At a recent discussion with Simon Tilford of the Centre for European Reform about my new book, The Paradox of German Power, I was asked about the role of ordoliberalism in Germany’s response to the euro crisis. A couple of years ago, my colleagues Sebastian Dullien and Ulrike Guérot wrote an excellent brief for ECFR in which they argued that ordoliberalism – an economic theory that goes back to the so-called Freiburg School in the 1930s but is little known outside Germany – cast a “long shadow” over current German economic thinking. I think they’re right, but I wasn’t really able to give a good answer about exactly what role ordoliberalism plays in the German economic policy process. The more I thought about it after the discussion, however, the more it struck me that there is a parallel with the role of Ostpolitik in the German foreign policy process.
In an essay I wrote in 2011, I argued that Germany should no longer be thought of as a “civilian power” but rather as a “geo-economic power”. I argued that the weakening of the Federal Republic’s commitment to multilateralism during the previous decade and its increasing economic assertiveness, particularly within the eurozone, undermined its claim to be a “civilian power” – that is, one that used multilateral institutions and economic co-operation rather than military power to achieve its foreign policy goals. The concept of “civilian power” was originally used by François Duchêne to describe the European Union and was applied to the Federal Republic by Hanns W. Maull, who, in one of his first essays on the subject in the early 1990s, described Germany and Japan as “new civilian powers” – “prototypes” of “a new type of international power”. So if Germany is no longer a “civilian power”, what about Japan?
I spent the weekend at a conference at Wiston House in Sussex, where you can’t help think about history. Wiston House is owned by Wilton Park, a foundation set up after the end of World War II that was originally based at an estate near Beaconsfield, where German POWs (including Helmut Schmidt) discussed democracy with British intellectuals. Kingsley Martin, the editor of the New Statesman, called Wilton Park a “prisoners’ university” that was “the nucleus of what might become a new democratic Germany”. It was set up by Heinz Koeppler, a Jewish-German émigré and in 1948 was taken over by the Foreign and Commonwealth Office to hold conferences. In 1951 it moved to Wiston House, parts of which date back to the sixteenth century. In such surroundings, it’s hard not to think in historical analogies – especially when it comes to Germany.
A couple of weeks ago I took part in the Frankfurter Allgemeine Zeitung’s Tendenzwende conference – a small gathering in Berlin of historians, economists, constitutional lawyers and philosophers, that has been held annually since 2009. It is named after a famous academic conference held in 1974, which coined the term that is often used in Germany for the shift in the 1970s from the post-war settlement to a new phase of slow growth and high inflation after the oil shock of 1973. After the financial crisis in 2008, Andreas Rödder (a historian) and Günther Nonnenmacher (one of the five publishers of the Frankfurter Allgemeine) had the idea of holding a similar conference to discuss whether a new paradigm shift was now taking place. The big question was: what comes after neo-liberalism? This year’s conference (which took place under the Chatham House rule) was on Europe.
I’ve recently been having a debate with Josef Janning of the German Council on Foreign Relations (DGAP) about German power in the European Union. In May Janning published an article on DGAP’s website in which he challenged the assumption that Germany was “calling the shots” in the EU and attempted to quantify various dimensions of member-state power. In my response I argued that Janning underestimated Germany’s power as the eurozone’s largest creditor and also stopped short of spelling out the implications of his correct but rather alarming conclusion that other member states could outvote Germany if they joined forces – in effect an anti-German coalition. In his response to me, Janning argued that I overestimated German power within the EU by too narrowly focusing on the euro crisis and disregarding British and French military capabilities. In my second response, I argued that although military capabilities allowed France and the UK to project power beyond Europe, they are not a source of leverage within Europe.
Since writing an essay on “Germany as a geo-economic power” in 2011, I’ve been thinking a lot about the concept of “geo-economics”. Although the term is being used a lot at the moment, there is no shared definition of it. (Sanjaya Baru, who runs the programme on geo-economics at the International Institute for Strategic Studies, had a good introduction to the various usages of the term in Survival, which was originally written as an introduction for a conference on “geo-economics” in Bahrain in March 2012 that I attended.) There are basically two versions of the term: a “soft” version that is meant to capture the way states increasingly seem to pursue economic objectives and a “hard” version that is meant to capture the way that states increasingly seem to use economic means to achieve strategic objectives.
A few weeks ago the cover of the Spiegel showed Chancellor Angela Merkel in combat fatigues with the headline: “German weapons for the world”. The story (available in English online) was about the so-called Merkel doctrine – an implicit policy of staying out of difficult and unpopular Western interventions such as the one in Libya last year while selling arms to other countries, in particular in the Middle East, to enable them take greater “responsibility” for security. The Federal Republic has traditionally had a comparatively restrictive arms-export policy and in particular rejected the sale of arms by German companies to undemocratic governments or countries in “conflict regions”. But under Merkel, according to the Spiegel story, the German defence industry – which employs 80,000 people – is booming as the government increasingly approves the sale of weapons to undemocratic regimes in areas of actual or potential conflict.
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.
At the end of a comment piece I wrote last month for the Guardian website I talked about Germany’s “economic narcissism”. A lot of the comments on the piece focused on my use of the phrase, so I thought I’d try to explain in more detail what exactly I meant. By using the term, I wasn’t simply trying to say that Germany was responding to the euro crisis in a selfish way. It seems to me that, in the end, whether you think Germany is pursuing its own economic interests or the long-term interests of Europe as a whole depends to a large extent on the economic theory in which you believe. By using the term “economic narcissism” what I had in mind was something related but slightly different: the way the debate in Germany about the euro crisis is so inward-looking.
In a piece about Germany as a geo-economic power that I recently wrote for Internationale Politik, a German foreign-policy journal, I argued that Germany’s “special relationship” with Israel might in future weaken. It seems to me that the relationship is all that remains of the foreign policy based on the idea of Auschwitz as Germany’s raison d’état that Joschka Fischer sought to develop (a theme of my book, Utopia or Auschwitz). Although Chancellor Angela Merkel is personally committed to the Jewish state, I think she is under increasing pressure from an anti-Israeli public opinion and from Germany’s economic interests with the Arab world. I also wonder whether a dramatic event – such as an Israeli military strike on Iran – could be a tipping point that creates a rupture between Germany and Israel in the way that the Iraq war did between Germany and the US.