There’s an old, rather obscure joke with several variations that goes like this. Four people set out to write about elephants, from the US, the UK, France and Germany. The American writes a book called “Elephants for fun and profit.” The Brit writes “Elephants I have shot.” The French version is: “The love life of elephants.” And the German writes a seven volume treatise called “Elephants and the German question.”
The “German question” is one of the perennials of modern history (meaning the last couple of hundred years), refreshed for different eras by the original unification of Germany, the division of Germany during the Cold War and now the role of Germany in the Eurozone. I wrote some time back about how one cause of the Eurozone problems is the coming of age of a generation of Germans with no direct experience either of war or the post war period of cooperation between France and Germany, intended to prevent any further wars. For background, France and Germany (or its key constituent Prussia) have been to war three times in the modern period: the Franco-Prussian War (1870) and the first and second world wars. Prussia was also a critical part of the coalition led by the British that defeated Napoleon at Waterloo in 1815. So there is some history here.
Simplifying rather a lot, the German question arises from the possibility of equilibrium (mutual peace and prosperity) in a system of nation states where one of them – Germany – is considerably bigger than the others, judge by population and national income. Europe’s history is one of repeated disequilibrium arising from one nation becoming strong enough to try to impose its will on the others, but never being strong enough permanently to do so. First it was Spain, then France, then Germany and to some extent Russia (the Soviet Union), but the last doesn’t fit the normal pattern because Russia is only partly a European power and economically is weaker than western European countries. Britain was a semi-detached player in this “game” because it was a sea power and its main interest in Europe was to prevent any single nation dominating the continent. So the UK traditionally sided with one or two lesser powers to provide a blocking coalition, against Spain (with the Netherlands), against France (with everybody else) and then against Germany (with France and Russia in 1914 and 1918).
With the division of Germany after the second world war, the German question was less acute, even though the truncated western Germany quickly regained economic leadership of the continent. But reunification in 1990, which the US, British and French leaders of the time were all rather unhappy about, brought the question back. Germany is by far the largest country in the EU by population and by GDP. The huge costs of reunification obscured this for a while as Germany went through a difficult period macroeconomically. But now the country is once again a formidable export machine, unchallenged in many areas of production and benefiting as globalisation has enormously increased its markets.
Trying to keep such an animal in the same field as the other European species that include Greece, Portugal and Italy, and even France, has led to the Euro mess we see today. An excellent article from Stratfor points out the dilemma for Germany, as captured by the leaked alleged proposal that Greece’s fiscal affairs be taken over by a European commissioner. Germany needs to keep the rest of Europe buying its exports so wants to avoid a massive slump caused by government fiscal austerity across the Eurozone. But it also wants to stop Greece from defaulting and needs a credible way of permanently reining in Greek budgets. Taking over control of Greece’s public finances would be intolerable to the Greek public who might therefore prefer to default. If this can be ring-fenced to avoid defaults in Portugal (10 year government bond rates currently 14% – priced for default in other words), Ireland and most of all Italy, then it might just be OK but that’s a big gamble.
None of this should be taken to imply criticism of Germany (apart from its policy makers’ foolish insistence on government austerity as the solution to the Euro’s problems). The Stratfor article is all about rational self interest and the cold realities of power politics. At some level, it just may not be feasible to come up with a sustainable economic or political governance mechanism that accommodates Germany and the other European countries.