Germany: The Illusionary Giant

It is a mistake to depict Germany as a hegemonic power; in fact, Germany is a illusionary giant.  It yields much less power within the EU than many believe and its influence is actually decreasing.

“Mr. Tur Tur, the illusionary giant, is a gentle and modest person, and tragically alone because everybody is afraid of him when he seems to be a giant from the distance.” Increasingly, Germany’s stance in Europe looks like Mr. Tur Tur from Michael Ende’s fairy tale: Jim Button and Luke the Engine Driver. While I write these words, protesters are crowding the streets of Athens to protest the austerity measures that Greece has been subjected to. They blame the European giant: Germany. Clearly, when people make a national past-time out of burning your flag you have reached a special status as a country. This privilege is reserved for powerful and despised states (such as the US or Israel). For Germans this sight is new and understandably uncomfortable. They ask what they have done to deserve such treatment. The complexities of the financial entanglement escape the normal citizen and they perceive the behavior of Greek protesters as ungrateful at best; after all Germany has bailed out Greece with their tax money. The current German government has avoided explaining the benefits of the Euro and a stable Greece to its population leaving a lot of frustration on both sides; Greeks affected by the austerity measures and Germans mistreated for their charitableness. Germans have forgotten what happened when the former social democratic and green government reformed the social and unemployment system (in Germany the reforms are known as Hartz IV and Agenda 2010). The reforms brought down the government. And while it is those reforms that many today say are responsible for German stability and good performance, it is nothing compared to the revolution in Greek society that has been taken place over the past months.

This mismatch between public perception and reality extends further. Germany is really not the giant that many believe it to be. In addition to a lack of strategic vision, Germany is losing political clout in Europe; it has lost key European allies and its ability to dominate the direction of anti-crisis policies in Europe. The Paris-Berlin axis was destroyed by the election of Francois Hollande, and other traditional allies have either withdrawn from rescue mechanisms or have increased the demand for regulation of recipient countries. In contrast to smaller countries, Germany cannot veto policies when such a veto might cause chaos on the financial markets. A German exit from the Euro is not a credible threat: it has long been noted that such a maneuver would lead to a rise of the new currency’s value and a disaster for the export-dependent German economy.

Domestically, Germany might be less stable than the mainstream perception currently suggests. Instability related to currency has high impacts on the German economy and a renewed crisis in the US economy would have a severe impact on German exports. For the past years Chancellor Merkel has dragged her feet on several important issues. The demographic development in Germany is dramatic, and dwindling immigration will soon have an impact on the country’s economy. When it comes to education Germany ranks far bellow the level that would be necessary for a major industrial nation today. Merkel’s government has taken any steps to address those issues and in general has proven to be rather inefficient when it comes to policy-making.

I have said before that it is a mistake to depict Germany as a hegemonic power; in fact Germany is a illusionary giant, it yields much less power within the EU than many believe and its influence is actually decreasing. With necessary reform left unattended, the economic success the perception is based on might also be a straw fire.

Photo Credit: Pennello

Tagged Crisis, EU, Euro, Europe, Financial Crisis, Germany, Greece, Merkel