Under German Leadership (II)

German Culture of Instability

Within the framework of the "Internationale Politik" magazine's "leadership" debate, Hans Kundnani, of the London office of the "European Council on Foreign Relations" sharply criticized Berlin's crisis policy. (german-foreign-policy.com reported.[1]) Kundnani raises issues that experts - particularly non-German experts - have been criticizing for years. Germany's insistence "on strict austerity programs throughout the Euro zone" hampers those countries stuck in the debt crisis from applying growth strategies to fight their recession, because to do so would entail having to provide financing. The austerity dictate could therefore "further exacerbate the debt crisis."[2] Berlin is, simultaneously, applying "intolerable" pressure to the economies of the crisis countries with its export offensive. The author writes that this is how the German government has been able to reduce unemployment "in Germany, to the lowest rate since unification," while in "countries like Spain it is at record levels." Kundnani writes, "it seems that Germany is not so much engaged in the Euro crisis for the sake of the whole of Europe, but rather more in its own interests." With reference to the catastrophic consequences for the crisis nations, the foreign policy expert speaks in terms of a "German culture of instability."[3]

No Concessions

Kundnani explicitly points out that, unlike Germany, other hegemonic powers in crisis situations do not solely serve their own short-term interests. "A good example," he says, is "the United States in the aftermath of the Second World War." "In the 1950s," as is known, "West Europeans were granted trade preferences" and this, to the disadvantage of its own economy, but "its strategic goal - European stability" - was achieved.[4] A hegemon that functions strategically, grants "short-term concessions to those it has co-opted into its hegemonic realm, to insure its long-term interests," writes Kundnani and characterizes those concessions made, from time to time, to the other European countries by the former West German governments in Bonn, as characteristic of this sort of hegemonic policy. Therefore, it had been expected that Germany would have made, at least, the concession of a reduction of trade surpluses or "allow a moderately higher inflation" - for the sake of insuring "the survival of the Euro," if for no other reason than Germany's profiting from "the Euro's weakness vis à vis the D-Mark, which benefits the German export economy." But, in fact, Berlin has made no concessions and has "rigidly refused to adopt such a policy."

More Isolated than Ever

Kundnani sums up: "Germany's increase in power and France's relative weakness have permitted Berlin to impose its preferences on the Euro zone and on the EU." With the Fiscal Stability Treaty, Germany has imposed a German economic model on its partners." Albeit, Berlin guarantees "no stability" to the Euro zone countries.[5] Therefore, with its - successful - "attempts to establish norms, it has encountered resistance from other Euro zone members, it continues to face this resistance, and, in all probability, the resistance will continue." Because of Germany's lack of concessions, "there is a lack of 'hegemonic mutual understanding'." In such an empathetic sense, Germany, according to Kundnani, is "not yet - and will probably never be - a European hegemon." "Even though so powerful, Berlin is nevertheless more isolated than ever within the EU."

Passionate Debates

A few pages after this criticism, "Internationale Politik" published other proposals for mastering the Euro crisis that provide an inadvertent confirmation of Kundnani's assessment. The article was authored by Andreas Rinke, senior political correspondent of the Berlin office of Reuters News Agency. He had won acclaim as a clairvoyant taboo breaker, already early last year. At the time, in an article for the internet edition of "Internationale Politik," he crowned Angela Merkel, "EU Chancellor" and French President, Nicolas Sarkozy, European Vice Chancellor. (german-foreign-policy.com reported.[6]) In his current article, Rinke, using futuristic scenarios, depicts probable new EU controversies arising from the German austerity dictate's incapacity to solve the crisis. He describes the imaginary situation, where next summer, "a passionate debate arises around the demand that an end must be put to a pure austerity policy."[7] The Reuters correspondent supposes that "scheduled elections in several EU countries will," also in the future, "again threaten to bring opposition parties to power, that will be against accepting a rigid reform policy, calling rather for larger national economic stimulus programs." Solutions to these problems must be found.

A New German Dictate

Rinke described a proposal - he has superb contacts to the Berlin establishment - aimed at a supplementary abrogation of national sovereignty within the EU, "National governments will be relieved of their authority to decide economic questions and those of social policy," and will be obliged to follow directives set by Brussels. Given the experience of German crisis dictates over the past two years, it would not be difficult to guess, who would table such a proposal. Rinke speculates that the extensive disempowerment of democratically elected parliaments, which, after their financial prerogatives, now are to be deprived also of their prerogatives in economic and social policies, could be accomplished - as with the Fiscal Stability Treaty - with a "Growth Stability Treaty," signed by all EU countries except Great Britain. A variation of "Euro Bonds" could, according to the Reuters correspondent, be a possible concession - "Project Bonds," with which the EU Commission may, at least provisionally, finance important, pre-determined infrastructure projects in weaker EU countries."[8] For a relatively low cost realization of Berlin's newest directives, through the "Project Bonds," Rinke writes, "the reestablishment of the Euro zone is complete." Apparently Rinke finds it hardly worth mentioning in his scenario that some of the EU countries would, indeed, complain "of a new German dictate," because they probably would have set themselves irreversibly "in route towards an economic liberalization," with the "Growth Stability Treaty."

[1] see also Under German Leadership (I)
[2] see also From the Crisis, Into the Crisis, Berlin's European Recession and Impoverishment Made in Germany
[3], [4], [5] Hans Kundnani: Was für ein Hegemon? Berlins Politik führt zu keinem deutschen, sondern einem chaotischen Europa; Internationale Politik Mai/Juni 2012
[6] see also Europe's Chancellor
[7], [8] Andreas Rinke: Wachstumsbeschleuniger. Wie Deutschlands nächstes Projekt für Europa aussehen könnte; Internationale Politik Mai/Juni 2012