German Power in the Age of the Euro Crisis
'The Fourth Reich': What Some Europeans See When They Look at Germany
Following World War II, a German return to dominance in Europe seemed an impossibility. But the euro crisis has transformed the country into a reluctant hegemon and comparisons with the Nazis have become rampant. Are they fair? By SPIEGEL Staff
May 30, 1941 was the day when Manolis Glezos made a fool of Adolf Hitler. He and a friend snuck up to a flag pole on the Acropolis in Athens on which a gigantic swastika flag was flying. The Germans had raised the banner four weeks earlier when they occupied the country, but Glezos took down the hated flag and ripped it up. The deed turned both him and his friend into heroes.
Back then, Glezos was a resistance fighter. Today, the soon-to-be 93-year-old is a member of the European Parliament for the Greek governing party Syriza. Sitting in his Brussels office on the third floor of the Willy Brandt Building, he is telling the story of his fight against the Nazis of old and about his current fight against the Germans of today. Glezos' white hair is wild and unkempt, making him look like an aging Che Guevara; his wrinkled face carries the traces of a European century.
Initially, he fought against the Italian fascists, later he took up arms against the German Wehrmacht, as the country's Nazi-era military was known. He then did battle against the Greek military dictatorship. He was sent to prison frequently, spending a total of almost 12 years behind bars, time he spent writing poetry. When he was let out, he would rejoin the fight. "That era is still very alive in me," he says.
Glezos knows what it can mean when Germans strive for predominance in Europe and says that's what is happening again now. This time, though, it isn't soldiers who have a chokehold on Greece, he says, but business leaders and politicians. "German capital dominates Europe and it profits from the misery in Greece," Glezos says. "But we don't need your money."
In his eyes, the German present is directly connected to its horrible past, though he emphasizes that he doesn't mean the German people but the country's ruling classes. Germany for him is once again an aggressor today: "Its relationship with Greece is comparable to that between a tyrant and his slaves."
Glezos says that he is reminded of a text written by Joseph Goebbels in which the Nazi propaganda minister reflects about a future Europe under German leadership. It's called "The Year 2000." "Goebbels was only wrong by 10 years," Glezos says, adding that in 2010, in the financial crisis, German dominance began.
For a long time, it was primarily the Germans who obsessed about their country's Nazi past, but recently, other countries in Europe have joined them. Chancellor Angela Merkel with a Hitler moustache, German tanks heading south: There has been a flood of such caricatures in Greece, Spain, Britain, Poland, Italy and Portugal in recent weeks and years. And Nazi symbols have become de rigueur at anti-austerity demonstrations.
People have even begun talking about the "Fourth Reich," a reference to the Third Reich of Adolf Hitler. That may sound absurd given that today's Germany is a successful democracy without a trace of national-socialism -- and that no one would actually associate Merkel with Nazism. But further reflection on the word "Reich," or empire, may not be entirely out of place. The term refers to a dominion, with a central power exerting control over many different peoples. According to this definition, would it be wrong to speak of a German Reich in the economic realm?
A Shadow over the Present Day
Greek Prime Minister Alexis Tsipras certainly doesn't have the impression that he is free to steer his country's policy as he likes. This Monday, he is in Berlin for meetings with the German chancellor, at which Germany's national-socialist past will be a topic of conversation. Greece is demanding that Germany pay reparations for Nazi war crimes visited on the country during World War II.
Those demands, of course, have much to do with the desperation now being felt by a government that has thus far acted with a significant degree of amateurism. But it would be a mistake to believe that the German past is no longer relevant. Again and again, it casts its shadow over the present day.
A heavy accusation has been levelled at Germany -- by some in Greece, in Spain and in France but also by some in Great Britain and in the United States. The euro crisis, a certain breed of politicians, journalists and economists argue, has allowed Germany to dominate Southern Europe and to suffocate it in order to impose its principles even as its export policy has meant that the country has profited from that same currency crisis more than any other country. Germany's image in some countries has become one of an egotistical economic occupier flanked by smaller Northern European countries from the same mold.
Graphic: German Dominance
The accusations come primarily from opinion-makers in countries that have experienced years of mass unemployment and the anger is palpable, which is why the demons from Germany's past are returning. And it is hardly surprising that those now suffering humiliation would demand payment of past debts. Germany's historic guilt is now being wielded by the powerless as a weapon to make noise and be heard.
