The current European financial and debt crisis has highlighted Germany's increasing power and amplified Berlin's influence over the EU. The implications remain unknown but British engagement could temper excessive German influence from within and create a stronger and more globally-minded Europe.
Dr. Luis Simón for RUSI.org
'Spreads', 'yields', 'downgrades', 'ratings', 'bailouts', 'EFSFs'.... Europe seems to be finally speaking a common language! The EU itself has never been in the limelight so much. Yet, it certainly is the end of European integration as we've known it. The big tables have turned: we now have a German-French engine (or Merkozy), not a Franco-German engine anymore. Surely, France remains influential and its input will remain important to the future of Europe. That is what Sarkozy's speech on 1 December in Toulon boiled down to. This said, Chancellor Angela Merkel's speech, given a day after Sarkozy's,represents yet another illustration of what is by now the worst kept secret in the continent: that Berlin will have the last word over the debt-crisis or, for that matter, over the evolution of the European Union. For the umpteenth time, Chancellor Merkel has reminded the markets that joint debt-liability is off the table and tied 'European solidarity to national responsibility'. Does this mean we are heading for a German Europe?
It is true that a (fortuitous) marriage of convenience between international bond markets and German politics is resulting in a massive build up of Berlin's political leverage in the EU. The impact of bond markets upon policy-making can be tyrannical. The Greeks, Irish, Portuguese, Italians or Spaniards are learning the lesson the hard way, caught as they are between the Euro and a hard place. The recent replacement of democratically elected governments by 'technical' teams in Italy and Greece is perhaps the starkest illustration of the impotence of those countries vis-à-vis the alignment between international bond markets and a German-led EU. But the crisis does not stop at the periphery. For the past two weeks we've seen Belgium, Austrian, French and Dutch spreads have been taking big hits. As the markets ran for cover, away from peripheral and not-so peripheral debt, Germany continued to enjoy a low interest on its borrowing. How long that will last remains unclear, as last week the markets began to show scepticism towards anything Euro-denominated.
The crisis spreads to Europe's core
It is one thing to have the periphery on fire, as bad as it is, and quite another when the focus is on France -when the issue is more serious. Because the Euro and the whole European integration process are and have always been a political operation. European integration has always mirrored the evolution of Franco-German relations. Surely, Germany benefitted from European integration greatly. Politically, it offered it an alternative to its über-dependence on the US and NATO during the Cold War and a path to vindication. Economically, for all the safeguards and compensations, the Single Market led to a situation that should have been forecasted all along: if you tear down the borders and 'play by the markets' the strong will get stronger.
For many, European integration was always about Germany paying its way up to political acceptance. From the European Coal and Steel Community on. And the French were cashing most of the bill: be it agriculture; the EC's support of France's former empire, via the development aid budget and low tariffs to the Single Market. But as German reunification, Eastern enlargement and America's post-11 September geostrategic shift away from Europe have progressively loosened the Cold War leash, Germany is willing to pay less and less and demands more and more political bang for each Euro. But how much less money for how much more influence?
Make no mistake: beyond the financial crisis there is a geopolitical one. A once-in-a-generation financial crisis has only illustrated (and perhaps further exacerbated) Germany's rising power and the fragility of Europe's post-war deal. And the driver behind Europe's geopolitical crisis is the disappearance of the one element that put Europe together in the first place: America's overwhelming military, diplomatic and political commitment to the old continent. Ten years ago a number of American International Relations scholars predicted that the end of the Cold
War would be followed by US disengagement from Europe, the end of NATO and the return of chaos and conflict to the continent. Instead, we had European Monetary and Political Union, NATO's transformation and the expansion of the western order eastwards. For twenty years complacent Europeans reacted with contempt and even laughter to such 'retrograde', 'Nineteenth century-minded' predictions. But what now? Will John Mearsheimer and the like laugh last? We know one thing: Europeans are not laughing anymore. American disengagement did not come about back then, but it is with us now. In that, the financial crisis is to blame as much as the ten long years of resource-draining wars in Afghanistan and Iraq. And the emergence of the Asia-Pacific region is not about to turn that process around anytime soon. Will the post-war, 'plural' Europe continue to hold? This is the key question hanging over the continent today, if sugar-coated by 'technical/financial' debates and the thick institutional and normative landscape that have populated European political discourse for too long now.
Towards a German Europe?
