Skip to main content

Germany can't save Europe on its own

By Thomas Kleine-Brockhoff, Special to CNN
June 21, 2012 -- Updated 1018 GMT (1818 HKT)
Thomas Kleine-Brockhoff: Germany's Angela Merkel can't singlehandedly save the euro and Barack Obama's presidency.
Thomas Kleine-Brockhoff: Germany's Angela Merkel can't singlehandedly save the euro and Barack Obama's presidency.
STORY HIGHLIGHTS
  • Many are callling on Germany to lead effort to rescue the Euro
  • Thomas Kleine-Brockhoff says there are limits to what Germany can do, given scope of problem
  • He says Germany is too big to be just another nation but too small to dominate the continent
  • Author: Angela Merkel has taken positive steps to strengthen Euro, but needs help from others

Editor's note: Thomas Kleine-Brockhoff is a senior transatlantic fellow at the German Marshall Fund of the United States, where he leads the EuroFuture Project.

Washington (CNN) -- Once again, a swelling chorus is calling on Germany to finally take action. "Start the engines, Angela," reads the colorful headline of a piece whose authors seem to assume that Chancellor Merkel commands the horsepower to save the euro, save the British and American recoveries, and -- as a throw-in -- save the Obama presidency.

If only the Germans showed more leadership and found it in them to roll out "decisive policies," argues Harvard historian Charles Maier, the everlasting eurocrisis could be ended.

It is true that Germany is the pivot in the euro game. Nothing happens if Germany does not consent. But the reverse is not true. If Germany wants something, it does not necessarily happen. That's where the problem of German leadership starts.

Thomas Kleine-Brockhoff
Thomas Kleine-Brockhoff

While much of the world looks at Germany as an ascending economic power within a declining continent, thereby shifting the regional balance of power in its favor, Germans themselves (and certainly their current elected leader) are keenly aware of the limits of German power. History has taught them painful lessons.

Since Germany's emergence as an industrial economy, it has been too big to be one of many in Europe and too small to dominate the continent. The latter proposition has been tested time and again and has usually ended in blood and tears somewhere in Russia.

Among Germans, this experience has produced an ingrained skepticism toward the notion of German dominance, even if it comes in the form of a benevolent hegemony, based on the consent of the neighbors and transfer of wealth to them.

Germans will be quick to point out that Germany is too small to take much of the rest of Europe onto its back. The German economy accounts for only 27% of the eurozone's output. The debt-to-GDP ratio hovers around an unhealthy 80% and might jump to around 100% given the commitments and guarantees to other European nations.

Nobody in Germany has forgotten the enormity of the task to bail out, reform and integrate East Germany after the fall of the Berlin Wall. To this very day, 3% to 4% of GDP are spent on transfers to the former East.

In 1989, East Germany accounted for roughly a fourth of the population of West Germany and no more than a fraction of its economic output. Compare that to ailing Spain and Italy, whose combined economies rival Germany's today. Therefore, it is a fantasy to assume that Germany alone can be Europe's white knight.

Given these constraints, Merkel's willingness to lead Europe is remarkable. She has found a strategy to leverage Germany's limited power. First, Merkel internationalized the European bailouts; second, she broke down the effort into small steps to make them palatable to domestic constituencies in multiple countries; third, she resurrected the French-German alliance as an engine for progress; and, most importantly, she made the markets her friend and ally.

In her assessment, no reform will happen in southern Europe without pressure from the markets. And there will be no pressure from the markets without limits to German largesse.

Unlimited and unconditional help would take away any incentive to reform. That is the reality in a monetary union without political union because the sovereign who bails out is different from the sovereign who reforms. Merkel's strategy is paying initial dividends. Structural reforms in southern Europe are well under way.

But Merkel's leadership has come at a price. Aligning herself with the markets has meant maintaining relentless pressure on the southern countries while keeping the crisis simmering. That has resulted in costly and dangerous brinkmanship and created the myth that the pain of structural adjustment has to be borne by the southern Europeans alone. And it has created a diplomatic challenge.

Even Germany's best friends don't understand why the country opens its purse only at the last moment, but not a second earlier. They mistake strategy for passivity and a realistic assessment of Germany's wealth and power for stingy disciplinarianism.

With the crisis coming to a head, the German approach will be put to the ultimate test. The markets seem to have concluded that no bazooka will end this crisis alone. They now bet on a so-called banking union as a first step toward centralizing power in Brussels. They seem to regard this form of minimal federalism as solution to the crisis.

Merkel endorses core-federalism, at least in principle, but she certainly cannot deliver it alone. Germany may be a reluctant leader, but its followers are even more reluctant. Merkel needs to persuade France, the most sovereignist country in continental Europe, to trade its Gaullist vision of Europe for a more centralized version with some sovereignty moving from Paris to Brussels. She needs to reassure smaller nations that core-federalism is not the equivalent of neo-colonialism.