Surveys abroad, to be sure, have found that Germans are widely respected overseas. But in Europe today, people are nevertheless quick to cry Nazi when German policy becomes uncomfortable.
The accusations against the German government have a strange dialectic: Germany is dominating, people say, but it isn't leading. It is a hegemon, but a weak one. That, too, leads us to history. In his 1987 book "From Bismarck to Hitler," historian Sebastian Haffner wrote that turn-of-the-century Germany had an "unwieldy size." It was, he said, both too big and too small. That may be true once again.
How, then, does Germany's role in Europe look at the moment when viewed from outside? And inside?
'Tank Divisions of Yore'
Next to the Milan stock exchange, not far from where an 11-meter (30-foot) tall sculpture of a middle finger offers its unique commentary on the decline of high finance, the headquarters of the newspaper Il Giornale can be found. There, in exactly the same office once used by renowned Italian journalist and author Indro Montanelli, Vittorio Feltri is now sitting. Seventy-one years old, Feltri has been a journalist for more than half a century with Corriere della Sera and other papers. Last year, he published a remarkable book together with another well respected journalist named Gennaro Sangiuliano, deputy head of news for the national broadcaster Rai 1. Its title: "The Fourth Reich: How Germany Subdued Europe."
It isn't just desperate, radicalized demonstrators who draw comparisons to the past. Often, respected intellectuals and citizens who are free of financial concerns, like Feltri and Sangiuliano, do the same.
The two authors see the euro as a means to a German end, writing that the common currency is reminiscent "rightly or wrongly " of the "tank divisions of yore." The euro, they believe, is to secure territory under German control. And Germany's high court, the Bundesverfassungsgericht? "Sounds like a Wehrmacht weapon." They write of Chancellor "Merkiavelli, in her pretentious headquarters, the "Kohlosseum," and say that she is now completing the plan that Hitler failed to make reality. The book, says Feltri, is intended as a polemical tract meant to point out the "unsuitability of this common currency that only Germany is profiting from."
A large share of Italy's political class shares Feltri's view. Last year, the Social Democrat Romano Prodi, former president of the European Commission, raised eyebrows with an essay published in the periodical L'Espresso. "In Germany, populist and nationalist sentiments are covered by Merkel," he wrote. "But in Brussels in recent years, only one country has determined the direction ; Germany has even seen fit to teach others unacceptable moral lessons."
Whereas Italian Prime Minister Matteo Renzi is careful to emphasize his proximity to Germany, radical tones can be heard on the right wing. Germany expert Luigi Reitani said at a conference late last year that some in Italy have begun drawing "a line from the barbarian invasions via Bismarck and Hitler to Merkel."
Things sometimes sound similar in France. Arnaud Montebourg, who would later become economics minister, said in 2011 that "Bismarck united the German principalities to rule over Europe and, in particular, France. In a shockingly similar way, Angela Merkel seeks to solve her domestic problems by foisting the economic and financial order adhered to by German conservatives onto the rest of Europe." In other words, Germany's former expansionary policies have returned in the economic realm.
'The Blood of Our People'
The fear of German hegemony in Europe is likely nowhere so great as it is in France, which was at least partially occupied by its neighbor three times during an 80-year period. In recent years, "Germanophobia" has increased dramatically across the political spectrum, from Front National to the leftist wing of the governing Socialists. That has partially served to distract attention from political leaders' own failures to implement reform, but they are nonetheless sentiments that deserve to be taken seriously.
The leftist French intellectual Emmanuel Todd warns that Germany is "increasingly pursuing politics of power and of hidden expansion." Europe, he says, is being ruled by a Germany which, in its past, has constantly fluctuated between reason and megalomania. Since reunification, Todd says, Germany has brought a huge area of Eastern Europe under its control, a region once under the influence of the Soviets, to use it for its own economic aims.
In Athens, in a building belonging to the Ministry of Culture, Nikos Xydakis, deputy culture minister for the Syriza government, echoes the sentiment.
"It is as though my country were experiencing the consequences of war," he says. European savings policies have ruined Greece, he says: "We have lost a quarter of our gross domestic product and a quarter of our population is unemployed." Furthermore, he said, Greece didn't ask for emergency loans, they were forced upon the country together with the cost-cutting program. "Now we are paying with the blood of our people."
