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Berlin's Lack of Vision Europe Turns against Germany

Germany's controversial approach to fighting the euro crisis has split the European Union. Some countries are complaining about Berlin's rigid course, while others accuse Chancellor Merkel of betraying the European project. The only thing they can agree on is that the EU needs Germany as a motor if it is to survive. By SPIEGEL Staff

Cooking is an art. François Vatel, a famous chef at the court of Louis XIV, was so distraught over his inability to serve a sufficiently delicious meal to the king that he committed suicide. At last week's European Union summit  in Brussels, the European leaders in attendance ruled out such risks from the start, by choosing in advance from a list of top chefs who had bid for the contract.

The menu that was served last Thursday in the European Council building on Schuman Square in Brussels had a distinctly Mediterranean flavor. It included gazpacho of red beets with king crab, sole Provencal with a tangy pea puree and, for dessert, Mallorcan pastries with passion fruit, all prepared by German Michelin-starred chef Gerhard Schwaiger, manager of the luxury restaurant "Tristan" on the Mediterranean resort island of Mallorca.

It was undoubtedly a coincidence, but the Germans also dominated the stage politically in Brussels, once again. The 26 other heads of state and government gave in to German Chancellor Angela Merkel's demand  to amend the EU's Lisbon Treaty to include a permanent crisis fund, known as the stability mechanism, for the euro zone starting in 2013. Also at the chancellor's request, they inserted a passage stating that the stability mechanism is only "to be activated if indispensable to safeguard the stability of the euro area as a whole." The group also approved Germany's demand that private lenders be involved in the event of a government bankruptcy.

"We came to an agreement," a clearly pleased Merkel announced. "It was a good day for Europe." The other summit participants had no choice but to make similar statements.

Simmering Conflict

This summit was supposed to send out signals of calm, levelheadedness and solidarity, if only to reassure the financial markets, but the unity was little more than a show. The conflict continued to simmer behind the scenes, especially the dispute over common euro-zone bonds. Luxembourg Prime Minister Jean-Claude Juncker campaigned for the idea once again, and he was backed by many of the attendees. But Merkel was quick to object, arguing that a system of euro bonds would reward spendthrift governments and penalize disciplined countries like Germany.

In short, nothing was resolved at the summit. The more the euro crisis expands into an existential crisis for the European Union, the more critical are other member states about Germany, the largest economy on the continent and the fourth largest worldwide. "This is all about Germany, and it's all about the end of the German appetite for writing checks to the periphery of Europe," said Harvard University historian Niall Ferguson in a recent CNN interview. British historian Timothy Garton Ash complains of a lack of vision. "It is much clearer today what Germany wants from Europe than what it wants for Europe," he wrote in an op-ed  for the Guardian.

Both comments imply that Germany is no longer the locomotive of European integration that it once was. In the last few decades, more and more countries joined the unification process, because they saw it as a road to common prosperity in peace and freedom.

Old Fears

The European community of nations, a construct that France in particular had once advocated to tame the furies of European nationalism, faces a severe test, one that reawakens old fears.

It was Jean Monnet, the son of a cognac merchant, who, in 1950, drafted the plan to bring together Western European heavy industry under the umbrella of the European Coal and Steel Community, which later turned into the European Union. In supporting the plan, Paris sought to protect itself from German economic power and political revenge. It also enabled then-German Chancellor Konrad Adenauer to break through Germany's international isolation.

Monnet, who is considered a "father of Europe," wanted to guide European countries into a super-state "without their people understanding what is happening. This can be accomplished by successive steps, each disguised as having an economic purpose." Apparently the fathers of the euro acted in accordance with the same philosophy later on. The new currency became a vehicle for further integration, and the EU became a monetary union -- but not an economic, let alone a political, union. As a result, the current financial crisis is too much to handle for the continent and the EU colossus.

2010 euro crisis 

Will the also lead to an existential crisis for the Union? Instead of a European Germany, could the continent be faced with a German Europe instead? Is the country that has served as paymaster for so long trying to set itself up as the taskmaster of the entire community?

'A Fight against Brussels'

All of Europe's eyes are on Berlin these days, because it opposes euro bonds, insists that private lenders be involved in government bankruptcies and is discussing scenarios for an end to the current monetary union. "This way of creating taboo areas in Europe and not dealing with others' ideas is a very un-European way of dealing with European matters," Luxembourg Prime Minister Juncker complained.

