Now, however, we are approaching a moment of truth in the whole European Union. Across the continent, north and south, there has been a dramatic decline in trust in that Union, and the emergence of protest parties. Between the German parliamentary elections on September 22, 2013, and the elections to the European Parliament that begin on May 22, 2014, there will be just eight months to convince these growing legions of skeptical Europeans that Europe’s leaders, established parties, and institutions know a way out of the darkness. Otherwise, we shall get a European Parliament that is both wild and blocked. The anger in some southern European countries could also boil over at any point, unless their peoples see light at the end of what many regard as a German-imposed tunnel.
The German foreign minister, Guido Westerwelle, rightly observes that this is a formative period in three respects: for Europe’s credibility with its own citizens, for Europe’s standing in the world, and for the way Europe and the world view Germany.9 By sheer chance, this historical crux coincides with the hundredth anniversary of the outbreak of World War I in 1914.
Soon after Germany’s peaceful unification in 1989–1990, Fritz Stern unforgettably described it as Germany’s “second chance.” Europe’s economically dynamic central power had had its first chance in the years before 1914. “It could have been Germany’s century,” as Raymond Aron once remarked to Stern. It blew that chance in two world wars and the Holocaust. Now it had another.
Nearly a quarter-century later we can confidently assert that, in its domestic affairs, Germany has used its second chance well. This is a “European Germany” of which Thomas Mann could be proud.10 Externally, however, in shaping a new European order and addressing the European question left open at the time of unification, the real test of how Germany uses its second chance is upon it only now.
Although the term “hegemon” is widely used, Germany’s position in Europe today is that of a leading rather than a dominant power. This is not the outright hegemonic predominance of Napoleonic France in continental Europe, or the United States in the Western world after 1945. The Berlin republic has just 16 percent of the EU’s population and 20 percent of its GDP. This awkward, in-between size is, alongside the country’s central geographic location, a recurrent feature of modern German questions. “Too big for Europe, too small for the world,” Henry Kissinger famously quipped. Yet the issue today is whether Germany is even big enough for Europe—not just objectively but also subjectively, in its spirit and strategic imagination.
Unlike the United States, Europe’s central state is preeminent only in one of the three main dimensions of power. Militarily, it does not compare for impact with Britain and France. Having roused itself to participate in the Kosovo intervention, to prevent another Serbian genocide there (still, in my view, one of the finest hours of post-unification Germany), and again to join its Western allies in Afghanistan, it has sunk back into a rather complacent pacifism.11 A senior government minister talks to me almost dismissively about his country’s “decent” army, before arguing that the real battles of the twenty-first century will be geo-economic.
And soft power? Yes, as that twenty-five-nation BBC poll suggests, the Federal Republic has considerable power to attract—Joseph Nye’s classic definition of soft power. Yet this still does not compare with the cultural pulling power of the land of Harry Potter, David Beckham, the Royal Shakespeare Company, the BBC, English-language universities with students from all over the world, the royal family, the London Olympics, and Mr. Bean.
But economic power—here it’s Germany, Germany above all. And political power, too. Thus, in the corridors and councils of Brussels, everyone waits to see which way Berlin will go. All Europeans used to have one subject in common: America. Now they have two: Germany and America. As we look for German answers to the European question, there are three crucial areas to watch: economic policy; European institutions to oversee and legitimate that policy; and, last but not least, the poetry to accompany this economic and institutional prose, inspiring Europeans once again to believe in the dream we call Europe.
Talking to German politicians and officials, I’m struck by the place their own answers start. That place is not Germany, or Greece, or Italy; it is China. In 2012, 46 percent of the EU’s exports to China came from Germany. Britain has globalized its financial services, but no European manufacturing sector is more international than Germany’s. What my German interlocutors want for the other eurozone countries is that they should become strong, competitive, export-led economies like Germany. Then, and only then, would we have what they call die Selbstbehauptung Europas, a Europe able to stand up for itself in a rapidly changing world. Hence their iron, schoolmasterly insistence on a combination of fiscal consolidation and structural reform in the weaker economies of the eurozone.
Their greatest worry is France, especially under its Socialist president François Hollande. France is both the most important country to Germany in the history of European integration, since the 1950s, and one dramatically failing to reform. How can they keep up the “reform pressure” on France, they fret, when it is effectively sheltered by Germany’s creditworthiness? (France’s government bond yields are much closer to Germany’s than those of Spain or Italy because the markets correctly judge that France is the last Mediterranean country Germany would ever let go.)
You see, says one senior German politician, I let my daughter use my credit card, but I check the transactions record. I tease out the point: “And if the French girl is blowing it all on beautiful couture dresses…?” “Exactly!” he snorts. German officials say privately, “We have to pretend to treat France as an equal.” Their last, best hope for economic reform in France is that French national pride will not abide that country’s own relative decline and Germany’s palpable condescension.
The trouble with the German prescription for the eurozone is that it is—according to taste—either just not working or not working fast enough. One simple, theoretical point seems to me worth stressing. Germany, the export champion, has been described as Europe’s China. Just as not everyone in the world can be China, and if everyone were like China, China could not be China—for who would then buy its exports?—so not everyone in the eurozone can be Germany, and in the unlikely event that they did become like Germany, Germany could no longer be Germany. Unless, that is, you assume that the rest of the world would cheerfully expand its domestic demand to buy an all-German eurozone’s increased supply of exports.
