By Lionel Barber, Quentin Peel and Gerrit Wiesmann in Berlin
Published: November 8 2010 20:55 | Last updated: November 8 2010 20:55
This week’s summit of the Group of 20 leading economies in Seoul may be shaping up to be ill tempered, but Angela Merkel seems to be positively looking forward to it.
The German chancellor is not entirely sanguine. She is worried about the revival of trade protectionism, not least in the US Congress, and the looming threat of currency competition turning into a new trade war.
But as she takes charge of pouring tea and coffee for visitors to her office in Berlin, Ms Merkel spells out how she hopes to be a peace-maker in Seoul if any confrontation develops between the US and China about exchange rates and trade imbalances. “I do not think it sensible to have a political argument,” she tells the Financial Times.
Unlike some leaders, Ms Merkel – re-elected last year for a second term as leader of Europe’s biggest economy – says she is a true believer in the value of the G20 grouping. She defends its success since 2008 in preventing the global economic crisis turning into a prolonged depression, and wants to see the disparate group of industrialised and emerging economies put on a more permanent basis.
Where some would argue that the group is too large to be decisive, the chancellor’s advisers say she likes the size, with the number of leaders round the table about the same as a European Union summit in Brussels.
A trip to Seoul gives Ms Merkel a chance, at least briefly, to put the problems of a fractious and unpopular coalition government in Berlin to one side. A high-profile performance on the world stage might help restore her flagging poll ratings at home.
Reviving global growth and defending free trade should also make it easier to handle the financial crisis within the eurozone, where the cost of government borrowing has soared for the weaker economies in the EU’s common currency area. The threat to the cohesion of European economic and monetary union has been the chancellor’s overwhelming concern since the outbreak of the debt crisis in Greece at the start of the year.
But top of her list of priorities for Seoul is to combat any new protectionism and try once more to revive the flagging Doha round of trade liberalisation and development talks within the World Trade Organisation.
As for the problem of global imbalances, pitting the huge trade surpluses of China and Germany against the deep deficit of the US, she is bluntly dismissive of Washington’s proposal that the G20 should set quantified targets to even them up. “Exchange rates should reflect the real economic strength of a country,” she says. “Particularly in view of the debate about China, we need to find facts and benchmarks to calculate what is a fair exchange rate. I don’t think much of quantified balance of payments targets.”
Global imbalances are not just influenced by exchange rates but are also a function of competitiveness, she argues. “The competitiveness of countries depends on many more issues than just weighing up imports against exports.” Simply setting a 4 per cent target for surpluses and deficits as a proportion of gross domestic product is “far too narrowly focused”. It is a more diplomatic way of dismissing a suggestion that senior German government officials reject as “rubbish” with “no scientific or academic basis”.
Part of the concern in Berlin about the US-led debate on global imbalances is that it shoves Germany into the same corner as China, ignoring the fact that Germany cannot manipulate its currency, the euro. “You cannot look at the European Union, with its single internal market, and a common currency in large parts of it, on a country-by-country basis,” the chancellor says. “One should judge Europe as a whole.”
In spite of her confident words, however, Ms Merkel is having to defend her policies, and her country, on several fronts.
Germany is under attack not only from the US for the size of its trade surplus – a matter of great pride to most German manufacturers and economists, let alone politicians. The same trade surplus is criticised within the EU, not least by France, ordinarily Berlin’s closest political ally. Meanwhile, Ms Merkel’s policy of sternly reducing public sector borrowing and outstanding debt, even while global economic recovery remains tentative, is under fire on both sides of the Atlantic.
The chancellor is unrepentant. She dismisses fears of any double-dip recession or prolonged 1930s-style downturn as exaggerated. “As far as Germany is concerned, I do not have that fear,” she says, “and if I think of the forecasts of the International Monetary Fund, I do not fear for the world economy either.”
One cause of the crisis “was that we did not have sustainable growth. In many countries growth was built on debt and [speculative] bubbles. In contrast, I now see the world in some regions returning to a sensible growth path. The greatest danger that threatens us is protectionism, and we are still not taking enough steps to ensure genuinely free trade”.
Ms Merkel defends the achievements of the G20 so far, arguing that the group has made notable progress in terms of global financial regulation and on the most substantial reform ever negotiated for the IMF. The Basel III agreement tightening rules on bank capital Ms Merkel depicts as “a splendid thing”, negotiated in less than two years, in contrast to the previous and less ambitious Basel II deal that took more than 10 years to finalise. “If that is now put into effect everywhere, we will have created a genuine crisis prevention mechanism,” she adds.
As for the IMF, “we have achieved the most comprehensive restructuring ever” in the run-up to the summit. “The new IMF structure reflects the power relationships in today’s world much better than before.” If the heads of government had not been breathing down their necks, the G20 finance ministers would not have been forced to reach agreement, she says.
The main gap on the regulatory map, she admits, is the lack of a deal on how to regulate banks that are considered “too big too fail”. Views were split within the Basel-based Financial Stability Board and “that remains an important task for 2011”.
