Over the past few days, the Brexit referendum has taken a nasty turn, with Boris Johnson, the former mayor of London and a prominent “leaver”, comparing the European Union (EU) to Adolf Hitler and complaining about Germany’s growing power in the EU. He should visit Berlin, which I did last week. Far from wanting to rule Europe, Germany’s leaders seem increasingly worn-out by its endless crises and, from their point of view, downright ingratitude. This growing fatigue in the continent’s already reluctant hegemon could spell as much trouble for the EU as Brexit does.
Post-war Britain famously lost an empire but couldn’t find a role. Now, Germany has acquired an empire of sorts, but can’t work out how to run it. All of Europe’s problems — the flood of Syrian refugees, the euro crisis, Russian President Vladimir Putin’s belligerence, the Eurozone’s anaemic growth, Eastern Europe’s drift towards rampant nationalism, Brexit — keep landing in German Chancellor Angela Merkel’s lap. Merkel has usually found some way to cope, most obviously by kicking each problem down the autobahn. But she lacks the power (and too often the inclination) to lead Europe, while her partners, even when they don’t obstruct her, do very little to help. So the problems drift, and frustration in Berlin mounts.
Look, for instance, at Europe’s two main enduring crises. Tomorrow, the Greek parliament is supposed to approve another package of structural reforms, prior to a meeting of Eurozone finance ministers in Brussels on Tuesday. Greece needs another dollop of aid to meet its July interest payments, but the International Monetary Fund (IMF) has been (rightly) worried that the country’s debt burden is too big and it will miss its target of a 3.5 per cent primary surplus in 2018. A Merkellian fudge has been readied: In return for the new reform package, Germany and the IMF will accept some of Greece’s more heroic forecasts and stretch out debt repayments.
Default has thus probably been skilfully averted again. But nobody in Berlin believes Greece will ever be able to pay off its debts. “It is really an emerging economy, not a developed one,” says one senior German, adding wryly that the Greeks should be dealing with the World Bank, not the IMF.
Worse, from Germany’s perspective, the lack of progress in Greece is symptomatic of the whole continent’s uncompetitive economy. Six years into the euro crisis, France has barely started structural reform (German ministers roll their eyes whenever you mention “Francois Hollande” and “reform” in the same sentence), and Italy is still trying to fix its banking system. The single market is worryingly incomplete. Very few of the structural underpinnings of a successful single currency are in place.
This contempt comes with a hefty dose of hypocrisy and self-delusion. Merkel has done few structural reforms herself; the hard work was done by her predecessor, Gerhard Schroeder. Content in their prosperous economic bubble, German voters have condemned the rest of Europe to needless austerity, resisted liberalisation (notably in the country’s lacklustre service industries), and refused to stomach common Eurobonds and other long-term solutions to preserving the single currency. So the Germans are not the thrifty saints they imagine themselves to be. But, as they endlessly point out, they are the ones who write the cheques every time there is a bailout — and they don’t feel as if they get a lot in return.
Germans have more justification for their resentment when it comes to Europe’s other main crisis: The flood of Syrian refugees. On the plus side, Merkel has found a way to stem the flow of people that threatened to overrun her country (and her chancellorship). Turkey has agreed to hold refugees within its borders in exchange for 6 billion euros (Dh24.71 billion) in aid from the EU, while Italy and Greece are also getting help in exchange for not letting refugees who land on their coasts surge northward.
These deals have brought some relief in Merkel’s court — but not without nervousness and reproach. Nervousness, because the deals are fragile: Turkey’s President Recep Tayyip Erdogan is already howling about the terms of his (“Since when are you controlling Turkey?”) reproach, because when Merkel pleaded for help, she got precious little assistance. While Germany has taken in perhaps one million refugees, Britain and France have each absorbed a fraction of that. Eastern Europe, which Germany helped rebuild, was more rudely uncooperative. And what, Merkel’s lieutenants wonder, will happen if the refugees start coming again?
So it is no wonder that Germany feels fatigued. A decade into her chancellorship (a somewhat tiring milestone for any government), Merkel must have found Johnson’s remarks ironic. Rather than dominating Europe, she has merely the same sort of negative clout that United States President Barack Obama has over much of the rest of the world: She can often stop things, but rarely cause them to happen. Part of that is her fault: If she had dared to get ahead of the euro crisis, rather than sticking various Band-Aids on it, she might have staunched it. But Germany is reluctant to lead, and the rest of Europe is reluctant to follow.
Domestic politics don’t make this any easier: The rise of the Alternative for Germany party, Germany’s version of euroscepticism, is partly based on its claim to tell the harsh truths about the EU that Merkel keeps papering over. If Merkel, who is still trusted, were to leave, chances are that her successor would have far less leeway to negotiate on Germans’ behalf.
The overriding worry is that a vicious cycle has begun: As Germany gets ever more frustrated with Europe’s inability to change, it gets ever less likely to lead, so the change it wants becomes ever less likely to happen. In a strange way, Brexit may alter this dynamic. Merkel is desperate to keep Britain within Europe because she sees British Prime Minister David Cameron, for all his Little Englander elements, as a voice for reform.
Yet, if Britain were to opt to leave and other countries threatened to hold referendums, then even the cautious Merkel may be forced to seize the moment and bully reforms through Brussels to create a more cohesive, modern Eurozone with a deeper single market. Hence, an irony for Johnson and his fellow Brexiters: The dominant Germany they fear is more likely to come into being if Britain votes to leave the EU.
John Micklethwait is editor-in-chief of Bloomberg News.