Germany, he says, has become too powerful in Europe. The country, he concedes, is a leader both politically and economically. "But those wanting to be a leader have to behave like one too." Germany, he says, should be more generous and stop viewing weaker countries in Europe as its inferiors.
Xydakis says that he has to pay rent for his office because the building was sold to a fund to help pay back Athens' debts. "I feel as though we were in Leipzig or Dresden with the bombs raining down." The only difference, he says, is that the bombs of today come disguised as savings measures.
For him -- just as for almost all critics of German policy -- a single word has become the focus of their complaints: austerity. It refers to policies of thrift, a concept that has positive connotations in Germany. But in European countries hit hardest by the debt crisis, it stands for a bleak policy of externally-imposed deprivation. Germany isn't just exporting its goods anymore, it is also exporting its rules.
Aggressive Trade Policy?
The goods, to be sure, are sold without any form of coercion. Europe loves products from Germany, and Berlin's export surplus in 2014 stood at more than 7 percent of economic output. An export surplus means that Germany, in trading with other countries, takes in more money than it spends on their products. The difference often flows back out of Germany in the form of so-called capital exports. In other words, banks in Germany loan foreign companies money so that they can buy German products.
Since the turn of the millennium, Germany's trade surplus has almost quadrupled and now stands at 217 billion ($236.4 billion). With France alone, the surplus was 30 billion in 2014. Even if exports to euro-zone member states dropped as a result of the crisis, no other country in the world has a trade surplus as large as Germany's. Why is that? Is it because of aggressive trade policy?
German economist Henrik Enderlein is not dogmatic and doesn't view the world through a national lens. A professor of political economics at the Hertie School of Governance in Berlin, Enderlein studied in both France and the US, worked at the European Central Bank (ECB) and taught at Harvard. He is an economic advisor to Germany's Social Democrats and his father was a politician with the business-friendly Free Democrats. "The fact that Germany today has the highest trade surplus of all countries has a simple reason," he says. "After the introduction of the euro, we had no other choice than to become more competitive. But it is absurd to believe that Germany did so in order to harm other countries."
Enderlein believes that Germany didn't consciously strive for its current roll but that it happened due to the structure of the euro zone. He also believes that the ECB is partially to blame because in the years after the euro's 1999 introduction, the euro zone's prime interest rate was kept between 3 and 4 percent. For southern European countries, this was much too low and led to a boom with rapidly climbing salaries and prices. For Germany, on the other hand, such interest rates were too high and employers had no choice but to keep salaries low so as to keep their products affordable. At first glance, that doesn't seem aggressive, but southern European countries complained that Germany was guilty of "wage dumping," or keeping domestic wages artificially low.
The resistance to rising wages led to German growth, self-confidence and, as a result, power. When Angela Merkel travels to Brussels, she does so as the leader of by far the strongest economy in the euro zone. Policies she doesn't agree with don't get passed. Power as such isn't a bad thing when those that have it use it wisely. But do they?
There is a new tone in Germany. It is one that no longer abides by the noble customs of diplomacy. Whispering, suggesting and hinting have been replaced by ranting and blustering.
Here is what this new tone sounds like coming out of the mouth of German Finance Minister Wolfgang Schдuble. Of Greece, he said that "a country that for decades has suffered and lived far beyond its means due to the failure of its elite -- not because of Europe, not because of Brussels and not because of Berlin but exclusively because of the failure of its elite -- has to slowly come back to reality. And when those responsible in this country lie to their people, it's not surprising that the people react as they have." He made the comments last Monday at an event hosted by the center-right foundation Konrad Adenauer Stiftung.
The day before, Bavarian Finance Minister Markus Sцder sounded similarly aggressive during an appearance on a German talk show with Greek Finance Minister Yanis Varoufakis. He didn't miss a single opportunity to gloat about Bavaria's economic and financial strength.
Volker Kauder, the conservatives' floor leader in German parliament, is the author of a particularly triumphalist example of the new tone, uttered way back in 2011. At a party conference of Merkel's Christian Democrats in Leipzig, Kauder said in a speech: "Suddenly, German is being spoken in Europe." Though CDU delegates loved it, the sentence was not well received further afield and Kauder now says he wouldn't repeat it.
