“Angela Merkel’s role as Germany’s and Europe’s leader is undisputed. No other leader of a large member state is politically fit enough to offer himself up as a leader” – note from a leaked cable.
Angela Merkel, the low-key Chancellor and ‘steward’ of Europe’s most powerful economy, needs to take on her international role with greater vigour. Yet Germany remains the reluctant leader for principally two reasons. Firstly, the legacy of the two world wars. Secondly, the German experience of Afghanistan. Both have strained any support for major international leadership, including, for example, the controversial decision to abstain from the NATO-led Libya mission. Far more importantly, the failure to take leadership seriously, seemingly out of courtesy for what has gone on in the past, has undermined the euro debt crisis specifically and the European project more generally. A fraught domestic situation in Germany (think of Karl-Theodor zu Guttenberg’s plagiarism, Christian Boetticher’s affair, or increasing conflicts within the governing coalition) has created tensions between accountability with her electors and the condemnation of international partners.
The consequences have been a rocky few weeks for Europe. Markets have tumbled. Resentment has increased. Money was spent, and phone calls were made. Europe’s leaders – particularly Merkel – have had to learn the hard way: Germany is the undisputed leader of Europe. One clear example has been the slump in the markets on 12 September on the euro’s uncertainty, followed by a quick rise and stabilisation of the markets three days later. Once Nicolas Sarkozy and Merkel began their talks with George Papandreou, the Greek Prime Minister, the crisis took a breather. This is more than a coincidence, suggesting that strong leadership is necessary to save the European project from catastrophic failure. The arduous process to get to this position is hardly over and needs a great deal more convincing (especially eurosceptic Britain), but the future is pretty much clear – Europe will come out of this stronger, not weaker. The European Union will survive. The global economy cannot afford for Europe to fail – it would plunge the world into a second (and far worse) recession that would probably turn into a depression and confirm that the West will head for a ‘lost’ decade of growth. This may sound apocalyptic, but this is no underestimate. Luckily, it is also unlikely to occur.
The cause of the debt crisis has been a disparate monetary union, prolonged by the inflexible approach of Angela Merkel and the Germans more generally. Europe lost its self-confidence in the 1990s, which seems to indicate that this has longer term causes. European self-confidence was lost because it appeared as a bureaucratic machine. Ironically, this crisis has shown that the EU remains, fundamentally, an intergovernmental institution that depends entirely on the support of individual member states to function. The European Commission or European Parliament have been stumm throughout the past couple of months. It is the European Council, made up of the 27 heads of government, that determines the direction of European governance, the speed of integration, and the external relationship with the rest of the world, particularly the United States (of which Barack Obama remains critical).
So, where does this leave Europe? The existential reason of the EU has been to increase efficient governance and a concerted approach to international public policy in a multi-polar and globalised world. It has, over the past six decades, succeeded in some areas and not in others. However, we have begun to see that Europe is heading towards a crisis in proportion to a loss in its identity and self-confidence. Europe must find this again. More importantly, it needs leadership. It will not find it in the European President, Herman von Rompuy. It will also not find this in the European Parliament. It will find it in the European Council, and more specifically in Angela Merkel. Germany will emerge, by force and reluctance, as the king maker of the European project. In recent days, Merkel has begun a fight-back to ensure the safety of the EU’s future, which more often than not will fall in line with Germany’s future. As one German newspaper put it, ‘Out of the crisis with a clenched fist’. This fighting talk is the only way that will make the European Union possible (and that has made it possible in the past).
In five years time, we will see Europe strengthened. European widening will stall, in favour of further European integration. Europe will learn from this lesson that a half-way house of some forms of integration and other forms of widening will no longer work. The European Council will affirm its role as key decision-taker of European affairs. Most importantly of all, the EU will become more flexible in its approach. There has been much negative spin on a ‘two-step’ Europe. In reality, a multi-dimensional and multi-level Europe is the only option for survival – with Germany and France at its centre, and eurosceptic nations such as the UK and Denmark on the outskirts. Economic powerhouses will continue apace, supporting development in weaker ones. This is a direction that seems viable, pragmatic and also preferable. Ultimately, then, the EU and the euro remain central to the future of European nation-states.
For all these reasons, and more, a Greek default is not inevitable – the collapse of the euro would follow, an unthinkable event that would also lead to the subsequent break-up of the European Union. This will not happen.
Der euro bleibt. Basta.