The other item on the chancellor’s G20 agenda is to discuss exit strategies from the massive government spending policies pursued by the leading economies – including Germany – to prevent the global recession turning into a depression. Wolfgang Schäuble, the sharp-tongued finance minister who will accompany Ms Merkel to Seoul, left no doubt about his dismay at the US Federal Reserve’s latest decision to pump $600bn into the American economy in a new round of quantitative easing. He described US policy as “clueless”.
Ms Merkel is more measured. “The G20 has repeatedly stressed that the crisis can only be overcome if we dismantle all forms of obstruction and do not erect new ones,” she says with a disarming smile.
The two most powerful figures in the German government do not always see eye to eye on policy. Mr Schäuble was Ms Merkel’s predecessor as leader of the centre-right Christian Democratic Union and sees himself as the standard-bearer for Germany’s traditionally strong commitment to the EU and to the euro. Yet on the questions of strict control of debt and deficits in all member states of the eurozone, to ensure the stability of the common currency, they are twin defenders of budget discipline.
They are joint architects of Germany’s own tough spending curbs, to cut €80bn ($111bn) over the next four years. Both are also behind a determined German push for tougher sanctions to prevent eurozone members breaking the rules embodied in its stability and growth pact – and for changes in the EU treaty to create a “permanent crisis resolution” mechanism to prevent a sovereign default.
She defends Germany’s insistence on drastic austerity measures in the weakest eurozone economies – Greece, Ireland, Portugal and Spain – as essential for currency stability and future sustainable growth. “I do not see any contradiction between growth and stability,” she says. “We have already seen the allergic reaction in the markets to countries that combined excessive debts with inadequate competitiveness.”
Sanctions agreed by EU leaders late last month will focus on competitiveness benchmarks as well as traditional ceilings on debt and deficit. Ms Merkel also wants a draconian political sanction – the suspension of voting rights – for countries that repeatedly fail to curb their borrowing.
On almost everything, the chancellor persuaded fellow leaders to accept the German position. But on suspending voting rights she was forced to admit defeat. The others would not accept such a drastic change of the EU treaty. “It is a matter of very fundamental values,” says Ms Merkel. “For that reason, suspension of voting rights will not be part of the restricted treaty change, but it is not off the agenda as a theme for the future.”
She defends her insistence on changing the treaty to enable a crisis mechanism to be established. It was not because of fear of what Germany’s constitutional court might say. “My attitude was based as much on my own European political conviction as on constitutional concerns,” she says. “If we were to face another case such as Greece after 2013 – something I hope will not happen – then we must not face the same emergency ... We need a legal provision for a situation where the stability of the euro as a whole is threatened.” That could not be achieved without treaty change.
In Brussels, Ms Merkel has been criticised for putting Germany’s national interests first in a way that her former mentor and predecessor, Helmut Kohl, would never have done. But as far as she is concerned, her battle for new rules in the eurozone has been driven entirely by her pro-European stance and a determination to ensure the survival of the currency.
“If the euro fails, then Europe will fail,” says Ms Merkel, repeating her own dramatic words to the Bundestag at the height of the Greek debt crisis in May. For the German chancellor, that is the bottom line.
Waning popularity, Not just the economy: a political tenet dispelled
Received political wisdom holds that governments benefit when economies thrive and suffer when they do not – just ask US president Barack Obama, writes Gerrit Wiesmann. Not so in Germany, where the popularity of the coalition led by Angela Merkel’s conservative Christian Democrats has waned as the economic news has turned positive.
A year ago, when the chancellor ended her partnership with the left-of-centre Social Democrats (SPD) and invited the liberal Free Democrats to join her in forming her second government, the export-reliant economy was on course to shrink 5 per cent in 2009. This year it is set to grow 3.5 per cent. In the same period, opinion polls have moved in the opposite direction. Today, they give the coalition 37 per cent approval – down 12 points since last autumn’s election. The opposition bloc of the SPD and the Greens has risen 14 points to 49 per cent.
Ms Merkel in part puts this down to the political in-fighting that dogged the government in its first months, notably a long and ultimately vain campaign by the FDP to secure tax cuts. “Initially for sure we were too occupied with ourselves in the coalition, but this period is now over and the results we’ve produced speak for our Christian Democrat-Liberal government,” she says, citing her new energy plan, which aims to boost production of renewables; budget consolidation; and healthcare reform.
With a respected poll showing that only 9 per cent of Germans attribute recovery to the government – while 42 per cent credit the world economy – it is noticeable that the chancellor does not say she expects the economy eventually to revive her fortunes. Instead, policy will prevail. “Many people will be convinced [about the government] when our decisions start to unfold their effects,” she says. “Whoever bases policy only on short-term polling trends is in the wrong job.”
