A Controversial Paragon Europe Shudders at Germany's New-Found Power

Germany, admired and envied for its economic success, has become a model for Europe in the debt crisis. The Continent is becoming more German as countries get serious about fiscal discipline. But the nation's new dominance is also stirring resentment, and old anti-German sentiments are returning. By SPIEGEL Staff

A French tricolor flag fluttering on a video screen provides the grand backdrop for Nicolas Sarkozy, who is about to take to the stage to talk about the euro crisis. The flag is huge, almost as if the organizers were attempting to allay any doubts that the speaker really is the French president rather than a mere emissary of German Chancellor Angela Merkel.

When Sarkozy appeared in front of his supporters in Toulon last Thursday, he spoke of the "fear that France could lose control of its own destiny." His dramatic words were an appeal to French national pride, but his response to those fears was anything other than nationalist: "France and Germany have decided to unite their fate," he announced. So-called "convergence" -- greater alignment of the two countries -- was the only way out of the crisis.

There is no doubt which country wants to align itself with which. Later that day, one of his advisers said Sarkozy wanted "supply oriented economic policies and debt reduction modeled on those of Gerhard Schröder," Merkel's predecessor. In his speech, the president even announced a "jobs summit" between employers and unions just like the one initiated by then-Chancellor Schröder six years ago.

The very next day the French daily newspaper Libération ran an article under the headline "A President Modeled on the Germans," which claimed "If you closed your eyes, you could hear Merkel speaking" during Sarkozy's speech.

During a televised interview back in early November, Sarkozy uttered almost unimaginable words for a French president: "All my efforts are directed towards adapting France to a system that works. The German system."

Speaking in Toulon, Sarkozy condemned the long-established French policy of buying economic growth by simply borrowing more. He said France could only overcome the current crisis through "work, effort and controlled spending," objectives that sounded eerily German. Fortunately the tricolor was still fluttering, and the event closed with a rendition of the Marseillaise.

In these days of crisis in Europe, the "German model" has become something of a magic formula. Like it or not, the dusty, dry Germans now seem to hold the key to European salvation.

From 'Sick Man of Europe' to Paragon

How has it come to this? For a long time, Germany wasn't regarded as a model state. The nation has been plagued by guilt since World War II and by economic stagnation since the late 1980s. The Germans saw themselves surrounded by neighbors who seemed to be doing things better: The Scandinavians had their welfare state, the French their family friendly policies, the Brits had their service industry, and countries to the east had lower taxes. As recently as 2002, Newsweek dubbed Germany "the sick man of Europe," calling it a country hit by economic strife and unsure about its place in the world.

And yet suddenly, Germany is being held up as a shining example for everyone else. It is almost the only country in the euro zone that the markets still trust. It is almost the only one that has a history of carrying out far-reaching structural reforms. Almost overnight, Germany has become the de facto center of Europe.

After the war, the French and the British sought to bind Germany into a united Europe to prevent it from ever becoming the dominant force in Europe again. But now its economic strength has made it the region's natural leader for the first time since 1945, although neither the Germans nor the continent's other citizens seem comfortable with this state of affairs yet.

As a result, Germany's dominance in Europe has brought forth a paradox. As admiration for its economic successes has grown, so too has increasing criticism of the way it is handling its role as the leading force. Not only does it appear to have done everything right on its own. It is also the country that -- still -- refuses to consider saving the 17-member eurozone by printing money or issuing euro bonds. It is also forcing others to adopt its cost-cutting recipes.

In this, it is becoming clear that Angela Merkel isn't the only person who wants to reshape Europe in Germany's image. The chancellor has become less inhibited about expressing her determination to revamp Europe -- but many countries have already decided for themselves that Europe must follow Germany's example if the common currency is to be saved.

Europe Becoming More German

Europe's Germanization can be seen all over the continent. In Italy, for example, the popular playboy Silvio Berlusconi has been replaced by a government of bland technocrats who appear to have consciously distanced themselves from any hint of being laissez-faire or Mediterranean. The new prime minister, Mario Monti, has been talking about introducing tough austerity measures ever since he took office a month ago. Monti himself is so down-to-earth and conservative that his fellow countrymen call him "more German than the Germans." Even the Italian media -- for instance the Sunday evening TV program "Report" -- has taken to listing everything the Germans do better: Their waste-recycling systems, their competitiveness and their education system.

In Spain, the outgoing Socialist Premier José Luis Rodriguez Zapatero has cut public-sector salaries and welfare payments. But just like German labor-market reformer Gerhard Schröder before him, Zapatero has been voted out of office. His successor, Mariano Rajoy, has already pledged to bring the country's national debt down to 4.4 percent of GDP in 2012, exactly as Merkel has demanded.

Greece, which is demanding drastic belt-tightening from its citizens, is the most reluctant to Germanize, not least because this would be more painful than in any other euro-zone country. Since November, a 30-man European Union team known as the Task Force and headed by a German, Horst Reichenbach, has been teaching Greek civil servants how to survey land, run real estate registers and levy property tax. That hasn't exactly reduced the animosity the local population feels towards Germans.

Nevertheless, politicians and the media in virtually every European country have for months been discussing German idiosyncrasies like its dual (theory- and practice-based) vocational training system and the social partnership between employers and unions, both of which have helped the country attain its current leadership. Everyone is keen to copy the best elements of the German system.

French Angst

Nowhere is Germany as threatening to the national psyche as in France. For weeks now, the main focus of public debate has been why the Germans are doing so well and the French so badly. Day after day, the newspapers almost obsessively compare the two countries. "The German Europe" was the headline of a recent article in business magazine Challenges; an expression of wonder and dread alike.

When French auto manufacturing group PSA, whose brands include Peugeot and Citroen, announced plans to cut 6,000 jobs a month ago, viewers of the evening news in France were treated to a graphic that dealt another blow to their national pride: This showed that PSA's production numbers have stagnated over the last 10 years while those of German competitor Volkswagen have risen sharply.

Economist Jean Peyrelevade recently published a book, "France: A State in Crisis," on this very issue. The book is essentially an instruction manual detailing how France could become more like Germany. Peyrelevade's conclusion is devastating: German companies are financially strong, French ones deeply indebted. Germany has been more rigorous in raising the retirement age than neighboring France, whose citizens have a mandated 35-hour work week. German salaries and wages have risen at a lower rate than productivity, while the opposite is true in France. "We in France have increased our national debt time and time again because the Germans enabled us to get such cheap loans," Peyrelevade says. "Germany has therefore bankrolled our demise."

France's national debt now stands at 85 percent of gross domestic product, and the country is poised to lose its top AAA credit rating. This is another reason why Sarkozy is at pains to chain his country to Germany, its historic rival. In the past, France was always proud of its combination of Mediterranean lifestyle and north European economic performance. Now Sarkozy warns of the danger of "being dragged down by countries in the south."

A year-and-a-half ago, Christine Lagarde who was French finance minister at the time, criticized German wage-dumping practices. Today Ms. Lagarde heads the International Monetary Fund, and nobody wants to hear such talk. It has become fashionable to admire the German model. Centrist presidential candidate François Bayrou has written a book in which he demands Schröderesque reforms, and even Socialist Party candidate François Hollande praises attempts to cut non-wage costs.

But are the French and other Europeans really prepared to implement tough social reforms, extend their working week and make other changes to their pension system? Do they really know what it means for every single person if their state is forbidden from spending more than it collects?


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