Germany looks strong only because other European countries are so weakby Josef Joffe / September 17, 2015 / Leave a comment
Published in October 2015 issue of Prospect Magazine
It is bailout number three for Greece. The fourth will follow unless Europe—make that Germany—forgives half or more of Athens’s unpayable debt. Forgiveness from Germany, that cruel disciplinarian? Of course. Berlin will agree to the inevitable “haircut,” as it has yielded on the three rescues totalling €300bn, which raises a delicious paradox. Whatever Chancellor Angela Merkel’s oracular pronouncements or the acerbic asides from her Finance Minister Wolfgang Schäuble, Deutschland always acts as the good “Europayer.” Yet goodness does no good. Berlin remains Europe’s ogre, hounded by the Anglo-American keepers of the Keynesian seal and trashed by the chattering classes from the Bay of Biscay to the Aegean.
Go figure. Among the hoi polloi, as a BBC poll in 2014 found out, the Germans are the world’s best-liked people. Among their betters, by contrast, Germany is the new America, the country they love to hate. For power does not breed love, and both are number one in their bailiwicks—Berlin in Europe, Washington in the world. Both are cast as princes of darkness, as bastions of might and malice. If they do right, it is for ulterior motives. If they throw their weight around, it is proof of irreducible hauteur. In Europe, anti-Germanism is now the younger brother of anti-Americanism.
Power does bite, but there is often less of it than meets the fearful eye. This truth should serve as the subtitle of “The Money War,” the unending drama over Europe’s common currency. Ever since 2010, when Greece had to be dragged from default for the first time, Geldkrieg has replaced Weltkrieg. By now, the feud has lasted longer than the First World War. And like the Great War, the battle over the euro is a tale of great expectations and not so great power, especially on the part of Germany.
“Weighed and found wanting” is as counter-intuitive as it can get. Isn’t Germany Europe’s hegemon once again? To crack the puzzle, a historical flashback is in order. The fuse was lit a generation ago, long before the clash of 2010. Three decades before it traded the mark for the euro, the Berlin republic had a good thing going. This was an informal Deutsche Mark bloc corralling the Benelux countries, the Scandinavians, Austria and Switzerland. It was primacy without responsibility, and nice for three reasons. With its currencies tied to the mark, this northern, mainly Protestant tier softened the relentless revaluation pressure bedevilling the almighty Deutsche Mark, its value doubling against the dollar by the mid-1970s. As the mark climbed, the other currencies rose in tandem, keeping bloc parities in line. Second, this kind of cordon sanitaire delivered a much better fit for the German economy than the current eurozone or “euro-19”. Compared to “Club Med,” the southern tier, it boasted competitive economies, efficient administrations and political cultures more attuned to Teutonic financial rigour.