With the debt crisis closing in on the EU's credibility, band-wagoning signs come from Paris. Sarkozy has as of lately praised German stability as the only way to maintain an only-in-name AAA rating, seemingly ready to abandon traditional French thinking about monetary and macroeconomic management in a desperate bid to at least hold on to the Elysee Palace. So much for grandeur. But the French Socialists know different and the 2012 Presidential campaign is now on. That very fact, together with the latest round of attacks on French yields, may well explain Sarkozy's recent flip-flopping and calls on the European Central Bank to take action. That, by the way, could be an incentive for Germany to give something: better help get 'Merzoky' re-elected in May than have to deal with the growth-minded socialists. Or is it? Has Sarkozy really capitulated or are his overtures to Berlin on the Euro just a means to weather the storm and win time to reload? After all, Sarkozy's Atlanticist urges and his more pragmatic approach to the EU tell us more about his will to hold his ground than short term economic-policy concessions that, he seems to think, will not necessarily translate into political losses over the long term. The Socialist Party, for its part, is ideologically and emotionally invested in l'Europe politique, and has an aversion to anything that smacks of les Anglo-Saxons. That said, the Mitterrand presidency showed us all twenty years ago that being a Frenchman comes right before being a socialist or, for that matter, a European.
But let's forget for one second about future scenarios. German power is the story of the day. Surely, as their weakness has been caricatured to an extreme by the crisis, most countries must be thinking this is not the best time to negotiate that new treaty the Germans so eagerly demand. Idealist pro-Europeans welcome Germany's moves as an opportunity to demand what they always crave, crisis o no crisis: more integration. But integration is not a magic word that somehow terminates politics. There will always be a political balance sustaining it and, as things stand now, more integration will mean integration along German lines. With bond yields out of control and geographically peripheral and politically peripheral countries alike getting in line, analysts and pundits tell us that German Europe is here to stay. But is it? The leverage and medium-term gains resulting from short-term panic must not be confused with strategic power.
The limits of German power
For all its confidence, Germany remains trapped within a constraining geography and an institutional architecture largely designed by the victorious Western powers after 1945. Not only are the notions of restraint and being a good European hardwired into the German psyche and domestic political architecture: they remain the safest route to influence and power. After all, it is from Europe that Berlin draws its strength (the EU accounts for over two thirds of German trade) and one's source of wealth and power must be pampered. Germany is aware that the survival of the EU goes through greater political integration and that any steps towards that will inevitably require some give. The French have not yet said their last word themselves. Their renewed Atlanticism, international political standing and excellence in the realm of strategic military assets continue to substantiate their indispensability and claim of a leading position in a more political Europe. More importantly, they are the only thing that stands between a growingly confident Germany and a large international mediatic microphone ready to unleash German-bashing in all directions. Holding off that microphone has a price, and the French play that game better than anyone.
Finally, and crucially, Anglo-American power in the rear remains the last line of defence of Europe's status quo. Any curious observer will have noticed that Washington and London have for quite some time now criticised Berlin for not doing enough to solve the Euro-debt crisis by loosening the ECB's leash. 'This is none of your business!', said a publicly outraged but quite possibly privately thankful Sarkozy. The Germans have so far held their ground, arguing that the problem won't be solved by throwing money at it. Should we worry more about too much spending bringing chaos or about too much austerity hampering growth and recovery? How to navigate the need to stop the immediate bleeding with growth and long-term prosperity? Where is the balance? Of course, economists disagree. But this is not a technical debate. The different players are invested in different solutions (politically, ideologically and financially).
Technicalities aside, Anglo-American calls for ECB action are a reminder that the political rules of 'multilateral' Europe demand that Germany pay more attention to the needs of others than it is currently doing. Surely, we are all (still) good allies and partners, and these sort of high-level political debates continue to play out in a characteristically subtle manner. But the thick normative dressing, the existence of common institutions or absence of military tensions does not mean conflict is not among us. The EU helped tame conflict, not least by getting it under the wire. It did not make it go away. We are seeing that now. On 14 November, the same day Chancellor Merkel pledged for greater political and fiscal integration, David Cameron denounced 'grand plans and utopian visions' and urged Europe to remain respectful of its plurality. More gist to the mill. Dire financial and economic conditions tend to lead to an exacerbation of political tensions. Is this the gloves coming off?
Let's forget about intent for a while and look at capabilities. Germany's reluctant, perhaps even unwitting, hegemony and civilian power discourse are surely a much more effective path to leadership than just panzering your way through the continent. It makes it easier for other Europeans to sign up for it. And it makes it harder for those on the other side to effectively counteract what they perceive more and more as a hegemonic drive. When it comes to raw capabilities the picture does not look so cheerful either. The British do not have a global empire anymore and the Americans are looking east. But let's not get carried away.
