There are multiple ways of looking at the euro crisis. Northern Europeans in general and Germans in particular tend to look at it as a crisis caused by fiscal indiscipline by southern European countries in general and Greece in particular, who didn’t stick to the rules. Others, particularly in France, look at it above all as a crisis caused by unregulated financial capitalism, which created banks that were too big to fail and therefore had to be bailed out by governments. Others still, particularly in the UK, look at it above all as crisis caused by the flawed architecture of the euro itself – a common currency without a common treasury – which meant it could never work. But if you take an even longer view, it’s also possible to see the euro crisis as the unforseen consequence of German reunification.
In a compelling essay that appeared in Foreign Affairs in 2010, Mary Elise Sarotte describes how German reunification in 1990 “left behind fateful seeds, which sprouted into the 2010 crisis”. Although the idea of a single currency had been around since the 1970s, it took the prospect of reunification after the fall of the Berlin Wall in 1989 to prompt Chancellor Helmut Kohl and President François Mitterrand to convene the intergovernmental conference that led to the Maastricht Treaty in 1992. In a sense, it was a quid pro pro for reunification. But in what Sarotte calls the “mad rush” to agree the terms of monetary union, European leaders who knew little of economics created a single currency that did not have the ability to respond to crises or real political coordination.
At the time, Kohl talked about German reunification and European integration as “two sides of the same coin”. German reunification was only possible in the context of European integration – as Konrad Adenauer had said, “German problems can only be solved under a European roof”. Conversely, reunification was also a “catalyst”, as Sarotte puts it, for the creation of the euro – a further massive step in European integration (although because of French resistance it was not possible to agree the greater political integration that Germany wanted to accompany the currency union). In short, Kohl believed that there was a symbiosis between Germany and Europe. Initially, he seemed to have been proven right as fears about German power failed to materialise.
However, during the decade after the euro was created in 1999, Germany’s relationship with Europe began to change. As economic imbalances grew, economic interests within the eurozone diverged. Meanwhile, having achieved its goal of reunification, Germany became more Eurosceptic. As I have argued elsewhere, the size of the German economy, and the interdependence between it and those around it, is now causing instability within Europe. Germany needs the EU as a market for its exports and the euro to keep its own currency from being overvalued, but is not able or willing to act as a hegemon. One might almost say that Germany’s relationship with Europe has gone from symbiotic to parasitic. In fact, I am starting to wonder whether, if the euro crisis is not solved, German reunification may ultimately lead to European disintegration.