GERMANY'S
STERNmagazine couldn't decide which of two stories to put on its cover this week, so it ran both.
The first – “Prussia: the Wayward Superpower” – marked the 300th anniversary of the militaristic monarchy that led the German Reich into the first World War. Adjacent, a muscular arm in a black-red-gold T-shirt adorned with an oversized tattoo of a grinning German chancellor. The headline: “Battle for the Euro – How Angela Merkel Governs Europe.”
For many, this news-stand collision of history and current affairs revives slumbering suspicions about Germany and its intentions in the euro zone crisis.
Berlin – through economic reform, historical gravity and sheer coincidence – finds itself at the fulcrum of the fight to shape the future of the European Union.
Amid the confused messages of crisis summits, one thing is clear: Dr Merkel’s patented austerity cure is the only medication on offer from Berlin to save the euro zone.
Given the conspiracy theories about “the Germans”, it’s interesting how, in Merkel’s inner circle these days, there is no palpable sense of triumph.
“Germany does not have any secret potion to solve all of this, except slow, tough negotiations,” said a close Merkel adviser on the phone this week. Then, in a sober voice: “This is not a position we ever wanted to be in, we have reached a point where we never wanted to be.”
Two extreme views are jostling for attention in the ongoing euro zone debate. The first: Germany is on the rise and determined to impose its economic and political will on the Continent once more. This view, audible among the Dublin 4 chattering classes and protesters in Athens, is a jarring fit with the prevalent view in Germany itself. More aggrieved than aggressive, many Germans feel taken for a ride by the Greeks and, like their neighbours, have dusted off their own lexicon of cultural stereotypes.
Unfortunately for Frederick “Fourth Reich” Forsyth, Berlin is not plotting another power grab for European domination. The fact is that Germany is far too insecure to do anything of the kind.
“Leading is anathema to us, it was educated out of us after the war,” joked a senior German civil servant friend over lunch this week. Which isn’t to say that Chancellor Merkel is opposed to sketching out where she sees the road leading: a more closely knit EU no longer living beyond its means.
“The debt crisis is a decisive moment, a chance to go a new way,” she said in a speech on Thursday. “The time and opportunity is there for a breakthrough to a new Europe.”
Like a stop-motion documentary camera, the debt crisis has sped up Europe’s tectonic shift, pulling the continent closer together and shoving Germany to the fore. It’s a shift that, in normal times, could have taken a generation or more.
Instead, it has happened in three years.
Just as it has taken some adjustment for Europe to realise they are dealing with a new Germany, many Germans have only begun to wake up to the changed expectations confronting them. Trapped between two camps – one calling for greater German leadership in the crisis, the other warning against precisely that – Germany is, far from hunched over a campaign map, instead fighting an urge to bury its head in the sand.
Leading the country at this remarkable juncture is the kind of political animal Europe has never seen before: an east German pastor's daughter with a scientific brain. "She is extremely concentrated at the moment, the crisis challenges her intellectually," remarks one Berlin confidante. "She thrives on this kind of thing." The important thing to remember about Merkel in this crisis, her biographer Gerd Langguth says, is that she is a " Vernunft Europäerin" or "rational European", quite unlike her mentor Helmut Kohl, whose emotional relationship to Europe was heavy with history.
In Merkel’s rational analysis, Greece’s debts are manageable but the consequences of a state insolvency – and a knock-on effect through Ireland and Portugal to Italy – are not. German banks would have to write off €300 billion – half the annual federal tax take, and the euro zone would go into meltdown on her watch.
What is her plan? First, austerity measures to balance the books of euro zone members, then a renewal of their marriage vows with “binding” EU oversight of national budgets.
“We see today that Irish worries are Slovakian worries, Spanish worries are German worries . . . our responsibilities don’t end at national borders,” said Dr Merkel on Thursday. “If [euro zone] agreements are not observed, a European institution must have the right to intervene in a budget.”
The consequences are far-reaching: a euro zone country presenting a budget that breaches common debt rules could find itself in the European Court. Critics of Germany see Berlin abusing its strong negotiating hand – a booming economy, record low unemployment, solvent national finances – to knock weaker euro zone neighbours over a barrel.
But Merkel’s negotiating strategy is not just informed by a European power play as much as political survival and domestic necessity.
Her hold on power hangs on a wobbly coalition partner, the increasingly eurosceptic Free Democrats (FDP), while her mandate to negotiate bailouts rests with an unpredictable constitutional court and an electorate incensed at bailouts for Greece. To keep her momentum, she is executing a complicated, two-stage political manoeuvre.
Abroad, she is preaching austerity in the hope this will right economic woes and boost competitiveness just as they did Germany’s – a risky and unproven endeavour – while keeping German voters behind her.
At home, she has agreed to long-promised tax cuts to keep the FDP link on life-support. At the same time she has green-lighted plans for some kind of minimum wage – a taboo-breaking policy U-turn for the CDU – but one that could, in an emergency, open the door to another grand coalition with the opposition Social Democrats.
Upcoming EU negotiations pose several challenges for Dr Merkel: the no-bailout promise Germans were given in exchange for giving up the deutschmark is now meaningless. Worse, Berlin sees the hallowed Bundesbank being undermined with every purchase of sovereign bonds voted through by the ECB governing council.
"Merkel's trying to salvage something from the wreckage of Bundesbank tradition to sell to her own voters," said Alan Posener, commentator with the Welt am Sonntagnewspaper.
She may be at the top of her game, but she is far more interested in European compromise than German hegemony.
Taoiseach's visit: Itinerary for Berlin
TAOISEACH ENDA Kenny is to meet Chancellor Angela Merkel for talks in Berlin on Wednesday, his first official visit to Germany.
Later he will deliver a speech at the Konrad Adenauer Foundation, Ireland’s Route Back to Recovery, on the topic of Ireland’s reform measures, and he will take part in a public discussion with finance minister Wolfgang Schäuble.
A senior finance ministry official added yesterday: “For us, Ireland is an important example of how the EU-IMF programme can have the hoped-for effect, if implemented diligently.”
Mr Kenny will be feted with full military honours on his arrival in Germany.