include Poland, the country which for a long time most feared a resurgent Germany. Last week Polish Foreign Minister Radoslaw Sikorski gave a remarkable speech in Berlin in which he described the collapse of the euro zone as “the greatest threat for Poland’s security and well-being.”

Just five years ago, Sikorski said the German-Russian agreement over a Baltic Sea pipeline reminded him of Hitler’s pact with Stalin in 1939. Now he says, “I’m less worried about Germany’s power than about its failure to act. It has become Europe’s essential nation. It must not fail in its leadership. Rather than dominate, it must lead the reform process.”

Few countries have gained more from EU membership than Poland. Its economy boomed even during the global financial crisis of 2009. “Poland wants to become the France of the east,” says Waldemar Czachur of the Center for International Relations.

Poland’s moderate Prime Minister Donald Tusk is almost falling over himself to be a model student. Thanks to this, Poland is already doing what many others must also eventually accomplish: It is eagerly cutting costs, it has written a debt ceiling into its constitution and is now even raising its retirement age. And in spite of the crisis, Warsaw still plans to adopt the euro in four years’ time.

If Nicolas Sarkozy isn’t careful, Tusk will soon replace him as Angela Merkel’s new favorite.

FIONA EHLERS, JULIA AMALIA HEYER, RALF NEUKIRCH, JAN PUHL, MATHIEU VON ROHR, HELENE ZUBER Translated from the German by Jan Liebelt