Germans are angry. Some of them are outright enraged. And almost anyone with a basic awareness of current affairs feels deeply frustrated.
Back in 1999, when the euro was born, Germany’s number one concern was that it would somehow have to cover up for the excesses and crooked ways of southern European governments. Now it’s happening. The European Union is about to sign a second hefty cheque for Greece, something politicians obstinately call a loan, but many suspect is plainly a cash handout. That comes on top of $150 billion the EU and the International Monetary Fund already started injecting into the Greek economy in 2010. In both cases, Germany, Europe’s economic powerhouse, gets to do most of the financial heavy lifting. “The Greeks are going to bankrupt Germany,” the Bild, a German tabloid with a daily circulation of three million, wrote last year in anticipation of the first bailout. The paper even sent a reporter to Athens to hand out bundles of drachmas, the old Greek currency, a stunt meant to persuade the country to drop out of the euro. It was a rude joke many condemned as irresponsible populism, but one that captured the riotous mood of German public opinion.
Even highly respected and normally poised German newspapers, such as the venerable Frankfurter Allgemeine, have been lashing out at “the failure” of the Greek bailout. “I find it embarrassing that we are paying so much money for other countries who have not been able to deal correctly with their money,” says Joachim Jahn, an editor at the paper. Not everyone feels as chafed as Jahn, but many are starting to question whether Europe is really all that good for Germany. A recent poll showed that 63 per cent of Germans have low to no confidence in the EU.
It’s a sea change from the era of Helmut Kohl, the legendary German chancellor who oversaw the country’s reunification in 1990 and was one of the founding fathers of the euro. “Everything Kohl’s generation did was related to the Second World War,” says Heike MacKerron of the German Marshall Fund of the United States, a public policy institution based in North America and Europe. Being at the centre of the European project of integration was Germany’s way to redeem itself from horrors past, and anchoring itself to the Western promise of democracy, peace and prosperity.
That sentiment, though, is largely lost on newer postwar generations, says MacKerron. Most Germans greatly appreciate the opportunity to walk around Europe’s historic capitals and the continent’s gorgeous southern beaches armed with little more than a camera and the unmistakable Birkenstock sandals with socks. But passport-free travel, and many other treasured perks that came with Europe’s integration, are no foundation for a deep emotional attachment to the union. Younger generations are also increasingly looking beyond the Old Continent. Germany, goes the new-found wisdom, needs the BRICs (Brazil, Russia, India and China, the world’s main emerging markets) more than it does the PIIGS, the unflattering acronym that stands for Portugal, Ireland, Italy, Greece and Spain, the eurozone’s most vulnerable economies, according to a report by the European Council on Foreign Relations, a Europe-based think tank.
And, at times, German foreign policy seems to reflect that conviction. Under former chancellor Gerhard Schröder, who famously called Russia’s Vladimir Putin “a flawless democrat,” Germany cozied up to Moscow more than many a Brussels bureaucrat would have liked. Under the current chancellor, Angela Merkel, Berlin raised eyebrows in several European capitals by siding with Russia and China in the UN Security Council when it abstained from voting in favour of NATO’s mission in Libya in March. And it did so again last month when it agreed to set up regular intergovernmental meetings with China, something Beijing shied away from doing with any other European country. “Euroskepticism has become more socially acceptable, if not chic,” write the authors of the ECFR report. And with Italy now also reportedly at risk of being shut out of the capital markets, as it emerged last week, that wariness is likely to grow stronger.
But do Germans actually have a right to feel so vexed? A number of prominent analysts are arguing that Berlin has two very good reasons to want to help Greece and other struggling economies: first, seeing that German banks hold potentially up to $34 billion of Greek debt, a default in Athens would have serious consequences for Germany itself, not to mention what would happen if a financial collapse there triggered a chain reaction that dragged down much bigger economies such as Spain and Italy as well. Second, Germany’s turnaround from stagnation in the early 2000s to 3.2 per cent GDP growth in 2006 was in part due to German manufacturers getting a boost from the euro, which allowed them to export more cheaply than they would have been able to under the defunct Deutschmark. And vice versa: while German exports grew, Europe’s most vulnerable economies lost the competitive edge they once had thanks to their weaker currencies, something that inflated their trade deficits and sent public sector debt through the roof.
That, roughly, is what Chancellor Merkel and German Finance Minister Wolfgang Schäuble have been at pains to tell their voters. Others, though, argue that the bailouts of Greece won’t work, and Germany would be right to want out. One of them is Derek Scott, once an economics adviser to former British prime minister Tony Blair. With the euro, “if you do the right things you get penalized, and if you get into a mess you can’t get out of it,” he told Maclean’s, a statement that sounds eerily and irresistibly persuasive. The Greek economy, he argues, has become so uncompetitive that it will never be able to get back on its feet unless it exits the euro, and restores control over its exchange rate. If it remains in the monetary union, it won’t be able to start growing again and, consequently, get its budget deficit under control—no matter how savagely it slashes its budget and hikes up taxes. The only way for Athens to survive, then, will be a lifeline of cash from Europe, and principally Berlin, something that would ultimately “wreck Germany,” he says.
Admittedly, Scott’s is a peculiarly gloomy outlook. Greece is also receiving help from the International Monetary Fund, which has a long record of dealing with economies that have gone belly up, and it could still get back on its feet, says Michael Burda, a professor of economics at Berlin’s Humboldt University. Of course, he says, it’s unthinkable for Germany to be asked to pick up the tab forever, but, he adds, Europe has “enough ammunition to rescue Greece, Portugal and potentially a piece of Ireland.” Saving the euro, he adds, is not a lost cause, and Germans should keep at it. Of course, “if Spain nosedives, it’s over,” he says. But not for now—despite the chagrin in Germany.