Merkel, of course, would never adopt such a tone, at least not publicly. She is more careful, her utterances sometimes so twisted that it isn't immediately obvious what she is trying to say. Last Tuesday, she told conservative parliamentarians in
Berlin that "Germany must be a country that doesn't leave anything untried in the search for progress." She meant progress elsewhere, in Greece.
The chancellor has an expansive project that is to ultimately result, one could say tongue in cheek, in a Merkel Reich. She isn't nearly as focused on Europe as her predecessor Helmut Kohl, who wanted to see Germany dissolve into the European Union. Merkel thinks more in nation-state terms, but she knows that Germany alone will have little influence on the world. Countries that want to have a say must have a large population and a strong economy. Germany has the latter, but, relative to China or the US, lacks the former -- which is why Germany needs populous Europe. But it must be a competitive, economically powerful Europe -- and that is what Merkel is working toward.
Early on in the euro crisis, she developed ideas for so-called bench-marking. The concept called for European countries to be measured in several categories against the best in that category, which was often Germany. In this way, a German Europe would be created.
In the battle against the debt crisis in Ireland, Spain, Portugal, Cyprus and Greece, Europe considered two different approaches. The southern countries wanted to stimulate growth through increased spending in the hope that state revenues would climb. Germany and northern European countries, by contrast, preferred cost cutting and structural reforms, an approach that made significant demands of the citizens of the countries affected.
The economically powerful Germany got its way. In order to put the struggling countries on the right track -- on the German track, that is -- Merkel brought in the International Monetary Fund so as to free Germany from having to play the strict overseer. Still, it has not escaped notice that Berlin is in charge.
From an early point in the crisis, other European leaders dared to protest openly. Then Polish Prime Minister Donald Tusk said that he had "fundamental doubts about the method" and asked Merkel at an EU summit: "Why do you have to foment division?" But three quarters of a year later, Merkel got her way with the passage of the rather German concept of a "fiscal pact." In addition, EU leaders agreed to anchor debt limits in their national constitutions, to impose stricter penalties for those who exceeded maximum deficit limits and to pass structural reforms on the model of those Germany passed from 2003 to 2005. German sociologist Ulrich Beck, who has since passed away, referred to the pressure being exerted on Europe from Berlin as "Merkiavellismus."
The change in Germany's approach to European policy has been dramatic. Helmut Kohl sought to avoid isolation at all costs when it came to important negotiations, but Merkel has all but completely rejected that approach. "I am rather alone in the EU, but I don't care. I am right," she once said to a small group of advisors during a discussion about the role of the IMF. Later, she said: "We are in Europe what the Americans are in the world: the unloved leading power."
European Parliament President Martin Schulz says that during his campaign in 2014 as the center-left's lead candidate, he was frequently asked: "How can you run for the office of European Commission president? You're German after all." Schulz, it must be said, speaks four languages fluently, has spent almost his entire political career in Brussels and has long fought for positive German-French relations. "I was seen as being part of the German dominance," he says. "There is this feeling that Germany is too powerful, but when you ask questions about it, you never get a concrete answer."
Senior officials in the Chancellery have reflected on how things got to this point and have come to the conclusion that much of it has to do with the larger role played by nation-states in the euro crisis. Only national governments, after all, were able to mobilize bailout money fast enough for ailing euro-zone partners. In addition, the further the French economy fell behind, the more powerful Germany appeared.
Merkel is sometimes referred to as "Madame Non." When one of the other EU leaders finishes speaking during European summit meetings in Brussels, it is said, people tend to look first at Merkel to gauge her reaction.
But caricatures of her with a Hitler moustache? Referring to today's Germany as the "Fourth Reich"?
The Nazis called their Germany the "Third Reich" in an effort to place themselves in a line with two previous eras of German dominance. The first was the Holy Roman Empire, born in the Middle Ages. Far from being a nation state, it was an area ruled over by mostly German emperors who controlled a large portion of Europe, all the way to Sicily. It came to an end in 1806 after Napoleon conquered many areas that once belonged to the empire. The second reich, according to this count, was the so-called Kaiserreich that Bismarck founded in 1871 after victories over Denmark, Austria and France. The smaller German states soon joined together under Prussian leadership, which is why Bismarck is considered today to have laid the groundwork for contemporary Germany. On April 1, his 200th birthday will be celebrated.
