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Wednesday, March 27, 2013

Germany and Europe: on top, but not in charge

There have been many pretenders to European domination over the last 560 years. In the end, and often at great cost, the pretenders have been defeated by alliances

In his sweeping new history of Europe from 1453 to the present day, Professor Brendan Simms argues that "the fundamental issue has always been whether Europe would be united – or dominated – by a single force". There have been many pretenders to European domination over the last 560 years, from Charles V of Spain, through Napoleon to Adolf Hitler. In the end, and often at great cost, the pretenders have been defeated by alliances. Britain has frequently played a decisive role in these alliances, always anxious to construct a balance of power against over-dominance.

Do these themes have continuing relevance in the Europe we inhabit in the early 21st century? After all, today's Europe is very different from those of earlier times. In particular, it has explicitly embraced peace between the nation states. All members of the EU, some more than others, have foresworn parts of the sovereignty of self-governing nation states. That was not the case in the Europe of conquest over which Napoleon or Hitler presided so bloodily.

Yet this is also a week in which the European Union, acting overwhelmingly at the bidding of Germany, has imposed humbling terms on Cyprus. In that light – and in the light of similar crises in Italy, Spain and Greece – it could be foolish to deny that a new form of single-force domination is emerging, even in this more pacific Europe, which has some parallels with those of earlier epochs. The Financial Times columnist Gideon Rachman put it succinctly yesterday: "Growing German power – and growing resentment of that power – are now the main themes in European politics. This is a historic irony, given that the main purpose of the whole European project … has been to end for ever the idea that Germany is simply too powerful to coexist … with its neighbours."

If we do now inhabit a German Europe, albeit a peaceful and democratic one, this has implications for the whole continent. Germany has spent much of the past 50 years persuading itself and others that it is subsuming its national interests in Europe. As a result of a eurozone crisis which it did not seek but of which it is an important architect, Berlin finds itself at the centre of attempts to maintain the single currency. It is by far the largest lender in the eurozone bailouts. It is driving the momentum towards greater fiscal convergence in the eurozone. Angela Merkel's fight for re-election this autumn is the pivotal political event in our continent this year.

In many ways, Germany is the kind of country that others in Europe, Britain included, wish they could also be. Germany has a balanced economy, a devolved constitution, a working democracy (including an industrial democracy), the rule of law, a tremendous export sector, a functioning welfare state and relatively low military commitments. Britain, with its unbalanced economy, overblown financial sector, assymetric and antiquated constitution, military overreach, discredited politicians and press, and welfare cuts, can only look on in enfeebled admiration.

A Europe based on the German model has huge attractions. But every attempt to create such a Europe has so far caused larger problems than it solves. The single currency net was cast far too wide for political reasons. One reason Germany is in such a strong economic position is not because of a strong consumer market (wage growth over the past decade has been disappointing) but through assiduous exporting – including to southern Europe, where it also exported credit in a form of national vendor-financing. Now these same, broken economies are being fed not Frankfurt's credit but austerity Berlin-style – and they cannot cope. The EU structural reforms demanded by Germany may feed Germanophobia.

The goal of a 21st century Europe based loosely on German values, models and possibly even leadership remains a valid one. But if it is ever to be achieved, Germany and its allies – Britain included – must learn to reset the dials for the journey. And there's not enough sign of that, either here, or in Germany, or elsewhere in Europe.


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