Germany Feels Some Push Back as It Grows More Euro-Assertive
By STEPHEN CASTLE
Published: February 14, 2011
Recommend Twitter Sign In to E-Mail Print Reprints ShareClose Linkedin Digg Mixx MySpace Yahoo! Buzz Permalink
BRUSSELS — For decades Germans wanted to become more European and took care not to be seen bossing around their allies on the Continent. But now that the government in Berlin wants Europe to become more like Germany, the temperature is rising.
At a meeting of European Union leaders this month, tempers flared when Germany, strongly backed by France, called on countries using the euro to agree to a pact enforcing German-style fiscal discipline and wage restraint.
The howls of protests from smaller countries illustrate the anxiety sparked by the growing assertiveness of the most populous and economically successful E.U. country, which fears it will end up footing the bill for the carelessness of others. If Germany decides to call more of the shots on economic policy, that has big implications for European integration, for the relative influence of smaller nations within the 17-nation euro zone and for countries outside the euro.
But it also poses a more fundamental question, one laden with history and fraught with emotion, not just for smaller European countries, but for France as well: Is the rest of Europe ready to accept overt German leadership?
“Usually the Franco-German entente would mean that France would decide the music and Germany would foot the bill,” said Frans Timmermans, a Dutch center-left parliamentarian who was until last year the Netherlands’ minister for European affairs. “This was the case for 40 years — now we see a reversal.”
Built upon the rubble of World War II, European integration was, for many years, seen as an unofficial bargain between Germany, the defeated aggressor, and France, the occupied victim. By teaming up with the French, Germany regained international respectability in exchange for bankrolling integration and subsuming its national interest within the greater good of the European project, both within the Union and NATO.
On a continent repeatedly shaped by war, the Union represented something unique, particularly for smaller countries. “For the first time in their history they have a system which allows them to exert influence in Paris and Berlin, capitals which used to treat them as subjects or objects of foreign policy,” said a senior E.U. diplomat who spoke anonymously because of the sensitivity of the issue.
Now the old certainties are shifting.
Over that ill-tempered lunch on Feb. 4, Jean-Claude Juncker, prime minister of Luxembourg, complained of learning of Berlin’s plans from newspapers, and Prime Minister Donald Tusk of Poland described being left out of the process that led to the pact as humiliating, according to officials and diplomats not authorized to speak publicly.
Then the Czech leader, Petr Necas, compared Germany’s confidential blueprint outlining its proposals — which was leaked to newspapers but not given to leaders — to sightings of the Yeti.
But much more is at stake than bruised egos. Germany is making its so-called pact for competitiveness the price for agreeing to expand the rescue fund set up for the euro zone. It will be introduced through an idea long championed in Paris — but until now resisted in Berlin — that could become an embryonic economic government for the euro zone as a whole.
According to the leaked German working paper, the country wants the abolition of wage indexation systems, mutual recognition of education qualifications, a common base for assessing corporate tax, adjustment of pension systems, a national crisis management system for banks and new legal measures to commit countries to tough fiscal policies through a “debt alert mechanism.”
Fears of a French-German diktat — a directoire in the Brussels jargon — are nothing new.
But the government in Berlin is no longer hiding behind Paris and is increasingly open in defending its economic interests and pressing its program, which is intended in large part to keep its nervous public on board. That change started under Mrs. Merkel’s predecessor, Gerhard Schröder, but she was the first chancellor to confront a German public more skeptical about the European Union.
Mrs. Merkel faces crucial regional elections this year and her struggling junior coalition allies in the liberal Free Democratic Party are flirting with a more Euroskeptic message.
Throughout last year’s protracted debt crisis Mrs. Merkel was largely on the defensive, unwilling to sanction a euro zone bailout until the very last moment, when she could argue to Germans that action was vital to save the currency.
But now that Mrs. Merkel has opted to push forward rather than simply delay action, her attempt to project German leadership has been complicated by disclosure last week that Axel Weber — the German long assumed to be heir apparent to Jean-Claude Trichet as president of the European Central Bank — had decided to bow out of the race.
Her plan rests on an implicit bargain with the German public: by supporting the euro, even if it means added costs, voters need to be reassured that Germany’s approach to economic policy making will hold greater sway. Instead of Berlin making most of the compromises, most Germans believe, it is time for others to make concessions.
At the same time, the financial crisis has changed the terms of debate.
“In good times the mood tends to be ‘I’m O.K., you’re O.K.,”’ said another E.U. diplomat not authorized to speak publicly. “In bad times it’s more like ‘I deliver, can you deliver?”’
And, as Germany’s ability to deliver economically contrasted with that of many neighbors, Mrs. Merkel’s rhetoric got tougher. At an E.U. summit discussion on economic targets in March 2010 she complained that, if the past were anything to go by, other nations would fall short and the Germans would have to work harder to compensate, according to an E.U. diplomat who spoke only on condition he not be identified.
The assertive stance is creating greater anxiety in Brussels and elsewhere because of Mrs. Merkel’s evident loss of faith in the European Commission, which is the E.U. executive arm and the traditional motor of European integration.
In a recent speech in Bruges, Belgium, Mrs. Merkel talked about the “union” method of integration — among governments — rather than the “community” method, led by the commission and including the European Parliament.
Germany’s preference for an arena where the big nations dominate sets off alarms in small ones, which see Brussels as a counter-balance to bigger states.
Mrs. Merkel’s competitiveness pact is bound to be watered down as it moves through the tortuous process of European agreement. It begins with a summit meeting March 11, where leaders of the euro zone countries are likely to argue well into the night even before inviting the other 10 E.U. countries that do not use the euro to join their pact.
The goal is to settle on a package of measures by late March, at yet another summit meeting where the bloc hopes to agree on creating a larger bailout fund for the euro’s most vulnerable nations.
Getting there will not be easy.
On corporate tax, Ireland objects to setting up an inner-circle policy-making process for the euro zone, worrying that without Britain — which has retained the pound and serves as a counterweight to France and Germany in wider European Council meetings — it will be forced to raise its own low rate to match the bigger countries on the continent.
Others, like Belgium, object to Berlin’s call to sever the link between wages and inflation. Countries outside the euro, including Poland, fret about being relegated to second-class status.
And even nations with no such fears worry about being dominated by the biggest of the big member states.
“It has a lot to do with history,” said Mr. Timmermans, the former Europe minister from the Netherlands. “States like the Netherlands are a little confused. On the one hand we always say we want Germany to take its rightful position as a leader of Europe, but once that happens old reactions come out and we say ‘that’s not what we meant!”’
“They are asked to play a leading role,” Mr. Timmermans added. “But God forbid that they do.”