The dark flip side of European technocracy

By Mark Leonard
May 31, 2012

How many countries will Germany need to bail out before it has erased the guilt of the Holocaust? That is the provocative question posed by Thilo Sarrazin, a publicity-hungry maverick whose 2010 book attacking immigration shattered Germany’s political consensus and sold more than 1 million copies. Last week he returned to the scene of the crime with a new book called Why Europe Doesn’t Need the Euro. In a much-quoted passage, he says supporters of eurobonds are driven “by that very German reflex according to which atonement for the holocaust and the world wars will never be complete until we have delivered our entire public interest, and even our money, into European hands.” This title has raced to the top of best-seller lists and sent jittery markets into panic. Sarrazin is a narcissist who is more interested in self-promotion than serious analysis. But his views on Europe – as well as the political class’s reaction to them – tell us a lot about how the euro’s political travails have come about, as well as how they are likely to unfold.

An opinion poll last week provides just the latest proof that Sarrazin has his finger on the national pulse: Over half of Germans think their country has suffered by joining the euro, while 79 percent reject eurobonds as a solution to the crisis. Sarrazin – a former regional politician and Bundesbank governor who was stripped of his official positions because of his views on immigration – is not a man to do things by halves. His book breaks not one but two German taboos by linking Holocaust guilt with questions about the sustainability of the euro. (It is designed to be a refutation of Angela Merkel’s argument that the breakup of the euro would lead to the breakup of the EU.) But although – or rather because – Sarrazin is so good at mirroring public opinion, the German political establishment is falling over itself to bury his arguments: Peer Steinbrueck, the former finance minister (and possible candidate for chancellor), described it as “bullshit”; while the current finance minister, Wolfgang Schaueble, described it as “appalling nonsense.”

The antics of Thilo Sarrazin are a product of the constrained, elitist nature of German politics where – after the experience of National Socialism – many topics are declared outside the realm of political competition. As a result, all mainstream parties are in favor of Europe, the euro and the Atlantic alliance, and against war, inflation and nationalism. The result is a restricted political sphere where politicians have often been able to act against public opinion without fear of challenge – including the decision to replace the über-popular Deutschmark with the strikingly unpopular euro. But those who dare cross the threshold of political correctness – as Sarrazin has repeatedly done – tap into a vast reservoir of pent-up popular frustration. And because the establishment cartel turns them into outcasts rather than arguing with their views, this reservoir continues to grow.

What is worrying is that Germany’s leaders are now trying to treat foreign politicians who question German orthodoxy the same way they treat their own populists. When I was last in Berlin, I asked one of Merkel’s aides what he thought her greatest achievements during the crisis were. He replied: “We could teach the neocons a thing or two about regime change.” He may have been joking, but the brutal way that Merkel and Sarkozy used markets to topple Berlusconi and Papandreou has been replicated in the treatment of other leaders. First, Angela Merkel tried to dismiss François Hollande – not simply saying she disagreed with his views on the fiscal compact but refusing to meet him during the election campaign (the implication since the election is that it is all right to campaign in French, so long as you govern in German). And now they are trying to turn Alexis Tsirpas – the firebrand leader of the Greek anti-austerity Syriza party – into a non-person. A chorus of European politicians are trying to scare the living daylights out of the Greek people in the hope that the electorate will give a mandate to the mainstream New Democracy party, which had supported the bailout package. My hunch is that this approach is unlikely to deliver a mandate for New Democracy, and even if it succeeds, it could be undesirable. If European leaders want a sustainable deal that keeps Greece in the euro, they would do better to bind parties like Syriza into an agreement than to tie themselves to an ancien régime that has already lost much of its credibility.

One of the ironies of the last few days is that Angela Merkel allegedly asked the Greek prime minister to call a referendum on whether Greece should stay in the euro. Back in December, Angela Merkel and Nicholas Sarkozy forced George Papandreou out of office for suggesting just such a referendum. At the time, I believed that allowing the political process to unfold might have given Papandreou a mandate for standing by his agreements with the EU. However by suspending the political process and imposing a technocratic government, Merkozy did lasting damage to the legitimacy of formal politics in Greece and has created the conditions for populism to flourish.