But soon after the founding of the Kaiserreich, a dangerous sentiment began to spread. It was a German hubris, a feeling of being superior to others, to know better and to be better. But it was mixed together with pusillanimity and a sense of being threatened.
The Dominance of Others
Bismarck's reich, under Emperor Wilhelm II as of 1888, was also of an awkward size. It was too large in the sense that it was the most powerful state in Europe, leading France, Britain and Russia to all feel threatened. But it was too small to rule over Europe by itself. The Germans too had to form alliances -- and the internal and external logic of these alliances was one of the most important reasons for the outbreak of World War I. The Kaiserreich lost, and broke apart in 1918.
Hitler believed that his "Greater Germany" was large enough to rule over Europe, but he was badly wrong. Even with the most brutal of war tactics and oppression, Nazi Germany was unable to defeat the Allies.
After the end of the Third Reich, German dominance on the Continent appeared to have been rendered an impossibility for all time. West Germany and East Germany both were initially tentative states that more or less willingly subordinated themselves to their big brothers, the US and the Soviet Union. They ceded to the dominance of others.
West Germany, though, soon developed a new -- economic this time -- instrument of power: the deutsche mark. Because the West German economy grew rapidly and its sovereign debt remained relatively manageable, the German central bank, the Bundesbank, dominated economic and financial policy in Europe in the 1970s and 80s. Governments in France, Britain and Italy paid close attention to the decisions being made in Frankfurt. Shortly before German reunification, a senior official in the office of the French president was quoted as saying: "We may have the nuclear bomb, but the Germans have the deutsche mark."
Franзois Mitterrand, president of France when the Berlin Wall fell, was not a fan of German reunification. He was afraid that a German colossus in the middle of Europe might soon begin seeking political dominance once again. British Prime Minister Margaret Thatcher believed so too, as did many Germans, particularly on the left wing. Author Gьnter Grass believed the country would return to its old hubris, its feeling of superiority.
German national team trainer Franz Beckenbauer seemed to confirm as much in 1990 when, after winning the World Cup in Italy, he said: "We are now that number one in the world after long having been the number one in Europe. Now, we are getting the players from (East Germany). I'm sorry for the rest of the world, but the German team won't be beatable for years to come."
In the political realm, too, there were occasional signs of megalomania. Chancellor Helmut Schmidt believed himself to be the best economist in the world in the late 1970s and early 1980s. When he met with US President Jimmy Carter, he didn't see it as a meeting between the big US and little Germany, he saw it as a meeting of big Schmidt and little Carter -- and not because of their physical sizes. Then, in the 1990s, came Oskar Lafontaine, a member of the Social Democrats at the time. As German finance minister in 1998, Lafontaine undertook the first effort to rebuild Europe according to Germany's vision. Because he wanted to harmonize European financial markets and was fighting for a currency union, the British tabloid Sun wondered if he was "the most dangerous man in Europe."
Too Small and Hesitant?
Ultimately, Lafontaine failed, and the German national team likewise experienced its share of losses, at least until 2014. Furthermore, united Germany initially kept a low political profile and remained modest. But then, the euro arrived, which Mitterand hoped would take away Germany's "nuclear bomb." The euro was supposed to break Germany's economic dominance, but it has had the opposite effect. The shared currency has bound together the fates of euro-zone member states and granted Germany power over the others.
Which is why the "German question" has returned. Is the new Germany too big and powerful for the other European countries or is it too small and hesitant?
Hans Kundnani is head of research at the European Council on Foreign Relations, a pan-European think tank based in London. His focus is German foreign policy and he has written a widely noted book about Germany called "The Paradox of German Power." Kundnani links the old German question with the new debate about Germany's role in the euro zone. The strength of Germany's economy combined with mutual dependence of the member states has created, he argues, economic instability that is comparable to the political instability that characterized the Bismarck era.
The problem, Kundnani believes, is not so much that Germany is exercising hegemonic power in Europe, but that it is only halfway exercising such power. It is focused entirely on itself -- and it may be too small for the role that it should be playing.
"Germany is once again a paradox. It is strong and weak at the same time -- just like in the 19th century after unification, it seems powerful from the outside but feels vulnerable to many Germans," Kundnani writes. "It does not want to 'lead' and resists debt mutualization, but at the same time it seeks to remake Europe in its own image in order to make it more 'competitive.'"