The Americans will never fully abandon Europe, and the British (although suffering the effects of its own austerity measures) retain a global trading, diplomatic, intelligence and naval infrastructure unrivalled in Europe. In contrast to Germany, whose population is shrinking, Britain is the fastest growing big country in Europe and is expected to be the most populated country in some four decades. For all its pacifism, greenness and Zivilmacht, Germany is not nearly as good at the soft power game as the British or American are. English is most Europeans' second language. London remains the world's financial centre and, by any standards, Europe's most global city. Europeans read their books and newspapers in English and listen to music, watch movies and TV in English too. They dream of a stint at British and American universities. No wonder: the world's top ten universities remain 'Anglo'. Only three European universities are on or anywhere near that list (all three British).
Why Britain Matters
Cameron and Merkel's speeches do smack of the old balance of power Vs. hegemony debate. But history is not necessarily repeating itself. Back then Europe was the epicentre of global politics. Today it is marching steadily and unabatedly towards its very periphery. Division will only accelerate that. There is no win in a potential European competition. We are all losers. But only the country that is most responsible for the shape of modern Europe can change the game: Britain. Yes: Britain's neither-in-nor-out status in the EU and its image as an American satellite have led many in the continent to take London as less powerful in European geopolitics than either Berlin or Paris. And that maybe true insofar as the daily business is concerned -much of which turns around the EU. But Britain continues to exercise a great deal of structural power. Alongside Washington, London played a key role in designing a postwar European milieu around a division of labour whereby NATO would ensure a favourable strategic balance in the continent (and beyond) that would allow the EC/EU to grow and develop. Both Paris and Berlin were on the receiving end of those decisions. That order continues to operate today. Not only do Britain's famous vetoes and red lines 'legally' preclude the EU from taking off as a political and strategic actor. By refraining from engaging in political Europe, the British hold back the French, always wary of stepping into the wild holding hands with the Germans alone. Britain also played a central role in kickstarting EU/NATO eastern enlargement, arguably the decision that made the deepest impact upon Europe's geopolitical map in the last twenty years. And it continues to play a central role in sustaining it, being perceived by eastern Europeans, Baltics and Nordics as one of their most committed and trustworthy allies.
Britain continues to hold the key to European geopolitics. If it decides to remain on the fringes (of the EU) and play divide-and-rule-politics it will most likely succeed. But would that be a win these days? Britain should really think much harder about that. Yesterday, the price of balance of power in the continent was a clean door to global empire. That Empire is not there anymore. Instead, a British-led Europe could be the new door to global power. Just as stability in Europe has historically depended upon British engagement, so has Britain risen and prospered with Europe. If Europe goes down Britain will go down with it. Full on British engagement would temper excessive German power from within and lay the foundations for a stronger and more globally-minded Europe. European decline is not inevitable just yet, but the window is closing.
Dr. Luis Simón is a Postdoctoral Researcher at the Institute for European Studies, Vrije Universiteit Brussel
The views expressed here are the author's alone and do not necessarily reflect those of RUSI
 BBC News, Sarkozy: France Germany ties key to eurozone stability, 1 December 2011,
 BBC News, Merkel urges EU fiscal union to tackle eurozone crisis, 2 December 2011,
 Financial Times, Bund sale sounds alarm for Europe, 24 November 2011,
 Gunter Hellmann, The 'Normalization' of German Foreign Policy and the Future of Europe's National Interests, Lecture before the Flemish Political Science Association in Brussels, 18 November 2011.
 John J. Mearsheimer, 'Back to the Future: Instability in Europe After the Cold War', International Security, (Vol. 15, No. 1 1990), pp. 5-56.
 Financial Times, France pushes for Christmass gift from ECB, 27 November 2011,
 On the Mitterrand Presidency see Ronald Tiersky, François Mitterrand: A Very French President (Lanham: Rowman & Littlefield Publishers, Inc., 2000)
 Niall Ferguson, '2021: The New Europe', The Wall Street Journal, 19 November 2011.
 Financial Times, Geithner warns EU of 'catastrophic risk', 17 September 2011
 The Guardian, Europe of the future: Germany shrinks, France grows, but UK population booms , 27 August 2008
 Luis Simón and James Rogers, British Geostrategy for a New European Age, RUSI Journal (Vol. 56, No. 2 April 2011), pp. 52-58.
 See Brendan Simms, Three Victories and a Defeat: The Rise and Fall of the First British Empire, 1714-1783 (London: Penguin Books, 2007).