Getting Cyprus Wrong – and Germany Too? « Euro

Getting Cyprus Wrong – and Germany Too?

March 27, 2013 by

The agreement on Cyprus concluded this week will turn out as a burden to policy-makers in Europe for both next steps related to Cyprus and the Eurozone rescue as a whole. The best take I have read so far is by Bruegel’s Nicolas Véron, who in his latest commentary addresses the manifold arenas in which the case of Cyprus will play out in the months to come.

Véron also discusses the role of Germany, making the point that the Cyprus agreement was held hostage by Germany’s federal electoral campaign, and Berlin as the “unquestioned central actor” in the Eurozone contributed to undermining trust won back in 2012. I agree that domestic politics played a major role for the governing coalition of Chancellor Merkel. The last thing Merkel wants is a euro controversy tainting the so far bright prospects of her re-election, and headlines in German local newspapers this week did her a favour by stating “Citizens’ deposits safe in German banks”.

The question is, despite the opposition trying to capitalise on the government’s potentially damaging slip and on the anti-Merkel mood in Cyprus and other parts of Europe: with a different government in power in Berlin, would the stance on Cyprus have looked significantly different? I doubt it.

German sociologist Ulrich Beck provided what I consider the key to understand German thinking in an interview published by the London School of Economics’ EUROPP blog this week. It is a crucial hint to understand the German soul throughout the past, present and future of the crisis, which is why I quote it in full length:

“(…) Germany’s austerity policies are not based simply on pragmatism, but also underlying values. The German objection to countries spending more money than they have is a moral issue which, from a sociological point of view, ties in with the ‘Protestant Ethic’. It’s a perspective which has Martin Luther and Max Weber in the background. But this is not seen as a moral issue in Germany, instead it’s viewed as economic rationality. They don’t see it as a German way of resolving the crisis; they see it as if they are the teachers instructing southern European countries on how to manage their economies.”

From the crumbling of the City of London during the first wave of the crises through the debt and governance failure in Greece to what is now being described as a ‘fatal business model’ in Cyprus in German papers, there has always been a moral, even moralistic undertone in the German debate, which people outside Germany are struggling with. For Germans themselves, however, it makes a lot of sense. There is a sense of unfairness felt in Germany when witnessing a growing anti-Germany mood in the streets of Cyprus, Italy, Greece and elsewhere: after all we are the good Europeans, not the bad ones, in helping others to find their way back to what we believe is a ‘good’ way of running an economy, and a government responsive to citizens’ needs. And we are even helping with our taxpayers’ money.

In government circles in Berlin this is framed positively and, with what I believe is a genuine sense of responsibility, as help in ‘forging a new social contract’ in countries affected by the crisis. In other parts of Europe, however, Germans cause increasing outrage for allegedly not tolerating any other system than their own, and for playing a moralistic blame game against “hubris, greediness and wilful negligence” (this is how a leading German conservative daily put it today, suggesting to turn the headquarters of the soon to be closed Laiki Bank into a “museum of greed”).

I understand that it is getting harder to believe in the rest of Europe when reading such commentary (and the list of similar quotes has become long in the course of the crisis) that Berlin has good intentions, and that it genuinely does not want to dominate or destroy other countries’ economic and social models. Keeping in mind the hugely formative driving force to German thinking as described by Ulrich Beck might deliver a key to understanding Germany better.

But Germans have to do their part too. In my observation there is still a lack of real understanding of how and why Germany is perceived by others as lacking empathy among policy makers in Berlin. And those who indeed are aware of these perceptions are playing an increasingly dangerous game by ignoring them or playing them down as a natural sight effect that comes with strong leadership.

If I was to revisit the findings of a set of papers that we published in mid-2012 on how Germany is viewed by other EU Member States, by now the results will certainly give much more reason for concern regarding Germany’s role in Europe. Perceptions matter in European politics, and they might turn against German leadership and narrow Berlin’s room for manoeuvre – to the detriment of Germany and Europe.

Europe For Citizens

“This project has been funded with support from the European Commission. This publication reflects the views only of the author, and the Commission cannot be held responsible for any use which may be made of the information contained therein.”

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  1. The Ulrich Beck interview is a great read. The part you’ve quoted is particularly well observed, but there are so many other good observations as well (the use of “waiting” as a power mechanism, the redistribution of risk). Thank you for linking to it – and to the LSE for publishing it.

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