But for now her energy plan – which includes extending the operational lifespans of the country’s 17 nuclear power stations – has galvanised the chancellor’s opponents and the strong anti-nuclear movement. At the weekend, 50,000 demonstrators played cat-and-mouse with 17,000 police officers in an attempt to stop a train depositing nuclear waste in a northern storage facility – protest on a scale not seen since the end of the last century.
It is the ever-more pragmatic Greens, rather than the second-placed SPD, that have profited most from such mobilisation, polling a record 20 per cent. The FDP can muster only a lowly 5 per cent. This has fired speculation that Ms Merkel might try to govern with the environmentalists after the 2014 election. She brushes aside the idea: “There are a great many differences between the Christian Democrats and the Greens.”
But such “black-green” alliances already exist at regional and local level – so “a great many” differences does not necessarily imply too many.
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Less frank on Frankfurt
On one subject Angela Merkel refuses to be drawn: who should be the next president of the European Central Bank. Speculation in Germany is rife that the chancellor would like to see Axel Weber, president of the Bundesbank, appointed the ECB’s first German head, succeeding Jean-Claude Trichet next year. “There is not a lot to say, because no decisions have been taken,” she insists, declining even to comment on whether the job should go to a German. There had not even been a “preliminary decision”. But she adds: “We will find a worthy successor to Jean-Claude Trichet.”
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Thursday, November 11, 2010
Monday, November 08, 2010
Merkel warns on rise of protectionism
By Lionel Barber, Quentin Peel and Gerrit Wiesmann in Berlin
Published: November 8 2010 20:55 | Last updated: November 8 2010 20:55
The greatest danger facing the global economy is a return to trade protectionism, Angela Merkel, German chancellor, has warned ahead of this week’s meeting of global leaders in Seoul.
In an interview with the Financial Times before the G20 summit opens on Thursday, Ms Merkel suggested that China must be persuaded with “facts and benchmarks” to set a “fair exchange rate” for the renminbi, rather than be attacked for its currency policy.
Exchange rates should reflect the underlying strength of a country’s economy, she said. At the same time, she dismissed a US proposal to set specific targets for maximum levels of balance of payments’ surpluses and deficits as “too narrowly conceived”. Germany has been under attack for the size of its trade surplus.
“I don’t think much of quantified balance of payments targets,” she said, speaking in the chancellor’s office in Berlin. “It is not just a question of exchange rates, but also a question of competitiveness.” She expressed concern about new examples of non-tariff trade barriers being erected by G20 members, including in legislation in the US Congress, and “other attempts to make market access more difficult”.
Calling for a new attempt to complete the Doha development round of trade liberalisation measures in the World Trade Organisation, she added: “We have been talking about it for many years, but there is another chance in 2011 to complete it at last.
“The greatest danger that threatens us is protectionism, and we are still not taking enough steps to ensure genuinely free trade. There is something we can do that does not cost us much, and does not create any new debts, and that is to finish the Doha round. That is the priority for me.”
Ms Merkel was careful to balance her criticism of the US and China, defending the achievements of the G20 for preventing the global economic crisis turning into a prolonged downturn.
If all the member states agreed to implement the latest Basel accord on new rules for the capitalisation of banks, she said, “we will have created a genuine crisis prevention mechanism”.
She warned that more work was needed on measures to regulate banks that are “too big to fail”. “That remains an important task for 2011.”
In the longer term, she said, the G20 should be developed into a lasting institution, a job that would fall to France when it took over the presidency of the group from South Korea after the Seoul summit.
Germany is working with France to put currency co-ordination and measures to curb speculation in commodity markets at the top of the G20 agenda next year.
Ms Merkel defended her government’s plans to rein back its publicly financed economic stimulus from 2011, saying a discussion of exit strategies was necessary for all G20 members. Berlin has been criticised, especially from the US, for imposing excessive austerity measures.
She said Germany’s trade surplus, which hit a two-year high of €15.6bn ($21.7bn) in September, should not be calculated separately from the wider European trade balance. With a single market in the European Union, it was not meaningful to calculate on a country-by-country basis.
Copyright The Financial Times Limited 2010. Print a single copy of this article for personal use. Contact us if you wish to print more to distribute to others.
Published: November 8 2010 20:55 | Last updated: November 8 2010 20:55
The greatest danger facing the global economy is a return to trade protectionism, Angela Merkel, German chancellor, has warned ahead of this week’s meeting of global leaders in Seoul.
In an interview with the Financial Times before the G20 summit opens on Thursday, Ms Merkel suggested that China must be persuaded with “facts and benchmarks” to set a “fair exchange rate” for the renminbi, rather than be attacked for its currency policy.
Exchange rates should reflect the underlying strength of a country’s economy, she said. At the same time, she dismissed a US proposal to set specific targets for maximum levels of balance of payments’ surpluses and deficits as “too narrowly conceived”. Germany has been under attack for the size of its trade surplus.
“I don’t think much of quantified balance of payments targets,” she said, speaking in the chancellor’s office in Berlin. “It is not just a question of exchange rates, but also a question of competitiveness.” She expressed concern about new examples of non-tariff trade barriers being erected by G20 members, including in legislation in the US Congress, and “other attempts to make market access more difficult”.