"Lead," in this context, means to frequently pay, which is also how Varoufakis sees things. The Greek finance minister wants Merkel to establish a kind of Marshall Plan, just like the US once did to get postwar Europe back on its feet.
A real hegemon like the US, Kundnani writes, doesn't just establish norms. It also creates incentives for those it rules over so that they remain part of the system. To do so, it must compromise in the short term so as to secure its long-term interests.
'More Like an Empire'
Germany, to be sure, has been the primary backer of two Greek aid packages, but they haven't proven sufficient. The new Greek government aims to fundamentally change the euro zone, establishing more mutualized debt and fewer German rules. Others agree. "This is not a monetary union," the Financial Times wrote back in May, 2012. "It is far more like an empire."
The investor George Soros warned that Europe could become split between countries with trade surpluses and those with deficits, describing it as a German empire in the middle of Europe with the periphery as its hinterlands. Empire, of course, is another word for Reich.
In today's world, dominated as it is by economic issues, rulers and the ruled have ceded their historical roles to creditors and debtors. Germany is Europe's largest creditor. Creditors have power over the debtors: They expect gratitude and they often have clear ideas regarding what the debtors must do so that they can one day pay back the money they owe. Creditors are not generally well liked.
Creditors want to have power over their debtors because they are afraid. Afraid that they won't see their money again. Germany could pay Greece's debts, but not those of Italy and Spain.
Germany may be big enough to impose its rules on Europe, Kundnani writes, but it is too small to be a real hegemon. Just like it was before World War I, Germany is afraid of being encircled by smaller countries. A part of that fear is that the ECB could ultimately be controlled by Southern European countries and that the power could be transferred to the debtor countries.
Germany is acting not like a hegemon, but like a "semi-hegemon." It is an argument previously made by the German historian Ludwig Dehio in describing Germany's position in Europe after 1871. Though the context was radically different, former Polish Foreign Minister Radoslaw Sikorski also said in a speech in Berlin in November 2011 that he was less afraid of German power than he was of German inaction and urged Germany to take the lead in Europe.
Kundnani has observed a tendency for Germans to see themselves as being the real victims of the euro crisis -- a view that is in diametric opposition to how debtor nations see things. Aggression is the result, to be seen in the new political "tone" in Germany or in the German tabloid Bild, which never tires of calling the Greeks "greedy."
Misguided Nazi References
Whereas Germany has dominated Europe economically during the euro crisis, it has remained a foreign policy dwarf. The apex of this refusal to play a significant political role was its abstention in March 2011 United Nations Security Council vote on the NATO intervention in Libya. European partners like France also saw the vote as a step backwards for Germany. After all, the country had been involved in the Kosovo air strikes as well as the Afghanistan war.
Viewed superficially, the call for more German leadership, which has been heard from many Eastern European countries in recent years, stands in marked contrast to the complaints of Germany's economic dominance. But the two are connected. Germany seeks to be an economic power, but not a military one. Its nationalism is based on economic output and export statistics, not on a desire to become a geo-political power. The same dilemma can be seen in the role Germany has played in the Ukraine crisis.
Germany, Kundnani writes, "is characterized by a strange mixture of economic assertiveness and military abstinence." For that reason alone, the references to the Nazi period are off base. It is not about violence or racism. It is about money. And that is a vast difference, even if monetary questions can be uncomfortable as well.
But an empire is in play, at least in the economic realm. The euro zone is clearly ruled by Germany, though Berlin is not unchallenged. It does, however, have a significant say in the fates of millions of people from other countries. Such power creates a significant amount of responsibility, but the government and other policymakers nevertheless sometimes behave as though they were leading a small country.
Germany is, in fact, not big enough to solve the problems of all the others with money. But it would still be important sometimes to show more greatness, sometimes by way of generosity. And it would certainly be easier to make progress in Europe without the new polemic tone from Munich and Berlin. Power and greatness can sometimes be shown by ignoring the inappropriate comparisons, or by elegantly refuting them.
By Nikolaus Blome, Sven Bцll, Katrin Kuntz, Dirk Kurbjuweit, Walter Mayr, Mathieu von Rohr, Christoph Scheuermann, Christoph SchultSource: www.spiegel.de