The situation in Greece shows how Europe’s technocratic tendency is leading to a strong populist backlash. The traditional “Monnet method” of European integration – named after the French founder of the EU who tried to turn political issues into bureaucratic ones – has dramatically narrowed the political space in member states without creating any widening of the space for politics at a European level. Telling a politician such as François Hollande – who has received a mandate to renegotiate the fiscal compact – or Alexis Tsirpas in Greece that “there is no alternative” sends a terrible message to European publics: They can change governments but not policies. The markets have a legitimate fear that unless leaders take the necessary steps toward integration, the EU will collapse. But this approach of imposing rules on the grounds that there is no alternative in fact risks creating a full-blown rebellion, making it harder for countries such as Greece to undertake reforms.

So far, Germany’s willingness to bankroll the European project has kept the show on the road. But the most worrying feature of the Sarrazin story is that it shows how even in Germany, the power of pro-European elites is challenged. The rise from nowhere of the Pirate Party – a ragbag collection of Internet activists with no political program to speak of – that is now polling in double digits in some regional elections shows how fluid German politics has become. It is unlikely that the anti-charismatic Sarrazin will end up becoming the German equivalent of Holland’s Geert Wilders or Austria’s Joerg Haider. But the refusal of mainstream politicians to make the case for European integration or to engage in full-throated political competition with their opponents could pave the way for someone equally undesirable to claim that mantle. It would be a tragic paradox if the German establishment’s guilt over past extremism hampers its ability to overcome the populists of the future.

PHOTO: Former German central bank executive and controversial author Thilo Sarrazin leaves after he attended a news conference to present his latest book Europa brauch den Euro nicht (Europe Doesn’t Need the Euro) in Berlin, May 22, 2012. REUTERS/Tobias Schwarz

13 comments

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/

[...] on blogs.reuters.com « Greek Wedding Film by Smart Productions + Poema Weddings & Special [...]

Very insightful piece.

Posted by TheUSofA | Report as abusive

very very good insight. heartfelt congratulations. It is the German version of herd mentality that defines black sheep as ‘no persons’ as you write. It is this which makes German society so structured and orderly. It is a brutal vein in the peoples’ DNA which led to disaster before.

If Germany was so consistent, consequent and morally superior as she professes to be, she should leave the Euro. Then the 60% against an European solution to the crisis would finally learn what the Euro meant to Germany.

The rest of Europe would have higher inflation for a while but German companies would flock to ‘us’ in droves.

Posted by lisandro | Report as abusive

The euro question hinges on weather the vast majority of Europe wants to be one large strong Nation or many little ones. If one they have to give the majority rule on a uniform economic laws and just courts for the laws. Also uniform educational policy particularly in teaching law, economics and public ethics.

If not they many small greatly differing nations most of whom will be too small to dictate trade rules. Small nations either much a cheap labor policy or some sort of export subsidy get what they need.

Posted by SamuelReich | Report as abusive

complete nonsense

conflates sarazin and nazism with a deutschen pseudo-political elite, then grandly arches over to merkel and sarkozy as a mini-richelieu duet conspiring to depose berlusconi and papandreou, to finally wheeze out that tsipras and the pirate party represent some psuedo-european spring

shallow drivel from an anglophile to lazy to think and gullible enough to believe polls

long live their ignorance

Posted by scythe | Report as abusive

I think a substantial portion of German political and economic decisions are driven by guilt, not only of the Holocaust, but also of the war years of the 20th century in general.

In reading European news sources, it is very difficult not to pick up strong anti-German sentiment in many articles.

I would say the rest of Europe does not want Germany to forget the past, even though in many articles they urge Germany to do that and become more “European”. However, many nations are very jealous of Germany’s success and tend to blame Germany for everything that has happened.

————————–

Perhaps a collateral notion is, not only how long the world intends to punish Germany for the Holocaust, but how long before the world
loses its guilt about the Holocaust and begins to treat Israel like any other nation?

Posted by PseudoTurtle | Report as abusive

I skimmed your article the first time through, but in reading it a bit more carefully I realize in reality you are not treating the Germans with much more respect than many lower-class European publications.

You can’t seem to differentiate between economic policy and anti-German sentiment either.

According to you, if the Germans don’t go along with writing a blank check for the rest of the eurozone, they must be Neo-Nazis bent on destroying civilization again.

Eurobonds are simply a bad idea.

From an economic standpoint they solve nothing of the problems inherent in the EU agreement, which was fatally flawed to begin with, but it massively increases the debt load to the wealthy bankers and investors who are sucking Europe dry.