Calling for a new attempt to complete the Doha development round of trade liberalisation measures in the World Trade Organisation, she added: “We have been talking about it for many years, but there is another chance in 2011 to complete it at last.
“The greatest danger that threatens us is protectionism, and we are still not taking enough steps to ensure genuinely free trade. There is something we can do that does not cost us much, and does not create any new debts, and that is to finish the Doha round. That is the priority for me.”
Ms Merkel was careful to balance her criticism of the US and China, defending the achievements of the G20 for preventing the global economic crisis turning into a prolonged downturn.
If all the member states agreed to implement the latest Basel accord on new rules for the capitalisation of banks, she said, “we will have created a genuine crisis prevention mechanism”.
She warned that more work was needed on measures to regulate banks that are “too big to fail”. “That remains an important task for 2011.”
In the longer term, she said, the G20 should be developed into a lasting institution, a job that would fall to France when it took over the presidency of the group from South Korea after the Seoul summit.
Germany is working with France to put currency co-ordination and measures to curb speculation in commodity markets at the top of the G20 agenda next year.
Ms Merkel defended her government’s plans to rein back its publicly financed economic stimulus from 2011, saying a discussion of exit strategies was necessary for all G20 members. Berlin has been criticised, especially from the US, for imposing excessive austerity measures.
She said Germany’s trade surplus, which hit a two-year high of €15.6bn ($21.7bn) in September, should not be calculated separately from the wider European trade balance. With a single market in the European Union, it was not meaningful to calculate on a country-by-country basis.
Copyright The Financial Times Limited 2010. Print a single copy of this article for personal use. Contact us if you wish to print more to distribute to others.
Thursday, April 08, 2010
Germany: A shifting Weltanschauung
Germany: A shifting Weltanschauung
By Quentin Peel in Berlin
Published: April 7 2010 20:21 | Last updated: April 7 2010 20:21
Paymaster no more. Angela Merkel arriving at last month’s Brussels summit, The chancellor once known as ‘Mrs Europa’ won her battle with fellow European Union leaders to resist an instant bail-out for Greece
When Angela Merkel first joined the government of Helmut Kohl as minister for women and youth affairs in 1991, the long-serving chancellor referred to the 37-year-old dismissively as “das Mädchen” – the girl.
Now she occupies his seat and she has a very different image. After her victorious battle in Brussels last month to resist an instant financial bail-out for Greece, the German media could not quite decide if she had become the Iron Lady, like Britain’s Margaret Thatcher, or the Iron Chancellor, in the tradition of Prussia’s Otto von Bismarck. Whichever it was, they liked it. Bild-Zeitung, the tabloid newspaper, ran a full-page mock-up of a memorial to Bismarck – who forged modern Germany from Prussia in the 19th century – with the head of Ms Merkel upon it. “No more the paymaster of Europe”, read the headline.
The greatest economic power in Europe, linchpin of the eurozone, Germany is not the country it was. Since 1990 – the year of reunification – it has become significantly poorer, with a lower per capita income and a lot less money to spare since pouring money into the former East Germany.
It has a new geographical perspective, too, as a central European rather than west European state. Its unquestioning adherence to the Atlantic alliance is no longer unquestioned. Its passionate commitment to European integration is also different. It has a new generation of leaders who never knew the second world war.
Does this mean Germany is no longer a reliable partner in the European Union and ally in Nato? Or does it just mean the country has become more normal, putting national interests first like its fellow members?
HELMET KOHL
‘Merkel learnt western policy like a foreign language from him’
The man most associated with Germany’s commitment to Europe in recent decades is Helmut Kohl, chancellor for 16 years, and 80 years old last Saturday. It was Mr Kohl, a ruthless party politician, who presided over reunification. Angela Merkel, the young woman from the east, became his best political pupil. And, after a party financing scandal in his Christian Democratic Union, it was Ms Merkel who forced him into political semi-oblivion.
“She is the perfect copy of Helmut Kohl,” says Professor Werner Weidenfeld of Munich university. “She learnt her western policy like a foreign language from him.” That meant she learnt the importance of forging Franco-German agreements when the two governments were most divided while also cultivating coalitions with smaller European Union members.
The difference is that she is much less willing to open the national cheque book. As chancellor, Mr Kohl regularly bought political deals in Brussels with German generosity. To win agreement on the Maastricht treaty in 1992, for example, he was the lead donor to cohesion funds for Spain and Portugal.
Ms Merkel is better than him at mastering complex briefs but lacks his conviction about the need for European integration, Prof Weidenfeld says. She is also a better operator at an EU level than she seems to be in Berlin. “What she is missing is the deep power infrastructure in every segment of party life,” he says. “He knew the personal connections and family history of every significant party member. She simply has not got that background or that memory.”
