Comment Dr. Ingo Friedrich, President of the European Economic Senate (EES)
14 May 2012

The course of history is sometimes grotesque: Germany’s centuries-long historical fantasies about playing a leading role in Europe are now about to come true in altered form in the face of the euro crisis. It goes without saying that the concept of achieving a "European dominance" should be consigned to the dustbin of history; no German politician seriously harbors thoughts of hegemony today. Playing a "leadership role" in an effort to preserve European unity and the eurozone would, however, be a more accurate statement.

And such a leadership role is expected by the majority of Germany’s European neighbors, even though the Germans have not gotten used to their new prominent role yet. This request is quite rational: Of all the major industrial EU nations, the Federal Republic of Germany has coped best with the financial crisis. Unemployment has not risen as feared; since the outbreak of the global economic and financial crisis in 2008, the unemployment rate fell from 7.8 to 7.1 percent 2011 – the lowest rate since the reunification. None of the largest European economies besides Germany - France, Great Britain, Italy and Spain - has reached the pre-crisis level again. Spain is now struggling with unemployment rates of nearly 25 percent and is already considered as the "second Greece". Britain is struggling with its debt, a rebellious lower class and the pound - and focuses rather on its historical "splendid isolation" in the face of the European crisis management. The Franco-German solidarity is also increasingly crumbling. France is in the aftermath of the presidential election and still getting over the shock of losing its “Triple A” credit rating.

The German economy, on the other hand, is surprisingly strong: In February 2011, in the middle of the euro crisis, the Ifo Business Climate Index rose to an all-time high and has maintained itself on a high level ever since, the small recession feared for the beginning of the year will most likely not occur, exports are booming and the economy will continue to grow in 2012. Germany’s only worries are currently concerns as enviable as the controversial Pirate Party and Günther Grass’s anti-Israel poem. If anyone can press for the euro’s rescue, it seems it can only be Germany. This development, however, triggers many ambivalent feelings among its neighbors. On the one hand, Germany should take the lead, on the other hand, the term "German diktat" is already making headlines in the European press. Germany is caught between the opinion fronts and must make it clear to its neighbors that its leadership role is by all means based on honorable intentions.

Summing it up, one can basically say that Germany does not wish to be amidst enemies but amidst friends and partners with goals such as democracy, stability and the possibility to achieve prosperity – well aware that this is also the key to permanently secure the economic strength and hence the prosperity of Germany as an exporting country. A new German hegemony is nowhere in sight, because the Federal Republic dismisses a German-dominated Europe. Much on the contrary, it is its general consensus since World War II that it is better to invest in the trust of its neighbors and in good international relations.

Still, Germany has some difficulties with its new leadership role. First, Angela Merkel looked for close cooperation with France’s former president Nicolas Sarkozy to rescue the euro but was then more and more challenged to take over the helm given the ailing French economy. No one can predict to what extent the cooperation with the newly elected president Francois Hollande will lead to the intended results. Over time, the chancellor urged more and more clearly to apply a greater fiscal discipline in the individual euro countries, to implement the fiscal pact and to provide for a constitutionally anchored debt cap. This immediately triggered the fear of an exceedingly dominant Germany. But what role does Germany see for itself in the concert of the 27 EU Member states and of the 17 Euro states?

Firstly, the familiar credo "Germany should not and cannot be Europe’s paymaster" still prevails. Germany is involved with more than 200 billion euros in various parachutes and rescue packages totaling more than a trillion euros. With sums of this magnitude at stake any potential creditor may, with good conscience, require that his money be used wisely and efficiently and scream blue murder when he sees that it could flow into an already overloaded state apparatus.

Secondly – and this is where Germany also considers itself an ambassador of values: The consensus society with its stable democracy and growing prosperity which has developed in Germany since 1945 can be implemented in all EU countries. A "European island of stability", as it presents itself within the framework of the EU, could then also be a role model for the neighboring countries. The EU virtually contributes to the stability of an unstable, globalized world.
Thirdly, Germany does not want a geographical division between the wealthy northern and the depressed southern EU states, the eurozone should be as far as possible preserved as a whole. The withdrawal of individual states from the EU, however, must be possible at all times. If the eurozone breaks apart, the EU - Germany included - will lose its influence on the global economic stage and the opportunity to exert its influence to transfer European ideas and values to other parts of the world. The main idea of German origin is the social market economy, a concept that the EU can offer as being by far the utmost humane and decent economic model.

Finally, Germany has demonstrated for decades that the distribution of national responsibilities between a state and federal level can be a successful approach. One could likewise conceive of applying a similar breakdown of competencies to the Europe of the EU within a union of states: The greater part of sovereignty would remain at national level. Any issue which can no longer be addressed there, however, would be dealt with at European level.

This has altogether nothing to do with German arrogance. Germany can offer its experience in the areas of social market economy and distribution of national responsibilities without meaning to claim that adopting the German approach will heal the world. It will then be up to the EU to realistically consider which economic and political model would best suit Europe. If other models are proposed, Germany has no intention to object. Contemplating worthwhile alternatives is always a wise choice.