In the end, the only thing that matters is what works. The challenge to Germany, after its election, is to find the policy mix that brings the eurozone what everyone wants—investment, growth, jobs, and hence also the reduced unemployment benefit bills and increased tax revenues that will alone durably reduce public debt. The outcome will of course depend on world economic trends that, in places such as China, are hardly favorable.
The rhetoric of German policy remains sternly dogmatic, with German economics often sounding like a branch of moral philosophy, if not Protestant theology. Merkel, the daughter of an East German Protestant priest, once incautiously suggested that the southern European debtor countries must “atone for past sins.” The reality of Berlin’s policy, however, has been more pragmatic. For example, earlier this year it authorized state-controlled German banks to help create jobs for the unemployed youth of southern Europe. The chances of seeing more such constructive pragmatism, including wage increases that could stimulate German domestic demand, would certainly increase if the Social Democrats were to enter government, perhaps in a “grand coalition” with Merkel’s Christian Democrats.
But even if the country’s leaders are prepared to do whatever turns out to be necessary, can they take the German people with them? Germans are understandably preoccupied with the danger of having to pay with their own hard-earned wages and savings for other Europeans’ self-indulgent mistakes. I lose count of the number of times people say to me, “When outsiders ask us for leadership, what they mean is money.”
They are also obsessed with the danger of inflation. One poll found that Germans fear inflation more than they fear getting cancer.12 The shadow of history again: in this case, the trauma of two dramatic inflations, after the first and after the second world war. Yet as the economic policy correspondent of the liberal weekly Die Zeit argues in a spirited polemic, they misunderstand both the past—it was deflation, not inflation, that immediately preceded Hitler’s rise to power—and the present reality of that danger.13
Two of the country’s most influential institutions also place limits on the power of any German government to act decisively. The Bundesbank, as skeptical about the euro now as it was when Kohl confided in Baker back in 1989, has been pressing its objections before the Bundesverfassungsgericht, the powerful constitutional court. As an expert witness, Bundesbank president Jens Weidmann suggests that the way Draghi saved the euro last year, with the promise of so-called outright monetary transactions, may violate the European Central Bank’s treaty mandate. Not for the first time, all Europe waits with bated breath for the next verdict of this German court.
Here we are led back to the answer to yet another German question, that of 1945. To ensure that no Hitler would ever again come to power, the Federal Republic was designed not only to be as geographically decentralized as possible but also to have a plenitude of institutional checks and balances, including a very strong constitutional court. So the state from which decisive executive leadership is demanded today has a political system intended to make such decisive executive leadership very difficult.
If Germany does manage to do what is necessary in economic policy, together with its eurozone partners, Europe will need some new institutional architecture, most urgently for the oversight of national budgets in the eurozone, but eventually for the whole structure of the Union. Berlin today is a building site, with vast cranes and diggers tunneling a new subway line right in front of the (fortunately well sealed) windows of my hotel room and, just down Unter den Linden, the foundation stone now laid for what promises to be a wonderful reconstruction of the Prussian royal palace, which was demolished by the East German Communists after World War II. Berlin is also an intellectual building site, with alternative designs for Europe being swung around like giant girders. A friend hands me a postcard saying, “The European Republic is under construction.” An internal Social Democratic discussion paper calls for ein anderes Europa—another (and better) Europe.
So will this be Bundesrepublik Europa, the Federal Republic of Europe? Like other European countries, Germany certainly starts by thinking of Europe through the prism of its own constitutional tradition, just as the French imagine a centralized secular republic and the Brits dream of a baggy commonwealth. Federal, in the German sense, could also mean bringing powers back down to the national and state levels—something many skeptical Europeans, and not just English Euroskeptics, would welcome. But the German debate is broader than this.
9 See his speech at the WDR Europaforum, May 15, 2013. ↩
10 Although, whisper it not, he might find it just a little boring. Where, behind those dichte und schöne Fenster, is Dr. Faustus? Where Lodovico Settembrini and Leo Naphta? Where Felix Krull? ↩
11 Three German high schools were recently awarded the Aachen Peace Prize for refusing to let Bundeswehr officers come and speak to their pupils about possible careers in the armed forces. See Die Zeit, June 20, 2013. I am grateful to Mark Lilla for drawing this to my attention. ↩
12 Allensbach Institut für Demoskopie, Sicherheitsreport 2012. I am grateful to Zanny Minton Beddoes for this reference, which I first came across in her Economist special report on Germany, “Europe’s Reluctant Hegemon,” June 15, 2013. ↩
13 Mark Schieritz, Die Inflationslüge (Munich: Knaur, 2013). ↩
See his speech at the WDR Europaforum, May 15, 2013. ↩
Although, whisper it not, he might find it just a little boring. Where, behind those dichte und schöne Fenster, is Dr. Faustus? Where Lodovico Settembrini and Leo Naphta? Where Felix Krull? ↩
Three German high schools were recently awarded the Aachen Peace Prize for refusing to let Bundeswehr officers come and speak to their pupils about possible careers in the armed forces. See Die Zeit, June 20, 2013. I am grateful to Mark Lilla for drawing this to my attention. ↩
Allensbach Institut für Demoskopie, Sicherheitsreport 2012. I am grateful to Zanny Minton Beddoes for this reference, which I first came across in her Economist special report on Germany, “Europe’s Reluctant Hegemon,” June 15, 2013. ↩
Mark Schieritz, Die Inflationslüge (Munich: Knaur, 2013). ↩