For Ms Merkel it is a tough balancing act. She has already proved herself a good European, the ultimate deal-broker in Brussels. But now she is praised at home for standing her ground over Greece.
Joschka Fischer, Germany’s pro-European former foreign minister, is appalled at the reaction to the Brussels summit. “One can hardly get one’s head round the decline in historical consciousness in our country,” he declared in the Süddeutsche Zeitung. “Neither Margaret Thatcher nor Otto von Bismarck were exactly models for Germany’s European policy, and for very good reasons. Neither had much if any conception of European integration.” The chancellor used to be praised as “Mrs Europa” for her pro-European attitude. She seemed to have reinvented herself as “Frau Germania”, he said.
Mr Fischer is famously outspoken. But his accusation picks up on a theme being debated in other European capitals: has Germany lost its European vocation and abandoned its belief in an “ever closer union” of member states? Either way, what sort of Europe would it like to see?
“Joschka goes too far,” says Volker Perthes, director of SWP, an international affairs institute based in Berlin. “He could say Gerhard Schröder, his former boss, was the first who tried to be Herr Germania. He was the one who said Germany would not be the paymaster of Europe.”
Professor Perthes, like a majority of political analysts and diplomats in Berlin questioned by this correspondent, cautions against a simplistic view of a newly selfish Germany. But the country has undoubtedly changed. “The environment is a different one,” he says. “We are not exposed on the eastern edge of western Europe. We are surrounded by a ring of friends. Germany is a bigger country, but it is also a bigger EU. What has remained is that Germany knows it needs the EU and Nato and the transatlantic relationship. The EU comes first. We know why we need it, but we are no longer prepared to be Mr Nice Guy, the big, fat paymaster, afraid of being accused of possible hegemony.
“What has changed is that the concept of national interest is no longer alien to the political vocabulary that Germans use. Our friends and neighbours always suspected that we had national interests. It is more transparent if we spell them out.”
One of the most senior European ambassadors to Berlin, and a long-time Germany watcher, sees the same shift from the other side of the table. “The accusation is that they will no longer put European interests above national interests,” he says. “I would like to hear of a single German chancellor who sacrificed German interests for Europe. Of course, Germany’s interest was in returning to normality via Europe.
“Before the euro, the Germans never came to anyone’s help in a financial crisis. They have never compromised their national interests for the sake of Europe. They [supported European integration] because they knew it was in their national interest – now, perhaps, more than ever.”
Helmut Kohl, the passionately pro-European German chancellor who presided over unification, was born in the second world war, a historian by training and inclination. Ms Merkel grew up in East Germany and trained as a physicist, analytical and pragmatic. She is pro-European by persuasion not passion.
“Germany’s European conviction today is still very clear,” the ambassador says. “But it is no longer a great love. It is rather that there is no alternative. The heroic spirit has gone. It is now a matter of normality.”
The questioning of Germany’s role in Europe concerns not only its position as paymaster. It also affects that other pillar of postwar identity: Nato membership and total commitment to the transatlantic relationship. A senior French diplomat once described the country’s attitude to the alliance as “more royalist than the king”.
That is no longer true, says Constanze Stelzenmüller, head of the Berlin office of the German Marshall Fund. “The odd thing about Nato is that the Germans have become deeply conservative, reluctant to change,” she says. “They don’t want to change the old strategic concept. They don’t want global alliances. They think the east Europeans exaggerate the Russian threat. But they are not being very innovative themselves.”
Prof Perthes does not question the commitment to Nato but sees doubts about its purpose. “They certainly don’t want to give it up,” he says. “A lot of history ties us. We owe our independence and our unity to Nato. But the threat perception has changed fundamentally.
“The old Nato enthusiasm you find today in Romania, Bulgaria or the Baltic republics. They want protection against Russia. They wanted to enter a cold war Nato. For Germany, that has gone. We are uneasy about the path Russia takes domestically but the fear of a Russian tank invasion is no longer there.”
Nor does Germany feel easy with the concept of an expeditionary Nato fighting wars around the globe, as in Afghanistan. Popular support for German troop involvement in that war is low, and waning, although Ms Merkel has agreed to a modest reinforcement.
The chancellor went to the EU summit in Brussels last month with a clear agenda: no bail-out for Greece except as a last resort. She made no effort to involve the smaller members of the eurozone in the critical negotiations, but focused entirely on getting an agreement with France in which all her preconditions would be included. Then it was presented to the rest of the group as a fait accompli. It was classic German diplomacy but with a difference: she made virtually no concessions on her initial position.
