United under a European roof

‘We are pleased that German unification is taking place under a European roof”. These words from the conclusions of the European Communities summit in Dublin on April 28th, 1990 were the outcome of intense negotiations over the previous seven months. German and European politics were on the fastest of fast tracks, leaving the most experienced observers dumbfounded by the sheer pace of events. Twenty five years on from them how does that statement stand up? And what are the consequences for the wider world and global politics?

Germany has faced strategic choices about its position in the world since emerging in the early 1950s from direct allied occupation after defeat in the second World War. Would it adopt a western orientation in league with the United States and its then European allies in the new Cold War with the Soviet Union, or opt for a neutral or non-aligned status between these two major antagonists, as proposed by Stalin in 1952? The so-called Westbindung choice was clearly made by Konrad Adenauer's government against neutrality then. And the form taken by Germany's western orientation led towards its full participation, first in the North Atlantic Treaty Organisation (Nato) from 1955 and then in the process of European integration which commenced with the Rome Treaty in 1957 setting up the European Communities.

This orientation was to last intact until 1989 when the Berlin Wall came down, through successive developments of the EEC and Nato – and taking full account too of the important east-west developments that led to the Conference on Security and Cooperation in Europe (CSCE), set up in 1975, and of particular importance for Germany's relations with the Soviet Union and East Germany.

The terms negotiated for German unification after the wall fell renewed and deepened these commitments. As the foreign minister, Hans-Dietrich Genscher, put it to the Western European Union parliamentary assembly in March 1990: "We Germans do not want to go it alone or to follow a separate path. We want to take the European path". On a wider plane he said: "We seek the process of German unification in the context of EC integration, the CSCE process, East-West partnership for stability, the construction of the common European house and the creation of a pan-European order".

Concentric circles

The concentric circles involved drew in relations with Central and Eastern Europe and with the Soviet Union, so that Genscher could claim that future German policy seeks “dynamically evolving stability for the whole of Europe”. This line of argument survived the subsequent disintegration of the Soviet Union in 1991.

The following decades were to see these concentric circles of German geopolitical concern evolve, for the most part surprisingly in tune with the policies laid down 25 years ago. Enlargement of the European Union to take in 10 central and eastern European states in 2004 consolidated a process initiated when German unification was accepted as its first step. This brought a completely new relationship with many of the states overwhelmed and exploited by Nazi Germany’s drive to expand and seize a European living space during the war.

Instead the policy of being at peace with all its neighbours was institutionalised in a sovereignty-sharing arrangement through the European Union. Alongside that, at a quicker pace, came the enlargement of the North Atlantic Treaty Organisation, pushed by the United States and the UK and supported by Germany despite Russian opposition. “For the first time in its history Germany is surrounded by allies, not enemies, who don’t see us as a threat any more,” said Hans-Friedrich von Ploetz, state secretary at the foreign office, in November 1997.

Germany’s role, through Genscher, in recognising Croatian and Slovenian independence after Yugoslavia broke up echoed some of that earlier history; but for the most part the new relationships were achieved without the historical resentment it could have evoked. That resentment was to return in a different form when the global financial and eurozone crises erupted later in 2008-10, bringing new cleavages to the European Union – North-South, debtor-creditor, core-periphery – different from the East-West ones set off by the end of the Berlin Wall.

Power was certainly not absent from these evolving circles, of course. It was plainly there in the triumphant speed with which Helmut Kohl led the German demand for unification in 1989-90 and delivered it within a year despite initial opposition from François Mitterrand of France and Margaret Thatcher of the UK, and the hostility of left intellectuals like Jürgen Habermas in Germany itself. The swift and brutal overturning of political, social and economic structures in East Germany was partly compensated by agreement on a one-to-one exchange rate for their currencies and by massive subsidies in following years; but resentment continues there too, alongside a certain nostalgia for its non-western past.

Single currency

The costs of unification cast a long shadow over Europe in the 1990s, as well as absorbing so much of Germany’s own surplus. They kept interest rates high in the long run in to the single currency extracted as a condition for unification by France and other states in the 1992 Treaty of Maastricht. Germany’s industrial and economic power was used to extend markets throughout the continent and subsidise cohesion policies. There was thus a willingness, when Kohl was chancellor, to take on some of the costs of leadership, within the EU and beyond it.

From the late 1990s, within the commitment to Nato enlargement which copper-fastened the US role in Europe after the end of the Cold War, a growing questioning developed in Germany of precisely what that US role should be and how Europe should relate to the rest of the world, in which it has different interests and priorities to the Americans. This gradual differentiation of policy peaked when Germany refused to be involved in the 2003 invasion of Iraq, along with France and several other EU states. It was related to a growing realisation that Germany has to work with Russia in Europe and cannot afford a confrontation that would jeopardise the availability of that country's huge domestic market for German goods, its position as the largest source of German gas and its valid security concerns about being surrounded by Nato members.