Even though peace was the order of the day at the EU's Christmas summit, the criticism continues to rage. A senior official at the European Commission said angrily that "in Berlin, European policy in recent years has been treated primarily as a fight against Brussels." And Daniel Cohn-Bendit, a member of the European Parliament for the Green Party, accuses the German government of basing its EU policy exclusively on what the tabloids are saying. Although former Chancellor Helmut Kohl also promoted German interests, Cohn-Bendit says, he never lost sight of the big picture. "If Merkel had been chancellor at the time, there would have been no European unification."

Opinions differ on positions toward Berlin. There are conciliatory signals from Paris while German flags are being burned in Athens. There are biting critics like the Spaniards and skeptics like the Italians, while the Scandinavians are showing solidarity with Berlin.

France and Germany Opt for Pragmatism

Laurent Wauquiez, 35, is France's newly appointed secretary of state for European affairs, which makes him the point of contact for Franco-German relations. He is only familiar with the history of the EU's establishment from the history books. He likes to portray himself as a confident European and speaks highly of Franco-German cooperation, without which there would be "no basis for Europe."

This sounds as if everything were still the way it used to be, the way it was under former German Chancellors Konrad Adenauer, Helmut Schmidt and Helmut Kohl, and French Presidents Charles de Gaulle, Valéry Giscard d'Estaing and François Mitterand. After being sworn in for her second term, Merkel's first official visit was to Paris, and only then did she travel to Washington and Brussels. But Nicolas Sarkozy, the current president residing in the Elysee Palace, is less concerned about Europe's problems than about damage control on the domestic policy front.

Merely the fact that Wauquiez is the fourth person in four years to hold his position raises doubts as over the extent to which Paris values the Franco-German relationship. Nevertheless, in the wake of a period of misunderstanding, accusations and hostility, both sides are now taking a more pragmatic approach to each other. Berlin no longer ridicules Sarkozy as a hyperactive Frenchman, and Paris has stopped sneering at Merkel as a stuffy worrier.

The EU bailout programs for Greece and Ireland have brought the French and the Germans closer together. Suddenly Paris no longer sees Berlin's austerity-oriented policy as an expression of self-focused stinginess, but as a model for France. The French newspaper Les Echos awarded German Finance Minister Wolfgang Schäuble its "Grand Economy Prize," while the former European Commission President and Socialist Finance Minister Jacques Delors said: "We need Germany's virtues and its strengths."

'A Direct Import from Germany'

Sources at the Elysee Palace say that cooperation between the two countries on the Ireland bailout was exemplary. According to their account, the president and the chancellor came to an agreement first, then their approach was coordinated with the relevant agencies in Brussels and, finally, the other Europeans were brought on board. In Paris, the entente is being sold as a "European G-2" and, according to Wauquiez, as a path from a "bilateral initiative to a collective dynamic."

At last week's summit, Sarkozy supported Merkel on the issue of euro bonds, "with arguments that sounded like a direct import from Germany," as the pro-government daily newspaper Le Figaro concluded with some bewilderment, noting that apparently the "rule of the strong" had prevailed. The strategy is driven by domestic policy considerations. Sarkozy, whose approval ratings have reached an all-time low, hopes to polish his image by appearing statesmanlike, standing next to "chère Angela." In addition to his role as chairman of the G-20 and G-8 nations, Sarkozy would also like to be setting the tone in Franco-German cooperation. In that regard, however, he has been unsuccessful to date.

On a range of issues, including the debt question, the budget deficit and the balance of trade, the French media look to Germany's current rate of growth with approval and envy. The idea of an equal alliance between Paris and Berlin is absurd under these circumstances, the news magazine Marianne concludes: "If we are talking about a German-French tandem, it is more than clear that the Germans are holding the handlebars while the French are pedaling."

Spain and Germany 'Far Apart'

There was also a time when the Spaniards thought highly of the Germans. In surveys, they were consistently voted the most popular Europeans, far ahead of Spain's French neighbors or the British. But those days are now gone, and not just since Berlin has balked at euro bonds.