AFGHANISTAN
A growing number of German military casualties in the Nato and US-led campaign in Afghanistan has steadily increased domestic concerns about its forces’ role there. The latest round of soul-searching began on Good Friday after a German army unit based in the northern city of Kunduz was ambushed by the Taliban. Three soldiers died, taking the number killed in the seven-year-old mission to 39. In the ensuing skirmish, six allied Afghan soldiers were killed in friendly fire. This follows just six months after the army ordered an air strike on petrol tankers hijacked by the Taliban, killing or wounding 142 civilians, as a result of which Franz Josef Jung, then defence minister, was forced to resign. Both events have shocked a nation in which older citizens remember the horrors of the second world war and younger generations are raised with the mantra: “never again”. The ruling Christian Democrats and Free Democrats still largely back the Afghan campaign but the opposition Social Democrats are turning against a mission they helped launch when in government. Volker Rühe, defence minister in the 1990s, blames successive administrations for talking only about “armed conflict”. His term would confront the nation with something it thinks it has put behind it: “war”.
Yet in Berlin, senior government officials are adamant that it was not narrow national interest that motivated her. It was a conviction that hers was the only country determined to uphold the EU treaty and the stability of the euro. Any subsidised rescue package for Greece would amount to a “bail-out”, she insisted, which would offend against the treaty. It would also fall foul of the constitutional court in Karlsruhe, the guardian of Germany’s fundamental law.
The court’s judgments on the Lisbon treaty, and before it on the Maastricht treaty that laid the foundations for EU economic and monetary union, and for the launch of the euro, are an important factor behind Berlin’s insistence that its room for manoeuvre is limited. It has ruled that stability is the absolute priority for the eurozone. It also ruled that the Bundestag, as the ultimate representative of German democracy, must be more closely consulted on EU legislation.
Ulrike Guérot, Berlin representative of the European Council on Foreign Relations, fears that both the court in Karlsruhe, and the Bundestag, are becoming more eurosceptic. “Germany has changed a great deal,” she says. “There is not one purpose, it is not conscious, there is no master plan. But it is happening by default.
“The new Bundestag [elected last September] is full of 35-year-olds who have never looked at the Maastricht treaty. The concept of ever-closer union [in the EU] has gone for large parts of the political establishment. What members of parliament care about is whether the German language is used in EU institutions. They say: ‘We put a lot of money into the EU, so why shouldn’t we speak German there?”
She sees a similar trend in Karlsruhe. “The law community is the most important elite community in Germany. They have turned anti-European. The problem is not the general population. It’s the elites who no longer carry the [European] project.”
On that score, she is more alarmed than most German commentators. As the representative of a generation brought up to refer to her country as the “Federal Republic” rather than “Germany”, she perceives a creeping nationalism, although she admits it is not an aggressive one. “I am not saying it’s not normal, but there’s a huge change in political perceptions.”
So what sort of Europe does Germany want? It is unclear. Ms Guérot says there is a lack of strategic vision. The commitment to a United States of Europe is long gone. Mr Kohl admitted as much in 1993. Joschka Fischer says – with regret – that it means the EU will increasingly develop as a weak confederation of states, and not a close federation.
Ms Merkel has not spelled out her vision in detail. But she believes Europe should argue with one voice on the world stage, and that a Europe of 500m, not a Germany of 80m, will matter most in global negotiations. It is a pragmatic choice, not an ideological one.
The chancellor still sounds more ambitious than any other European leader. She wants treaty change to reinforce the stability of the eurozone. If the leaders keep using their difficulties with getting the Lisbon treaty ratified as an excuse for inaction, they will bring the EU to a halt, she says. That does not mean she believes in the European Commission as a future European government, as true European federalists once did.
On that, Ms Merkel’s advisers are perfectly clear. “The member states are the masters of the treaty,” one said during the Brussels summit. “The Commission is its servant.”
Copyright The Financial Times Limited 2010. Print a single copy of this article for personal use. Contact us if you wish to print more to distribute to others.
By Quentin Peel in Berlin
Published: April 7 2010 20:21 | Last updated: April 7 2010 20:21
Paymaster no more. Angela Merkel arriving at last month’s Brussels summit, The chancellor once known as ‘Mrs Europa’ won her battle with fellow European Union leaders to resist an instant bail-out for Greece
When Angela Merkel first joined the government of Helmut Kohl as minister for women and youth affairs in 1991, the long-serving chancellor referred to the 37-year-old dismissively as “das Mädchen” – the girl.
Now she occupies his seat and she has a very different image. After her victorious battle in Brussels last month to resist an instant financial bail-out for Greece, the German media could not quite decide if she had become the Iron Lady, like Britain’s Margaret Thatcher, or the Iron Chancellor, in the tradition of Prussia’s Otto von Bismarck. Whichever it was, they liked it. Bild-Zeitung, the tabloid newspaper, ran a full-page mock-up of a memorial to Bismarck – who forged modern Germany from Prussia in the 19th century – with the head of Ms Merkel upon it. “No more the paymaster of Europe”, read the headline.
The greatest economic power in Europe, linchpin of the eurozone, Germany is not the country it was. Since 1990 – the year of reunification – it has become significantly poorer, with a lower per capita income and a lot less money to spare since pouring money into the former East Germany.
It has a new geographical perspective, too, as a central European rather than west European state. Its unquestioning adherence to the Atlantic alliance is no longer unquestioned. Its passionate commitment to European integration is also different. It has a new generation of leaders who never knew the second world war.