Does that opinion make me a Neo-Nazi?

No, I think it makes me a person who understands what is really going on in Europe, whereas clearly you do not.

Posted by PseudoTurtle | Report as abusive

@ lisandro –

Your remarks are racist and disgusting, certainly not worthy of being allowed as a comment in Reuters.

Posted by PseudoTurtle | Report as abusive

{ML: In a much-quoted passage, he says supporters of eurobonds are driven “by that very German reflex according to which atonement for the holocaust and the world wars will never be complete until we have delivered our entire public interest, and even our money, into European hands.”}

Anyone who believes such drivel should be certified for the insane asylum. It’s pure nationalistic propaganda.

Germans want to remain in the Euro for two basic reasons:
* From WW2, they have learned how, when in Deep Doodoo, nationalist principles can come to the for and produce one of the most heinous regimes ever produced on earth since Attila the Hun. Meaning that they do not trust their political class and they are right not to do so. It is far better that Germany and Germans feel part of and contribute to a larger whole – which is the actual fact today.
* The EuroZone is an integrated common market that functions best based upon one convenient currency. People like Sarazzin have forgot the pre-Euro times when countries battled one another within the “snake”, which was established to mitigate the wild swings of national currencies that often caused nations to “beggar thy neighbor” by sudden currency devaluations. Such currency exchange wildness dampened inter-Europe trade patterns, thus diminishing aggregate demand of the Common Market (as it was known at that time).

It is true that the Eurozone, at its inception, overlooked the strictures of fiscal prudence – which should have been cast in concrete by means of a rigorous observance of the Golden Rule (of budgeting sobriety).

That can be fixed and should be fixed by integrating the Golden Rule into each EuroZone country’s national legislation and with regulatory oversight by the Brussels Commission.

Then countries can decide upon their array of national expenditures without affecting the solidity of the Euro from profligate spending maintained willy-nilly by National Debt. Which the Germans had insisted upon at the onset of the Euro-currency, but fell into the same trap (of too high spending) at a moment just afterwards in order to recover from an economic downturn.

People who live in glass-houses should not throw stones …

Posted by deLafayette | Report as abusive

I am fascinated by the belief that countries with ancient histories of their own, intertwined at times with each other but essentially established as separate peoples with temperaments, religious beliefs, philosophical, ethical, moral perceptions – all the bits that make people who they are essentially, really thought there could be a cohesive Europe with economic equality and balance? Didn’t the persons in Brussels know that Greece has been corrupt for decades? That there is a defiance to authority? That Germans are temperamentally better at self discipline and saving than other nationalities? That the French while smart and linguistically capable are wily and somewhat superficia land like to control through style at times? Why is it so abhorrent to see the realities of national personalities? Do people really believe that Turkey will be able to be integrated into Europe? Really?
The French and the Germans have emerged as the leaders of the EU precisely because of their national temperaments! It is not racists to observe these things…these observations are a reality.

Posted by jujubean | Report as abusive

A lot of half-truths, IMO.
Germany was pressed into the Euro “to be a good European” as the French repeatedly said.

But it’s worth pointing out how the Greeks (and often in UK blogs) a brainless minority look to mix Germany’s current stand with WW2 history.

As for “the Holocaust” – there were a lot of holocausts, not to diminish Nazi atrocities. But Japan has erased its atrocities, Russia likewise. As for the Armenians, well, who are they? And “holocaust” lit: total burning. Do we remember approx 350 Protestants condemned and burned at the stake in England in 1555 for not swearing allegiance to the Pope? Imagine if they had been Jews – we’d still be paying for it. Or the “slighting” of Catholics from 1600 to 1820, paying for much of the UK govt’s spending. We don’t hear endlessly about that.

So when Germany has (a) admitted its Nazi past, (b) paid war reparations to Russia, USA, France, UK till ~ 1952, then (c) paid Israel, then (d) paid Russians for use of WW2 slave labor, then (e) paid East Germany to re-unite, then (f) faced a 1990s recession and taken short-time, worked at second (often menial) jobs, come through, I’m surprised how accommodating Angela actually is. And when Germany and Austria are heavily burdened by non-German speaking people, it’s not surprising there are a few Nationalistic voices.