Gerhard Schröder as chancellor from 1998 to 2005 exemplified these trends, not least in his subsequent work for Russian companies. The continuing debate on Ukraine's future, from the Orange revolution of 2004 through to the Maidan revolt of 2013-14 during Angela Merkel's chancellorship, polarised Germany's position against several other central and eastern EU and Nato member-states which felt more threatened by Russia and more in need of security guarantees against it. Germans understood better the idea that Russia needs space to protect its own interests and territorial integrity, quite aside from the question of its authoritarian leadership under Vladimir Putin.

This year's crisis planning over Ukraine posed serious choices for Merkel's Germany on whether to support an assertive US policy of Russian containment and Nato membership for Ukraine rather than the political and economic engagement, together with Ukrainian non- alignment, which better suits Berlin's interests. Observers of the German-US relationship underlined a mood of decidedly reduced discipleship and conflicting geopolitical interests stimulated by a deep-seated outrage over leaked reports of US surveillance of German elite targets.

Where this leads in terms of continuing German commitment to Nato and its willingness to take a more active leadership role in international affairs, along with its EU partners, is as yet unclear. There are many elite voices urging such a more active role, not least from President Joachim Gauck last January. They feel the inhibitions constraining it are now redundant, notwithstanding a public opinion still reluctant to take on too many commitments. But most Germans support a more active EU foreign and security policy, within which Germany would play a more leading role.

This issue overlaps with a wider one concerning Germany's leadership role. International relations specialists debate whether Germany is willing and able to take on the burdens of hegemonic leadership to guarantee stability, as other powers like the US and the UK have done in imperial and post-imperial periods at global levels. Assuming such a role is possible in an emerging world order of multi-polar centres of power – which could take the form of institutionalised regions if the EU model is followed or has influence in Asia, Africa or Latin America – several patterns are possible.

Economically, this would see Germany supply counter-cyclical credit, fund debt write-downs, provide a market of last resort and coordinate macroeconomic policy in return for the benefits of a single currency and continental markets whose governing norms it dominates. Politically it would engage much more as a leader on objectives and ways of achieving them, now more independent of the Franco-German relationship which determined policy-making so much under Kohl and Schröder now attenuated by growing French weakness under Merkel. In security and military terms it would be similarly willing to assert German and European interests and values in the geopolitics of its neighbourhood and further afield, taking account of diminishing British influence pending resolution of the UK’s long term relationship with Europe.

Consensus and compromise

All this should be conceived within the regionalist model of the EU rather than separately from it. German ministers and officials insist that the EU provides the foundation for German policy, as its Minister of State for European Affairs

Michael Roth

put it in Dublin this September. They want to see an EU system in which everyone has their say through consensus and compromise, with smaller states having the opportunity for voice and role. As a social democrat he values balancing EU economic balances with employment, growth and a strong social cohesion dimension. Germany has signalled much greater confidence in policies of the new

European Commission

led by Jean-Claude Juncker than in the outgoing one led by José Manuel Barroso. This may signal a new willingness to cooperate with Brussels and somewhat less of the inter-governmentalism seen through the eurozone crisis.

But in evaluating Germany’s likely future role certain central facts must be recognised clearly. Irish and other debtor states’ expectations of writing off debt burdens in a banking union have been disappointed. The creditor states led by Germany have refused to fund such a “transfer union”, demanding debts be paid, albeit over a prolonged period. A sound money ideology prioritises strict rules of budgetary balance and competitiveness over economic growth. In a low-trust regime they have so far refused to fund debt write-offs based on promises to behave differently in future.

This policy orientation persists despite the latest news of deflationary expectations in the eurozone, coinciding with poor prospects for the German economy. All this is within a continuing ideological framing of the eurozone crisis as a product of national turpitude in debtor states and the dangers of moral hazard if behaviour does not change. Potential prolonged deflation in the peripheral, indebted south is discounted by German ordoliberal doctrine, as are the depressing effects of such an outcome on the whole European economy, in which Germany’s strong exports would be deprived of buoyant markets.

Germany therefore lacks some of the key attributes of regional economic and political leadership. It is rather a geo-economic and commercial power, increasingly aware of its own interests, but reluctant to provide the political and military security normally supplied by regional hegemons and heavily constrained too by its domestic politics for which such costs of leadership are unacceptable.

In these circumstances smaller EU member-states such as Ireland adhere to the new strict eurozone rules and endeavour to align policy with northern creditor states. Hopes of multilateral change on debt relief are not abandoned, but now ride on policy arguments about whether the minimalist banking union regime will be sufficient to ward off another crisis for the euro, arising from popular protest, growing illegitimacy or economic stagnation. All the signs are that it has not done the job.

In that case Germany and the EU will have to choose between the currency’s survival and the sound money approach to macroeconomic management, the logic of which would point to eventual German withdrawal from and therefore disintegration of the eurozone. Successive studies show withdrawal would be far too costly for any German government to contemplate.