Spanish resentment against Germany has been smoldering since early May, when statements by German politicians on the urgent need for a Spanish bailout sent the markets into turmoil. An analysis by the Elcano Royal Institute, a private foundation that conducts international studies, even accused the conservative press in Germany of engaging in a smear campaign against Spain's economic strength. "Spain and Germany now seem to be further apart than ever before in the last 50 years," concludes study author Javier Noya.

It is the story of a broken relationship. José Ignacio Torreblanca, a European expert at the European Council on Foreign Relations in Madrid, uses an image to describe the rift. Germany, he says, has allowed itself to be tied to Europe's mast, like the mythical Greek hero Odysseus, for more than 40 years. "Now the sirens of Calvinism have sung, and Germany has decided to untie itself from the mast and look for a new ship."

Torreblanca has written frequently about Germany in op-ed pieces in the daily newspaper El País. In the years of Spain's transition to democracy, after the death of dictator Francisco Franco, Germany was a great role model for Spain, for example in its efforts to overcome the fascist government and its acceptance of the new constitution of 1978, which resembles the German federal model. But the Spaniards were also impressed by Germany's determination to define its own identity through European integration. In 2005, they were the first to accept, by referendum, the draft version of a European constitution.

Deeply Resentful

Torreblanca describes the phase that followed as a partnership. Then-Socialist Prime Minister Felipe González aligned himself with Germany's conservative Chancellor Helmut Kohl, who in turn included the young Spaniard in the German-French axis. It was a time of give-and-take. Kohl backed Spain in its bid for European Community membership in 1986, while González unconditionally supported Germany's plans for reunification and the monetary union. The German chancellor leaned on Brussels to increase payments to Spain from the European structural fund, and in return González supported eastward expansion.

His conservative successor José Maria Aznar disrupted the bilateral relationship, however. Even after a socialist became prime minister again, in 2004, relations remained cool. "The political and psychological bridges have been blown up," says Torreblanca. Current Prime Minister José Luís Rodríguez Zapatero has remained too passive, says Torreblanca, especially since Merkel has been in power in Berlin.

In this year of crisis, the Madrid government has frequently felt snubbed by what Finance Minister Elena Salgado calls German politicians' "incompetent remarks" on the European debt crisis. The Spaniards are deeply resentful and expect more solidarity from the wealthy Germans. When the German economy was stagnating, says Barcelona-based political scientist José Fernández Albertos, the European Central Bank guaranteed low interest rates for Germany and others, which initially led to higher levels of private debt and real estate bubbles in southern European countries. According to Albertos, Spain and Ireland violated the Stability Pact far less frequently than Berlin and Paris.

"A powerful coalition of the German government, the Bundesbank (Germany's central bank), the German constitutional court and belligerent public opinion" now stands in the way of more expansive fiscal policy in Europe, says Fernández. He believes that if Germany adheres to its selfish principles, the future of the euro will depend on the willingness to make sacrifices in the countries on Europe's periphery -- which will have to pay for German prosperity with unemployment and zero growth.

Envy in Rome

The Italians take a different view. In Rome, Merkel has long been seen as a chancellor who can do everything Italian Prime Minister Silvio Berlusconi cannot. She is seen as credible and honest, and the Italians admire her for her seriousness and for the fact that she doesn't have her own interests at heart, but those of her country and her people. When they read media reports on the German recovery, they conclude that she has been successful with her economic policy, and they marvel at Germany's rapidly declining unemployment figures. During the ongoing government crisis surrounding Berlusconi, there is hardly a parliamentary debate in which the opposition doesn't draw comparisons to Germany, asking questions like: Why are we having so much trouble with the crisis? Federalism, short-time working hours, reforms -- why do these things succeed in Berlin and not in Italy?

But since Germany began going it alone in the EU, Merkel seems to have become sinister and even a threat to the Italians. Suddenly she is being viewed, once again, as the "iron chancellor," the moral watchdog. She is accused of "rigore Tedesco" ("German rigor") and even extortion.

Italians don't want the Germans to dictate how they are supposed to clean up their finances. Like other countries, they too are acquiescing to the proposals to solve the euro crisis, but they don't like the Germans' new, self-confident behavior. It's the tone that annoys them.