Clearly no-one has a solution to the Euro crisis. It’s interesting that Cameron says (and I agree, generally) Austerity is needed, but increases Public Spending (the idiot), while Hollande says Stimulus is needed and then orders his semi-Nationalized industry bosses to take huge pay cuts to set an example! Mad world.

Posted by seymourfrogs | Report as abusive

@ seymourfrogs –

Thank you for the most rational comment — including the original article — of all.

Posted by PseudoTurtle | Report as abusive

[...] were. He replied: “We could teach the neocons a thing or two about regime change.” The dark flip side of European technocracy | The Great Debate The Daily Mail — the world's biggest cut-and-paste operation. Reply With [...]

[...] The dark flip side of European technocracy Can Germany afford to let Greece leave? Stocks » Markets » Energy » [...]

[...] The dark flip side of European technocracy Can Germany afford to let Greece leave? [...]

[...] The dark flip side of European technocracy Can Germany afford to let Greece leave? Stocks » Markets » Energy » [...]

[...] The dark flip side of European technocracy Can Germany afford to let Greece leave? Stocks » Markets » Energy » [...]

[...] A German debt purchase is a bet on euro zone break-up The dark flip side of European technocracy [...]

European monetary aggregate data from the ECB came out this week and continues to follow the trends we have seen over the last year.

Killeen Home

Posted by Watches1 | Report as abusive

[...] Este artículo fue publicado por primera vez el blog de la página web de Reuters [...]

[...] The “democratic deficit” long agonised over but rarely tackled in a serious manner (Mark Leonard points out the German problem) becomes a democratic nightmare if powers are transferred a la Merkel to the existing Brussels [...]

[...] Reuters article is absolutely required reading for anyone wanting to understand Germany’s role in [...]

[...] Leonard, Director of the European Council on Foreign Relations, recently discussed an important trend that looms over the European project. Commenting on the recent scandalous  [...]

[...] Leonard, Director of the European Council on Foreign Relations, recently discussed an important trend that looms over the European project. Commenting on the recent scandalous  [...]

Let me briefly comment first on whether Germany needs the euro.
Bearing in mind the recent Spanish bailout, as well as the financing needs of troubled euro area economies such as Greece, Portugal and Ireland, one can be tempted to conclude that Germany has often had to bear disproportionately higher costs, relative to the derived benefits, when it comes to the euro area membership. The latter argument can however be contested, as some recent analyses suggest.
First of all, Germany benefits greatly from its membership in the euro area, as over 40 percent of its exports go to the euro zone. This aspect is particularly relevant for such a trade-oriented economy. The benefits ensured by trade can arise because of a lack of exchange rate risk, an expanded single market and greater price stability, all granted by membership in the monetary union. One could also go further and comment that Germany has benefited from the euro exchange rate through most of the life time of the euro.
According to estimates produced by the State Bank KfW, in 2009 and 2010, the German economy would have grown by 50-60 billion euros less in the absence of the euro. Similarly, its GDP growth in 2010 would have been 3.6 percent, not 5.6 percent as it was under the euro. In the counterfactual scenario, in which Germany still had the D-Mark, a flight to safe havens would have led to a hike in its currency and in its interest rates (according to estimates, as reported by KfW, the mark would have been 20 percent more expensive than the euro at the time of writing, in November 2011). This would in turn strongly impact a country with such a strong export basis. Lacking counterfactual evidence, one can compare the case of Germany to that of Switzerland. The year before the Swiss National Bank chose to link the currency to the euro, the Swiss franc (also regarded a haven in troubled economic times) rose more than 30 percent, affecting exports.
Arguments provided by McKinsey paint a similar picture: the euro has brought Germany a third of its economic growth since 1999, in contrast to the contribution the euro had for the euro area as a whole (20 percent). The removal of transaction and hedging costs also added another 11 billion euros to Germany’s GDP in 2010. McKinsey further estimated that improved trade gave the German economy an additional 30 billion, while improved competitiveness earned the country 113 billion. The effect was also considerable, relative to the one on the euro zone.
Another positive aspect induced by euro area membership, and also aided by the economic crisis, was the lower refinancing costs of German government debt, with German yields regarded as the safest in the euro area. According to a study by Unicredit, German yields averaged 3.5 percent over the last decade. Given this background, a 1 percent fall in yields could lead to a cut in the government’s interest payments on new debt issuance by 12.5 billion a year (by 60 billion by the end of 2015).

Posted by danuta_huebner | Report as abusive