“Over and over again”

The extension of the eurozone’s assistance programme for Greece dominates the European debate in Germany and links eurozone politics to the future of Europe. 

ECFR Alumni · Head, ECFR Berlin
Senior Policy Fellow

Next to the challenges posed by Russia and the Ukraine war, the extension of the eurozone’s assistance programme for Greece dominates the European debate in Germany. Experts and scholars have criticised the compromise reached among eurozone finance ministers as hard-nosed adherence to a “failed German-inspired policy of austerity”, as The Economist has put it.  Meanwhile in the German debate, the country’s largest tabloid paper Bild launched a “No” campaign in the run-up to the German Bundestag’s vote on the compromise. 

Both camps of the critique – one arguing Germany wasn’t doing enough, the other claiming the government was being too soft – had to be addressed in parliamentary debate. While a large majority from the ranks of the Grand Coalition in favour of the compromise on Greece seemed secure, and the opposition parties (The Greens and The Left) have already indicated they support the deal, the debate was still sensitive. Given the scepticism of the German public, nay-votes from coalition MPs were sure to draw attention. Indeed, 32 MPs voted against the motion with a further 13 abstaining. This is the largest number of dissenting votes the Grand Coalition has received on eurozone policy.

Against this background, government speakers were keen to link the current eurozone decisions to the larger issue of the EU’s significance for Germany. No other member of the coalition government epitomises the bigger picture argument better than its finance minister Wolfgang Schäuble: “As far as we are able to, we Germans should do everything to keep Europe together and to unite it – over and over again.”

“As far as we are able to, we Germans should do everything to keep Europe together and to unite it – over and over again.”

As Schäuble also emphasised, Germany insists on the application and acceptance of the rules and processes governing financial assistance policy as part of an overall strategy to defend the integrity of the eurozone. A compromise on these essentials would weaken reform processes in other eurozone countries and negatively affect the credibility of governments currently undertaking major changes in France, Italy, Spain, Portugal or Ireland. In the German view, it would also alienate the publics in those countries contributing to assistance funding while enjoying lower wage levels, smaller pensions, and lower standards of living compared to Greece. These factors combined could break the implicit solidarity argument of European integration, which Schäuble views as a precondition for Europe’s fate in the 21st century: Europe’s future, he told Parliament, “will depend on the success of integration” and on “whether we stand together and could rely on each other in good or in bad times, and on whether those in trouble could count on the solidarity of others”, because “those better off will come to the support of others.”

While some may dismiss these statements as well-crafted political rhetoric, Wolfgang Schäuble in fact revealed the essence of traditional German thinking about Europe. Such a statement could hardly be issued with the same seriousness in other large member states. Below the surface of a strong interest-based policy of German governments at the EU level, the degree of commitment to European integration is still striking. Until this day, and resurfacing on occasions like this, the German attachment to the EU proves to be a matter of Staatsraison, of state reason. European integration cannot be allowed to fail, for with it the anchor of Germany in its neighbourhood would be put into question.

The political class of Berlin sincerely believes in the benevolent nature of its focus on fiscal sustainability. It is deeply convinced to be helping out EU partners in need – so deeply that allegations of profit interests or hegemonic ambitions as drivers of German policy may disturb actors (mostly because they seem to agitate the wider public at home) but do not irritate them in their course. Greece’s finance minister Yanis Varoufakis will be frustrated to see that even the wildest analogies he employs in media interviews could not stop his German counterpart from seeking to arrive at a compromise with him, “over and over again”, to use Schäuble’s words.

Below the surface of a strong interest-based policy of German governments at the EU level, the degree of commitment to European integration is still striking.

Nevertheless, there seem to be no illusions in Berlin governmental or parliamentary circles that the extension of the existing programme does little more than extend the time frame for more complex and probably controversial negotiations. The hope remains alive in Merkel’s government that the outsider government in Athens willembark on a serious policy of thorough reforms, closing the loopholes and addressing the shortcomings in implementation of its predecessors. But many in Germany appear prepared to deal with the opposite, continuously reminding their Greek counterparts of the commitments they have underwritten as the prelude to the next big showdown on a third programme right before the summer break of 2015. And these anticipations will likely turn out to be well-founded.

Post-agreement statements by the Tsipras government have given numerous indications of a renewal of the controversies over a write-off, rescheduling, or a completely revised assistance scheme at the end of the four-month extension period.

Seen from the Berlin perspective, all of this looks like a troublesome but unavoidable perspective. What’s puzzling is the little interest German policymakers take in the option for a “third way” between the apparent German fiscal orthodoxy and Tsipras’s demands. Such an approach could hardly consist in compromising on the rules; rather it should seek to modify the playing field, overcoming the spatial constraints of policymaking inside the eurozone.

Instead of limiting the approach to government interaction, eurozone policymakers could address the people at large and not just their own national constituencies, make the case of governance reform, and offer direct support in the implementation of changes to provide European citizens with better rules, better implementation, and better public services. Elements of such an approach are the existing bilateral agreements between France and Germany with Greece on supporting public sector reform – its limiting factor being the hesitance of Athens to accept more such support. So far, eurozone governments have failed to trigger domestic demand for such policies in Greece, and not because they haven’t tried hard enough. After all, inside the eurozone, the organisation of public life in member states has long ceased to be a black box. Never have national data and information on economic and fiscal policy and government performance been made available more thoroughly to the European level than since the establishment of the common currency. Decision-making, however, has remained an intergovernmental affair, and with that has remained subject to the postures, tactics, oddities, and irrationalities of inter-state conduct.

The minutes of the Bundestag debate on 27 Feb can be found here.

The European Council on Foreign Relations does not take collective positions. ECFR publications only represent the views of its individual authors.

Author

ECFR Alumni · Head, ECFR Berlin
Senior Policy Fellow

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