The source of much of this resentment is the inferiority complex of Europe's second-largest debtor nation -- relative to economic strength -- and its fear of Germany, which prefers to side with the French and the British. Italy was a founding member of the EU, but it no longer plays much of a role in Brussels, where Spain and new EU members like Poland now have more of a say. The Italians know this, and they are suffering as a result.

Similar Interests

But there are also countries in Europe where criticism of the Germans is voiced discreetly or not at all, like Sweden and Finland. The explanation is simple, and it also shows why European integration is so difficult. The interests of the Swedes and Finns are almost identical to those of the Germans. Both northern countries have repeatedly generated surpluses in recent years, and their balance of trade and export figures are usually positive. They already sorted out their national finances with tough reforms in the 1990s and, like Germany, they are also export-oriented.

At the same time, all the northern European countries insist on national autonomy, particularly Denmark and Sweden, neither of which belong to the euro zone.

Finnish Finance Minister Jyrki Katainen is reserved in expressing his view of the German-French push for a new euro crisis mechanism, although he does see it as a solo effort on the part of the two large countries and as a "serious matter." The director of the Finnish Institute of International Affairs, Teija Tilikainen, fears that the way Merkel and Sarkozy came to an agreement in advance is "not an isolated case, but is becoming a habit."

On the other hand, say banks and economic institutes, threatening debtor nations like Greece with sanctions is "very educational." And it is "normal" for Germany to promote its own interests within the union, says a senior official with the Finnish Finance Ministry. The stronger emphasis on the large countries is part of democracy, he adds. "Smaller countries cannot have the same influence as the large ones."

Lack of Forethought

So is it all just a tempest in a teapot? No, says Hubert Fromlet, the chief economist at Swedbank for many years and now a professor of international economics at Sweden's University of Kalmar. "There is a lack of positive forethought," says Fromlet, who wonders why the German government can't organize a special meeting in Germany to point the way on what happens next with the euro.

But questions of fiscal policy aren't the only things at stake. The EU project itself is on the line, a project that became a model of success over decades and has anchored Germany at the center of Europe.

The reversion to national interests, previously the privilege of the French and the British within the EU, is especially serious in Germany, because the once familiar commitment to the European idea has become rare. The generation of Luftwaffe auxiliary personnel or Résistance fighters on both sides of the Rhine is no longer in office. And popular support for Europe is suffering as a result of the fact that many Europeans are too young to have much first-hand experience of border checkpoints and currency exchanges. The displeasure over bickering in Brussels outweighs the joy over an increasingly borderless and, despite everything, prosperous Europe.

Concerns about Germany's Reputation

No one in Berlin has any illusions over the image Germany currently has in Europe . "Once again, Germany's image has deteriorated considerably in some EU member states, as a result of its position on overcoming the euro financial crisis," reads a report prepared in July by the European division of the German Foreign Ministry.

But what is to be done, if not even the Germans can agree over how to change this perception? Günther Oettinger, the German EU energy commissioner, says that in the current global economic crisis, one has to "accept that every government will initially be committed to safeguarding its own interests and those of its citizens." Berlin, together with France, cannot please the remaining member states, says Oettinger.

But former European Commission Vice President Günter Verheugen disagrees, saying that some national leaders, particularly in Germany and France, have lost their European compass. Verheugen believes that there is a lack of "political leadership that places the European common good above national egoism."

European policy experts within the German coalition government are also becoming more and more concerned about the country's reputation. "We have to get the small EU countries more involved again," says Gunther Krichbaum, the chairman of the Committee on European Affairs in the German parliament, the Bundestag. "If they feel treated as extras, we shouldn't be surprised by such reactions." Besides, he adds, Germany needs to explain its European policy more effectively to its partners.

This is a view that only some people in Chancellor Merkel's camp share. They feel that Berlin should simply put up with the critical reactions coming from other countries, a position Merkel also supports. But at the Foreign Ministry, Merkel's language and that of her staff are a source of resentment.

Foreign Minister Guido Westerwelle's diplomats are annoyed that Merkel is not even willing to make small gestures to Germany's partners. Incompetents are at work in the Chancellery, they say. Apparently there is a lack of a European vision.

FIONA EHLERS, MANFRED ERTEL, WALTER MAYR, RALF NEUKIRCH, CHRISTOPH SCHULT, STEFAN SIMONS, HELENE ZUBER

Translated from the German by Christopher Sultan
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