She needs to convince the southern periphery that joint debt and joint risk in Europe will mean joint control over the budget process, thereby limiting the reach of the nation state. And, finally, she needs to win over the Brits to play along with (rather than obstruct) a more centralized system of governance among the eurozone and even the EU countries that the Brits themselves likely will never join.

Rather than being made the villain, Merkel could use a little help from her friends across the Atlantic.

The opinions expressed in this commentary are solely those of Thomas Kleine-Brockhoff.

ADVERTISEMENT
Part of complete coverage on
November 24, 2014 -- Updated 2310 GMT (0710 HKT)
If Obama thinks pushing out Hagel will be seen as the housecleaning many have eyed for his national security process, he'll be disappointed, says David Rothkopf.
November 25, 2014 -- Updated 1311 GMT (2111 HKT)
The decision by the St. Louis County prosecuting attorney to announce the Ferguson grand jury decision at night was dangerous, says Jeff Toobin.
November 25, 2014 -- Updated 0857 GMT (1657 HKT)
China's influence in Latin America is nothing new. Beijing has a voracious appetite for natural resources and deep pockets, says Frida Ghitis.
November 24, 2014 -- Updated 2151 GMT (0551 HKT)
Iranian President Hassan Rouhani speaks during a press conference in the capital Tehran on June 14, 2014.
The decision to extend the deadline for talks over Iran's nuclear program doesn't change Tehran's dubious history on the issue, writes Michael Rubin.
November 21, 2014 -- Updated 1925 GMT (0325 HKT)
Maria Cardona says Republicans should appreciate President Obama's executive action on immigration.
November 21, 2014 -- Updated 1244 GMT (2044 HKT)
Van Jones says the Hunger Games is a more sweeping critique of wealth inequality than Elizabeth Warren's speech.
November 20, 2014 -- Updated 2329 GMT (0729 HKT)
obama immigration
David Gergen: It's deeply troubling to grant legal safe haven to unauthorized immigrants by executive order.
November 21, 2014 -- Updated 0134 GMT (0934 HKT)
Charles Kaiser recalls a four-hour lunch that offered insight into the famed director's genius.
November 20, 2014 -- Updated 2012 GMT (0412 HKT)
The plan by President Obama to provide legal status to millions of undocumented adults living in the U.S. leaves Republicans in a political quandary.
November 21, 2014 -- Updated 0313 GMT (1113 HKT)
Despite criticism from those on the right, Obama's expected immigration plans won't make much difference to deportation numbers, says Ruben Navarette.
November 21, 2014 -- Updated 0121 GMT (0921 HKT)
As new information and accusers against Bill Cosby are brought to light, we are reminded of an unshakable feature of American life: rape culture.
November 20, 2014 -- Updated 2256 GMT (0656 HKT)
When black people protest against police violence in Ferguson, Missouri, they're thought of as a "mob."
November 19, 2014 -- Updated 2011 GMT (0411 HKT)
Lost in much of the coverage of ISIS brutality is how successful the group has been at attracting other groups, says Peter Bergen.
November 19, 2014 -- Updated 1345 GMT (2145 HKT)
Do recent developments mean that full legalization of pot is inevitable? Not necessarily, but one would hope so, says Jeffrey Miron.
November 19, 2014 -- Updated 1319 GMT (2119 HKT)
We don't know what Bill Cosby did or did not do, but these allegations should not be easily dismissed, says Leslie Morgan Steiner.
November 19, 2014 -- Updated 1519 GMT (2319 HKT)
Does Palestinian leader Mahmoud Abbas have the influence to bring stability to Jerusalem?
November 19, 2014 -- Updated 1759 GMT (0159 HKT)
Even though there are far fewer people being stopped, does continued use of "broken windows" strategy mean minorities are still the target of undue police enforcement?
November 18, 2014 -- Updated 0258 GMT (1058 HKT)
The truth is, we ran away from the best progressive persuasion voice in our times because the ghost of our country's original sin still haunts us, writes Cornell Belcher.
November 18, 2014 -- Updated 2141 GMT (0541 HKT)
Children living in the Syrian city of Aleppo watch the sky. Not for signs of winter's approach, although the cold winds are already blowing, but for barrel bombs.
November 17, 2014 -- Updated 1321 GMT (2121 HKT)
We're stuck in a kind of Middle East Bermuda Triangle where messy outcomes are more likely than neat solutions, says Aaron David Miller.
November 17, 2014 -- Updated 1216 GMT (2016 HKT)
In the midst of the fight against Islamist rebels seeking to turn the clock back, a Kurdish region in Syria has approved a law ordering equality for women. Take that, ISIS!
November 17, 2014 -- Updated 0407 GMT (1207 HKT)
Ruben Navarrette says President Obama would be justified in acting on his own to limit deportations
ADVERTISEMENT