14 June 2013

Zanny Minton Beddoes: The reluctant hegemon

But Germany is unwilling to do so, due to the weight of history, the perception that the “laziness of southern Europeans” is the cause of the eurozone crisis, and the strategic approach of guiding “from the rear”. 

However, this combination of barriers does the continent’s economy and politics more harm than good, says the British economic weekly. It argues that now that fiscal austerity is being "grudgingly" relaxed, Merkel could work to establish a "proper banking union" and take "a host of pro-growth reforms" to encourage privatisation and boost public and private investment in southern Europe.

Germany’s confused attitude, however, is compounded by its reluctance to lead. German politicians in general, and Mrs Merkel in particular, have pandered to Germans’ small-country mentality and their belief that responsibility for fixing the euro lies elsewhere. The one country with the capacity to lay out a strategic vision for the single currency’s future is unwilling to do so.

Many Germans will say that Mrs Merkel does have a vision for Europe’s economic revival, which revolves around increased competitiveness; and that Germany is capable of acting boldly. 

This special report argues that, in both cases, German leadership is wanting. On the euro, Germany’s competitiveness agenda is insufficient, and based on a distorted reading of the country’s own history. And Germany’s energy policy, for example, is less an example of bold leadership than of an ill-planned unilateralism that illustrates the country’s deep reluctance to think strategically about international challenges. But the report also shows that for all its obsession with rules, Germany is capable of pragmatism when needed. It was Germany, along with France, which first flouted the EU’s Maastricht deficit rules in 2003.

Even more important, Germany is changing fast. Its population is the oldest in Europe, and the number of people of working age is about to shrink sharply. A widespread shortage of workers will drive Germany to welcome more immigrants and encourage women to spend more time on paid work, which will profoundly affect its economy and its society. In time, it will also have a big impact on the way it conducts itself in the European Union. The new Europe will be “Made in Germany” not only because of the changes Germany wants others to adopt, but also because it will need to remake itself.

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