Does this mean Germany is no longer a reliable partner in the European Union and ally in Nato? Or does it just mean the country has become more normal, putting national interests first like its fellow members?
HELMET KOHL
‘Merkel learnt western policy like a foreign language from him’
The man most associated with Germany’s commitment to Europe in recent decades is Helmut Kohl, chancellor for 16 years, and 80 years old last Saturday. It was Mr Kohl, a ruthless party politician, who presided over reunification. Angela Merkel, the young woman from the east, became his best political pupil. And, after a party financing scandal in his Christian Democratic Union, it was Ms Merkel who forced him into political semi-oblivion.
“She is the perfect copy of Helmut Kohl,” says Professor Werner Weidenfeld of Munich university. “She learnt her western policy like a foreign language from him.” That meant she learnt the importance of forging Franco-German agreements when the two governments were most divided while also cultivating coalitions with smaller European Union members.
The difference is that she is much less willing to open the national cheque book. As chancellor, Mr Kohl regularly bought political deals in Brussels with German generosity. To win agreement on the Maastricht treaty in 1992, for example, he was the lead donor to cohesion funds for Spain and Portugal.
Ms Merkel is better than him at mastering complex briefs but lacks his conviction about the need for European integration, Prof Weidenfeld says. She is also a better operator at an EU level than she seems to be in Berlin. “What she is missing is the deep power infrastructure in every segment of party life,” he says. “He knew the personal connections and family history of every significant party member. She simply has not got that background or that memory.”
For Ms Merkel it is a tough balancing act. She has already proved herself a good European, the ultimate deal-broker in Brussels. But now she is praised at home for standing her ground over Greece.
Joschka Fischer, Germany’s pro-European former foreign minister, is appalled at the reaction to the Brussels summit. “One can hardly get one’s head round the decline in historical consciousness in our country,” he declared in the Süddeutsche Zeitung. “Neither Margaret Thatcher nor Otto von Bismarck were exactly models for Germany’s European policy, and for very good reasons. Neither had much if any conception of European integration.” The chancellor used to be praised as “Mrs Europa” for her pro-European attitude. She seemed to have reinvented herself as “Frau Germania”, he said.
Mr Fischer is famously outspoken. But his accusation picks up on a theme being debated in other European capitals: has Germany lost its European vocation and abandoned its belief in an “ever closer union” of member states? Either way, what sort of Europe would it like to see?
“Joschka goes too far,” says Volker Perthes, director of SWP, an international affairs institute based in Berlin. “He could say Gerhard Schröder, his former boss, was the first who tried to be Herr Germania. He was the one who said Germany would not be the paymaster of Europe.”
Professor Perthes, like a majority of political analysts and diplomats in Berlin questioned by this correspondent, cautions against a simplistic view of a newly selfish Germany. But the country has undoubtedly changed. “The environment is a different one,” he says. “We are not exposed on the eastern edge of western Europe. We are surrounded by a ring of friends. Germany is a bigger country, but it is also a bigger EU. What has remained is that Germany knows it needs the EU and Nato and the transatlantic relationship. The EU comes first. We know why we need it, but we are no longer prepared to be Mr Nice Guy, the big, fat paymaster, afraid of being accused of possible hegemony.
“What has changed is that the concept of national interest is no longer alien to the political vocabulary that Germans use. Our friends and neighbours always suspected that we had national interests. It is more transparent if we spell them out.”
One of the most senior European ambassadors to Berlin, and a long-time Germany watcher, sees the same shift from the other side of the table. “The accusation is that they will no longer put European interests above national interests,” he says. “I would like to hear of a single German chancellor who sacrificed German interests for Europe. Of course, Germany’s interest was in returning to normality via Europe.
“Before the euro, the Germans never came to anyone’s help in a financial crisis. They have never compromised their national interests for the sake of Europe. They [supported European integration] because they knew it was in their national interest – now, perhaps, more than ever.”
Helmut Kohl, the passionately pro-European German chancellor who presided over unification, was born in the second world war, a historian by training and inclination. Ms Merkel grew up in East Germany and trained as a physicist, analytical and pragmatic. She is pro-European by persuasion not passion.
“Germany’s European conviction today is still very clear,” the ambassador says. “But it is no longer a great love. It is rather that there is no alternative. The heroic spirit has gone. It is now a matter of normality.”
The questioning of Germany’s role in Europe concerns not only its position as paymaster. It also affects that other pillar of postwar identity: Nato membership and total commitment to the transatlantic relationship. A senior French diplomat once described the country’s attitude to the alliance as “more royalist than the king”.
That is no longer true, says Constanze Stelzenmüller, head of the Berlin office of the German Marshall Fund. “The odd thing about Nato is that the Germans have become deeply conservative, reluctant to change,” she says. “They don’t want to change the old strategic concept. They don’t want global alliances. They think the east Europeans exaggerate the Russian threat. But they are not being very innovative themselves.”
