Is Germany Europe's Bully?

By David Wroe

BERLIN, Germany - "Must we eventually pay for the whole of Europe?" asked a recent headline in Germany's populist daily Bild.

It's a common German interpretation of the bailouts of Greece and Ireland, with Portugal and Spain perhaps to follow. Austere, hard-working, disciplined Germany is paying for its peripheral European neighbors' long holidays, early retirements and public profligacy.

The Irish, not surprisingly, see it differently.

"There is an awful lot of anger that has come very much to the fore in the last few weeks," said Frank Monaghan, 46, a public transport employee who was vacationing in Berlin this week. "In the past there was always a friendship between Ireland and Germany, but now the feeling is that they're pissing on us. We didn't want this deal and people feel it's been forced on us."

Germany, long considered a reliable - and financially generous - supporter of European integration, has begun to anger some of its fellow European Union members with its stubborn, go-it-alone approach.

Receive email alerts

[+] More

Berlin's tough stances during the euro currency crisis have prompted critics to accuse it of bullying smaller countries. The rhetoric culminated on Wednesday when Jean-Claude Juncker, the Luxembourg prime minister and chairman of the group of eurozone finance ministers, called Berlin's behavior "un-European" - a stinging rebuke on par with one U.S. state calling another "un-American."

The overwhelming feeling is that Europe's largest economy has decided that, if it must pay to keep the European dream alive, it will do so on its own terms. It's Germany's way - or the autobahn.

"To be a good German, you always had to be a good European," said Jose Ignacio Torreblanca, a senior research fellow at the European Council on Foreign Relations and head of its Madrid office. "There's been a fundamental shift in this."

In a sense, Germany is just behaving like a "normal" European big boy, analysts say. France and Britain have never been shy about using the EU for their own naked political ends.

But largely because of World War II and the Nazi era, Germany has long been regarded as having a special responsibility to the continent it tore apart. Post-war European integration has been inextricably linked to its own rehabilitation. But three generations after the end of the war, that has begun to change.

"It's a new generation of Germans in office ... and they don't feel as bound by the weight of history," said Philip Whyte, senior research fellow at the Centre for European Reform in London. "If you talk to younger Germans who had nothing to do with the war, they resent being told by Europe that they have a debt to pay."

Berliner Oliver Mayer, 33, a business communications graduate who is currently looking for work, feels Germany should never forget its history. But he doesn't think dishing out billions to other eurozone members is the right way to discharge this special responsibility.

"Money comes from ordinary taxpayers ... and German taxpayers have been paying a lot to other countries, so I would agree with what Angela Merkel did," he said, referring to the chancellor's rejection of Juncker's proposal to create European bonds to help weaker, indebted countries.

"The job for German politicians is to keep a balance between foreign responsibilities and the domestic budget. For me personally, the euro hasn't brought any benefits and I'm sure that if I asked friends around me now, they'd answer the same."

Surveys bear out his confidence: nearly six out of 10 Germans want the Deutschmark back, according to a recent poll. Indeed, according to a report in British daily The Guardian, Merkel even obliquely threatened to leave the eurozone after butting heads with Greek Prime Minister George Papandreou in Brussels at the end of October.

"If this is the sort of club the euro is becoming, perhaps Germany should leave," Merkel is reported as saying.

Nobody seriously thinks Germany is ready to ditch the euro, but it will play hardball when it comes to the mechanisms used to keep the common currency going.

"They still think the monetary union is a good thing and they want to keep it," said the ECFR's Torreblanca. "But they will calculate the cost every step of the way. Germany will only want to muddle through every crisis by doing the least possible to keep the system going. That is why I think we're heading towards a system of permanent crisis."

The big difference in the 21st century compared with the last one, he explained, is that Germany is casting its eye more globally, in particular looking to sell exports in Russia and China that have traditionally gone to European countries. Germany simply doesn't need its neighbors like it used to.

"It is too early to say that Germany can do without southern Europe, but the truth is Germany can take us for granted because their growth is elsewhere," Torreblanca said. "A political disengagement is something we are going to start feeling very soon. They have to make up their mind whether the European integration process is a burden."

Among other offenses, critics say Merkel pushed up the final cost of the Greek bailout by stalling in an attempt to get past a key state election in May before having to tell voters they were paying to help another country. She has also been widely accused of precipitating the Irish bailout with her ill-timed insistence on bond-holder "haircuts," meaning investors - and not just taxpayers - would bear some of the cost when a eurozone country cannot pay its debts.

Whyte, of the Centre for European Reform, said the latter criticism had probably been overstated. But there were two clear contradictions in Germany's "must-we-pay-for-the-whole-of-Europe?" posturing.

The first is that Germany's export-dependent economy - while undeniably efficient and productive - has benefited massively by its neighbors' going into debt. If other countries had not spent more than they had earned, Germany would not have run trade surpluses. Second, German banks had huge exposures to the government bonds of shaky peripheral countries. Berlin couldn't really afford not to pay for the bailouts.

"It is being seen as a bailout of southern European countries. But what is less appreciated is that it is also a covert bailout of German banks," Whyte said.

That is precisely the beef that the Irish have right now, tourist Monaghan said.

"We were being made to feel that we were getting the handout when in fact the Irish taxpayer is bailing out German banks," he said. "They made out that they were helping out the European neighbors when in fact they were saving their own skin.

"Whether that is accurate or not, that's the impression," he said.

David Wroe, a Berlin-based journalist, has covered Germany for the past two years, focusing on politics and social affairs.

Sponsored Links
Related Articles
May 10, 2012
Germany's Choice: Inflation or Defaults - Simon Tilford
May 11, 2012
EU Piggies Won't Go to Market - Greg Sheridan
May 16, 2012
How Hollande Should Handle Merkel - Charles Grant
May 15, 2012
Grading Medvedev's Foreign Policy - International Institute for Strategic Studies
David Wroe
Author Archive