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Brexit and the City
07 July 2013

Simon Nixon: A reluctant hegemon steps to forefront


Germany is showing more assertiveness in dealing with Europe's debt crisis and is changing how it exercises its power, writes Nixon for the WSJ.

The fact that Ms Merkel felt the need to hold a jobs summit or extend bilateral loans to Spain is revealing. It shows the extent to which Berlin has been stung by accusations that its single-minded pursuit of austerity is responsible for the economic and social crises in the periphery. Ms Merkel felt compelled to do something because her opponents were threatening to turn eurozone unemployment and SME funding into an election issue. Domestic and international political pressure is forcing Berlin to accept greater responsibility.

Crucially, Germany's willingness publicly to accept this responsibility also marks a shift in Berlin's European strategy away from the supranational "community method" centred on the Brussels-based European Commission towards bilateral and intergovernmental initiatives that allow Berlin a far greater degree of control. Indeed, one of the most striking changes in Berlin's handling of the crisis over the past two years is the extent to which suspicion of the commission has hardened into deep mistrust. For example, Berlin was furious at the commission's decision in June to offer France an extra two years to meet its deficit target before a delay had been even formally requested and without upfront conditions—a decision that some German officials fear undermined reformers in the French government.

Critics say Germany has failed to exercise the leadership in Europe that it has a responsibility to provide by virtue of its economic superiority, held back largely for reasons of history, culture and political parochialism. Instead, they argue, Germany has forced countries on the eurozone's periphery to bear the full cost of the region's debt crisis, causing social misery and a deep recession that threaten to destroy the currency bloc, rather than offer the solidarity and burden-sharing needed to allow Europe to exit the crisis.

It is arguable whether Germany has ever been as reluctant as claimed; Germany has been the dominant force in shaping the Continent's affairs for over 30 years, even if it has exerted its influence less noisily than, say, the French or British. And even during the current crisis, German leadership has been more effective than its critics recognise. But the events of the past week highlight an increasing German assertiveness, combined with a change in the way it is choosing to exercise its power.

Full article (WSJ subscription required)



© Wall Street Journal


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