TO UNDERSTAND what a German thinks of the euro-zone crisis, a good starting point is the expression " Bei Geldfragen hört die Gemütlichkeit auf". Loosely translated: "The craic stops when the bill comes."
It was coined in 1847 by David Hansemann, a Rhineland banker and politician, in protest at Prussian plans to run up huge debts to pay for a 600km train line from Berlin to the distant east.
Times have changed, but the revival of the old expression sums up the grim attitude in Germany to the euro zone’s dizzying debt crisis. For decades, Germany’s idealistic European vocation – plus its cash – was what made the EU work. But a survey last Sunday showed 71 per cent of Germans have little or no trust in the euro, and German tabloids are reheating old prejudices about southern Europeans.
The ill will is mutual: swastikas on placards in Athens suggest that, for some Greeks, Berlin’s EU mask has already slipped. Even in Ireland, which has no meaningful baggage with Germany, a Sunday newspaper felt compelled to warn its readers about a “reinvigoration of Germany’s urge to dominate”.
Hovering between these two groups, Germany on the one side and the rest of the EU on the other, is Berlin’s increasingly troubled troupe of diplomats, political analysts and foreign correspondents. Last Tuesday evening, they gathered for group therapy at the French embassy, next to the Brandenburg Gate.
“Has Germany gone autistic on Europe?” asked Ulrike Guérot, Germany’s think-tank grande dame, in a shot across the bow. “After decades at the heart of the European project, Germany seems to have lost all interest in it.” Two hours of bitching about Berlin followed. The common view: Germany’s strategy in the euro-zone crisis is, at best, poorly communicated or, at worst, unforgivably erratic. Berlin has allowed the Franco-German motor, once a guarantor of stability and momentum in the EU, to conk out.
Everyone felt better afterwards except for the fact that no government ministers were present to note the complaints. Germany’s front bench were around the corner in the chancellery, tinkering with a new engine. “I think Germany can be the motor for improving European-Chinese relations,” said the country’s beaming chancellor, Angela Merkel, after a joint German-Chinese cabinet meeting.
Bilateral trade between Germany and China jumped nearly 40 per cent last year, to €130 billion, a third of the EU total, and is set to top €200 billion within five years. China needs German machines and technology to drive its growing economy just as badly as German exporters need Chinese customers.
The Chinese premier, Wen Jiabao, summed up the new special relationship thus: “Trust is more important than currency; it’s gold.” Riots in Athens over the euro-zone crisis and Berlin is cosying up to Beijing. Is it just unfortunate timing or have German doubts about Europe prompted the country to look around for new options?
In the current euro-zone drama, the Germans have been cast as the villains for demanding new fiscal controls before they hand over any cash to distressed neighbours. But they are simply acting according to type.Just as the Great Famine planted a buy-not-rent seed in the Irish psyche, the interwar period seared into German DNA a fear of losing money through hyperinflation and profligacy. Manfred Güllner, head of the Forsa polling agency, says it’s important not to confuse German Euroscepticism with EU scepticism.
“Just as before, the Germans are generally positively disposed to the European unification process and are, in principle, prepared to help Greece,” he says. “But the discussion about the problems and the dangers to the euro have unleashed fears: many are worried about the value of their own money and public finances. That has led to a majority now opposing Greek aid.”
The average German is torn: his instinctive trust in the European project has collided with his lingering suspicion that the euro zone is a flawed construct. The doubts about the latter have contaminated the former, the Greek bailouts have poisoned the European debate in Germany, and the rest of EU is alarmed.
Lurking behind that alarm, often, is annoyance: considering forecasts say Germany’s economy will grow 2.7 per cent this year, surely the Germans could loosen the purse strings for their European cousins in need. Germany is a prosperous country, yes, but few of its neighbours realise how rapidly it is becoming a country of haves and have-nots. Leaving the French embassy on Tuesday night, I saw what is now a common sight in Berlin: a man reaching into a public bin to retrieve a glass bottle to cash in the 10c deposit.
GERMAN CITIES ARE NOWfilled with armies of bottle collectors, retrieving deposits to supplement their monthly dole payment of €364. Try explaining to them the need to support the Greek social-welfare system.
While European newspapers report on Germany’s economic boom, they ignore, too, the hundreds of German cities juggling their finances furiously to avoid bankruptcy. As they close swimming pools and theatres, mayors have no way to explain why Greece needs Germany’s help. “It’s an impossible task; we simply can’t afford it,” says Josip Sosic, spokesman for the western city of Duisburg. “We are already obliged to borrow money to pay our share into the fund to rebuild eastern Germany. It’s madness.”
The wider economic view is equally sobering. After a short postunification boom, Germany has spent two decades slipping in and out of an economic coma. The German patient covered the astronomical €1.5 trillion cost of rebuilding the east, subsisting on a thin broth of wage restraint. In the past decade, while Ireland and Greece partied, Germany awoke from yet another economic coma only through drastic labour-market reforms and welfare cuts. Germany in the 21st century is a lean, mean industrial machine, but its postwar model of economic fairness has been cut to the bone. The headlines talk of a boom, but 83 per cent of Germans told the Forsa polling agency they have yet to feel it. In real terms, wages here haven’t risen in a decade.
“We have seven million people in a low-wage sector, four million of whom top up their earnings with social welfare,” says Mehrdad Payandeh, an economics expert with the German Union Federation. “Half of German households are now so poor they pay no taxes at all. We’re dealing with a poverty time bomb here.”