Prof Perthes does not question the commitment to Nato but sees doubts about its purpose. “They certainly don’t want to give it up,” he says. “A lot of history ties us. We owe our independence and our unity to Nato. But the threat perception has changed fundamentally.
“The old Nato enthusiasm you find today in Romania, Bulgaria or the Baltic republics. They want protection against Russia. They wanted to enter a cold war Nato. For Germany, that has gone. We are uneasy about the path Russia takes domestically but the fear of a Russian tank invasion is no longer there.”
Nor does Germany feel easy with the concept of an expeditionary Nato fighting wars around the globe, as in Afghanistan. Popular support for German troop involvement in that war is low, and waning, although Ms Merkel has agreed to a modest reinforcement.
The chancellor went to the EU summit in Brussels last month with a clear agenda: no bail-out for Greece except as a last resort. She made no effort to involve the smaller members of the eurozone in the critical negotiations, but focused entirely on getting an agreement with France in which all her preconditions would be included. Then it was presented to the rest of the group as a fait accompli. It was classic German diplomacy but with a difference: she made virtually no concessions on her initial position.
AFGHANISTAN
A growing number of German military casualties in the Nato and US-led campaign in Afghanistan has steadily increased domestic concerns about its forces’ role there. The latest round of soul-searching began on Good Friday after a German army unit based in the northern city of Kunduz was ambushed by the Taliban. Three soldiers died, taking the number killed in the seven-year-old mission to 39. In the ensuing skirmish, six allied Afghan soldiers were killed in friendly fire. This follows just six months after the army ordered an air strike on petrol tankers hijacked by the Taliban, killing or wounding 142 civilians, as a result of which Franz Josef Jung, then defence minister, was forced to resign. Both events have shocked a nation in which older citizens remember the horrors of the second world war and younger generations are raised with the mantra: “never again”. The ruling Christian Democrats and Free Democrats still largely back the Afghan campaign but the opposition Social Democrats are turning against a mission they helped launch when in government. Volker Rühe, defence minister in the 1990s, blames successive administrations for talking only about “armed conflict”. His term would confront the nation with something it thinks it has put behind it: “war”.
Yet in Berlin, senior government officials are adamant that it was not narrow national interest that motivated her. It was a conviction that hers was the only country determined to uphold the EU treaty and the stability of the euro. Any subsidised rescue package for Greece would amount to a “bail-out”, she insisted, which would offend against the treaty. It would also fall foul of the constitutional court in Karlsruhe, the guardian of Germany’s fundamental law.
The court’s judgments on the Lisbon treaty, and before it on the Maastricht treaty that laid the foundations for EU economic and monetary union, and for the launch of the euro, are an important factor behind Berlin’s insistence that its room for manoeuvre is limited. It has ruled that stability is the absolute priority for the eurozone. It also ruled that the Bundestag, as the ultimate representative of German democracy, must be more closely consulted on EU legislation.
Ulrike Guérot, Berlin representative of the European Council on Foreign Relations, fears that both the court in Karlsruhe, and the Bundestag, are becoming more eurosceptic. “Germany has changed a great deal,” she says. “There is not one purpose, it is not conscious, there is no master plan. But it is happening by default.
“The new Bundestag [elected last September] is full of 35-year-olds who have never looked at the Maastricht treaty. The concept of ever-closer union [in the EU] has gone for large parts of the political establishment. What members of parliament care about is whether the German language is used in EU institutions. They say: ‘We put a lot of money into the EU, so why shouldn’t we speak German there?”
She sees a similar trend in Karlsruhe. “The law community is the most important elite community in Germany. They have turned anti-European. The problem is not the general population. It’s the elites who no longer carry the [European] project.”
On that score, she is more alarmed than most German commentators. As the representative of a generation brought up to refer to her country as the “Federal Republic” rather than “Germany”, she perceives a creeping nationalism, although she admits it is not an aggressive one. “I am not saying it’s not normal, but there’s a huge change in political perceptions.”
So what sort of Europe does Germany want? It is unclear. Ms Guérot says there is a lack of strategic vision. The commitment to a United States of Europe is long gone. Mr Kohl admitted as much in 1993. Joschka Fischer says – with regret – that it means the EU will increasingly develop as a weak confederation of states, and not a close federation.
Ms Merkel has not spelled out her vision in detail. But she believes Europe should argue with one voice on the world stage, and that a Europe of 500m, not a Germany of 80m, will matter most in global negotiations. It is a pragmatic choice, not an ideological one.
The chancellor still sounds more ambitious than any other European leader. She wants treaty change to reinforce the stability of the eurozone. If the leaders keep using their difficulties with getting the Lisbon treaty ratified as an excuse for inaction, they will bring the EU to a halt, she says. That does not mean she believes in the European Commission as a future European government, as true European federalists once did.
On that, Ms Merkel’s advisers are perfectly clear. “The member states are the masters of the treaty,” one said during the Brussels summit. “The Commission is its servant.”
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