Merryn's Blog

How the past still haunts Germany

Germany's demand for greater union in Europe has nothing to do with ambition or aggression, it is born entirely out of fear.

If you pop down to any pub in the home counties where men aged 60-plus hang out, you'll find that a good number of them think Germany has caused the financial crisis on purpose in order to impose German political leadership on the eurozone.

There's a fairly incendiary pamphlet doing the rounds called The Fourth Reich and the theory has also been picked up in our own national newspapers.

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Here's Simon Heffer, the poster boy for this kind of stuff, in the Daily Mail last year, talking about "how Germany is using the financial crisis to conquer Europe." Their aim, and one they are fast achieving, he says is "a complete fiscal union in which Germany as the EU's most powerful economy and principal paymaster makes the rules and makes them unbreakable."

The result? A loss of sovereignty not seen in much of Europe "since many were under the jackboot of the Third Reich 70 years ago." Think "one economic policy, one taxation system, one security system, one debt, one economy, one finance minister... and all... German."

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This sounds mildly insane. But it's a view that has gradually spread from the Daily Mail and the nation's pubs into the minds of the normally relatively sane.

I give you hedge fund guru Crispin Odey's latest manager's report (I say guru because the long-term performance of his fund is stunning and he appears in the Sunday Times Rich List with wealth of around £450m).

He used to think, he says, that financial crisis in Europe was avoidable. Now he thinks that Angela Merkel has failed to avoid it on purpose in order to turn "a crisis into a political opportunity", something at which Germany has form (this, says Odey, is how Bismarck managed to unify Germany back in the 1800s).

She has "played a blinder" by continuing to refuse to give money to the bankrupt southern European countries and constantly stating that the "only solution would be a fully fledged unified state of Europe." Everything she says points to the only solution being this. But for this to be an option that the rest of Europe will accept "the crisis must worsen and importantly the situation in France must fast deteriorate."

It's pretty Germanophobic stuff. But is there anything in it? I suspect there is not. It is absolutely true that the crisis has worsened as a direct result of policy inaction. It is also true that Germany's refusal to allow the European Central Bankto get on with buying time via money printing like the rest of us probably isn't helping much. Nor for that matter is its insistence on austerity. But that doesn't mean that Merkel's behaviour reflects some kind of crazed domination plan.

Much more likely is that it reflects something else: not aggression, but fear. There was an interesting article in the New Statesman last year pointing some of this out. Imagine, says Richard Evans, that you were born in Germany in 1910. There'd have been "a childhood spent amid the violence and deprivation of the First World War, with an Allied economic blockade leading to the death of more than half a million Germans through starvation and related diseases; the hyperinflation and political violence of Weimar's early years and then the mass unemployment that put a third of the workforce out of a job by 1932, coming along just at the time when someone born in the run-up to the First World War was entering the job market.

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Then, in 1933, the Nazi seizure of power, followed by mass conscription in 1935 and continuous warfare from 1939 to 1945. If you survived that, there were more years of inflation and poverty until the currency reform of 1948 began to put things right."

Then there would have a long period in which Germans "experienced peace, prosperity and stability" along with their economic miracle it appeared to be finally proven that "political democracy could deliver economic prosperity." Look at it like this and is the fact that Merkel doesn't much fancy the idea of allowing endless money printing really that much of a surprise?

Evans' conclusion? "It's not ambition that lies behind the German stance - it's fear, even paranoia, deeply embedded in the national political culture. It is a fear that Germany needs to overcome." The result may be the same either way at this point the choice is pretty much down to European collapse or more European union. But I am not sure it is particularly helpful for us to confuse fear with agression along the way.




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