One of the greatest misunderstandings in the euro-zone row is that Germans are a nation of Protestant austerity fetishists. Yes, this is a nation of savers, not shoppers. But every claim that austerity will save the euro-zone economy, as it has in Germany, is met with 10 counterclaims that austerity has played only a small role in the current boom.
“In the last decade the money was to be made in Ireland and Greece, so the German capital flowed over there,” says Prof Hans-Werner Sinn of the Ifo economic institute. “We became cheaper and poorer. Now, in the crisis, investors want a secure harbour for their investments, so the money has flowed home. The boom is simply happening where the money is.”
The euro-zone crisis has been a coming-of-age drama for Germany’s thirty-somethings, the “Erasmus generation”, who are slowly assuming the reigns in German society. Ask them about Germany’s role in Europe and you get the kind of views that would have been heresy for older generations.
“Maybe the whole EU just overextended itself; would it be so bad to go back to an economic federation?” asked one friend, the political adviser to a government MP, last week.
There was a similar tone at a party in Berlin on Wednesday night. “We can’t afford the EU as it stands: less is more,” said a 26-year-old political-party official.
Though by no means representative, views such as these suggest the EU is no longer a sacred cow among younger Germans. That might set nerves on edge elsewhere on the continent, but is it realistic to expect German views on their role in the union to remain trapped in a time warp? Is it fair to expect a German 20-year-old, less worried about the euro than where her next mobile-phone credit is coming from, to internalise the war-and-peace EU rhetoric of the former chancellor Helmut Kohl?
For the German finance minister, Wolfgang Schäuble, the last cabinet holdover from the Kohl era, this heated debate is proof of Germany’s vital, evolving relationship with the union. Circumstances may change but the basics of Germany’s EU vocation remain the same, he insists. Germans are “less blinded by the short-term problems and controversies than many journalists would have them”.
“To someone under 30, talking about the decisive contribution the EU has made to ensuring lasting peace on the Continent may sound banal. After such an extended period of peace, unprecedented in our region’s history, it is easy to understate how real and precious this contribution has been,” he says. “But I think younger Europeans, in particular, are acutely conscious of the extraordinary freedoms afforded by the EU because they experience these freedoms – to move, study, reside and do business anywhere in the union – on a daily basis. This is what makes Europe alive.”
Strip away xenophobic German tabloid stories about Greece, still more published than public opinion, and you have a Germany that will still contribute to the budgets and the debate, but with fewer illusions than before and greater demands. But falling out of love with the EU is not an option.
That much was clear to the millions of Germans who have seen the recent film The Coming Days, a gripping thriller set in Germany in 2020. “Everything south of the Alps fell into chaos after the collapse of the EU,” the narrator says matter-of-factly in the opening minutes. “The rest of Europe walled itself in to protect itself from African refugees.”
With his compelling screenplay, people like the 38-year-old director Lars Kraume suggest that younger Germans are less passionate about the EU than their grandparents, but they don’t kid themselves that there is an appealing alternative.
So why all the ill will towards Germany? Ulrike Guérot blames an erosion of empathy among EU member states, a “dialogue of the deaf” where no one is prepared to really listen to the other side. This isnt new but has only become a problem with Germany’s new, poorly communicated EU doctrine: that it can still meet its European obligations without subsuming entirely its national interests.
Germany craves normality and recognition from its neighbours but has yet to realise how closely Europe is watching. Those looking in, Germany’s European neighbours, have yet to realise they have outdated notions, and expectations, of the EU’s largest member.
“It’s a fallacy to believe we are a normal country just because we have a good national football side and wave flags,” says Jakob Augstein, publisher of the weekly newspaper Freitag. “People in Europe are sometimes afraid of us still: not because we are sinister Nazis but because we are a larger country. We have a responsibility to act better than we have sometimes acted in the last while.”
As Germany watches the Greek drama roll and starts flirting with China, Germany knows it's best at home at the heart of Europe. It's not ashamed of expressing it, either. As Süddeutsche Zeitung, Germany's best-selling quality daily, notes: "No EU country knows when it will need the solidarity of the union."
How Germany became a winning economy
Germany’s economic motor is purring along. After shrinking in 2009 and recovering last year, the country has made up ground lost in the credit crisis, and the world’s fourth-largest economy is now worth €2.28 trillion.
After growing 3.6 per cent last year, twice the EU average, the economy is expected to grow by about 3 per cent this year. Unemployment has fallen to a postunification record of 6.9 per cent and is likely to fall below the psychologically important three million during 2012.
Economists say Germany’s quick economy was down to its strong manufacturing base: as companies recovered they ordered new machines. The Berlin government shielded its manufacturers from the worst of the crisis by helping to bridge months of empty order books with state-subsidised welfare payments. In lean times, this allowed companies to retain rather than fire their highly skilled employees, who could then go straight back to work as soon as orders came in.
Despite competition from low-wage economies, Germany, home to BMW, Siemens and Bosch, still leads the way in high-tech machines, vehicles and consumer products.
Opinion is divided over the other sources of Germany’s economic recovery. Some say the spring in its step is from German investors keeping their money safely at home for the first time in a decade.
Others say radical welfare and labour-market reforms made the unemployment line less attractive and made it easier to hire and fire workers.
Unions argue that Germany’s economic boom is built on a new underclass of temporary, low-paid workers on welfare top-ups. Business confidence is on the rise, while domestic demand, the Achilles heel of the economy, fell nearly 4 per cent in May, the sharpest drop in four years.
