The Myth of Germany's EU Dominance
The latest sign that the U.K.'s exit from the European Union is not impossible is an editorial in the British tabloid, The Sun, which refers to the EU as a "relentlessly expanding German-dominated federal state." It's as useless to fact-check pro-exit campaigners as it is Donald Trump -- their arguments are emotional, not factual -- but it's worth asking whether the bloc is really dominated by Germany in any malignant way.
In 2011, right-wing journalist Simon Heffer wrote a column in The Daily Mail warning of the rise of a "Fourth Reich" -- a new German attempt to conquer Europe in the aftermath of its debt crisis. Heffer interpreted Germany's calls on other European countries to balance their budgets and coordinate economic policies as a first step toward "a fiscal union that will leave Germany dictating the financial terms for the rest of Europe."
Nothing of the kind has come to pass five years later, so it's not clear what The Sun means by a federal state: No federation can exist without common taxes. Presumably, the reference is to the hated EU bureaucracy in Brussels. It's by no means German-dominated, though.
The highest-ranking German in the EU hierarchy is Martin Schulz, president of the European parliament. The EU legislature is weaker than any of its members' own national parliaments, unable even to initiate legislation. It's the faceless technocrats on the European Commission's staff that do that, and Germans only make up 10 percent of the commission's non-technical staff, while Germany's population makes up 16 percent of the European Union's.
There are about as many Italians and Belgians among the EU administrators. And it's not as though Germans are overrepresented in key directorates: Their highest concentration is in the commission's analytical center.
Germany is, indeed, a little overrepresented when it comes to contributing money to EU programs. Its 2015 economic output was about 20.7 percent of the entire EU's, but its share of the EU budget reached 21.4%. The U.K. had about 16 percent of the EU's gross domestic product, more than its 12.6 percent share of the budget. It has no reason to complain about German "dominance" in paying for EU programs.
Exit boosters' complaints, then, aren't about any quantifiable German overrepresentation in the Brussels "superstate," such as it is. They're about a perception that Germany is too powerful politically and economically, that it is the de facto center of EU decision-making. There is, indeed, something to that: German Chancellor Angela Merkel has pushed Europeans to impose sanctions on Russia over its treatment of Ukraine; she and her Finance Minister Wolfgang Schaeuble took the lead last year in deciding how the Greek crisis should be handled; she barely consulted anyone in the EU when she invited Syrian refugees to Germany.
If there's anyone recently who has determined European policy whenever a crisis arose, it's Merkel. Or Merkiavelli, as Italian journalists Vittorio Feltri and Gennaro Sangiuliano dubbed her in their book about "El Quarto Reich."
Germany, of course, is the bloc's biggest economic power and its most populous country, but if the EU were designed to give an institutional advantage to bigger countries, nobody would have joined it in the first place. Merkel's and Germany's outsized political power comes from a willingness to assume responsibility and shoulder financial burdens.
Greece wouldn't have stayed afloat financially without German money. As the biggest creditor, it naturally has more say than others in negotiating bailout conditions. German politicians felt a responsibility for keeping the euro area intact -- perhaps because Germany benefits economically from sharing a currency with weaker economies.
Germany is a safe haven for investors when other euro countries get in trouble. It's not Germany's fault, however, that it has a strong export-oriented economy -- it's something other EU countries are supposed to want, too, including the U.K., whose exports reached just one third of Germany's last year. This part of Germany's "dominance" can't be regulated or negotiated away -- it's genuine, organic economic power.
On refugees, too, Merkel took the lead because her government was willing to pick up the bill. Others weren't. Germany handled 441,800 asylum applications last year, compared with 38,370 for the U.K.
Both the Greek bailout and the refugee crisis have shown the limits of German dominance: The EU's biggest nation is allowed to lead -- meaning it has an influential voice in endless contentious negotiations -- only if it's willing to contribute more than others to common projects. Even then, others may violently disagree: Germany was effectively isolated on refugees and forced to do a humiliating deal with Turkey to curb the inflow. And on the relatively painless Russia sanctions -- a costlier proposition to Germany than to most other EU members because of bigger pre-sanctions trading volumes -- the EU consensus is now eroding.
Under Merkel, Germany hasn't so much led as tried to keep the EU and the euro area together -- with limited success, as it's turned out. Leading would have meant, as Heffer suggested, pushing for closer integration, a fiscal union, a semblance of the "federal state" -- but Merkel has exhibited no political will for such a push. The German government won't be the first to press for closer integration because that would awaken memories of Nazi propaganda minister Josef Goebbels' 1945 rant about Europe in the year 2000. Goebbels wrote:
One can also predict with a high degree of certainty that Europe will be a united continent in the year 2000. Germany will not be occupied by its enemies in the year 2000. The German nation will be the intellectual leader of civilized humanity.
More than 70 years after Goebbels's death, "Fourth Reich" fears are the biggest obstacle to German leadership, let alone dominance, in the European project. No German leader wants to be seen pushing for more power and compared to the Nazis. Merkel would gladly give up the appearance of leadership if somebody else were as interested in keeping the union together, and paying for it. France, however, is happy to play second fiddle, if only because it's less economically stable. And other countries' alliances -- such as the eastern European anti-immigrant coalition -- are purely situational, not attempts to take on a leading role.
In 2016, German dominance in the EU is a myth. The only advantage Germany has over its neighbors is a stronger economy. The EU is not turning into a federal state anytime soon, and opponents of closer integration should thank Germany's old inferiority complex for it.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
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