Artwork: Claude Cadi

The process of European integration has reached a critical point.” 25 years ago, this sentence set the stage for the famous Schäuble-Lamers memorandum and its bold vision for Europe.

The always humble foreign affairs expert Karl Lamers and the notorious Wolfgang Schäuble, both members of Germany’s Christian Democrats (CDU), warned that a “regressive nationalism” was taking hold in Europe, feeding fears of unemployment, migration, and societal change. Single countries could not tackle these problems—national sovereignty had become “an empty shell.” Indeed, only through the European Union could the continent’s nation-states be sovereign at all.

At the same time, enlargement would make the union more diverse and lead to a “significant power gain” for Germany. It would also overstretch the EU’s institutions and render it less effective. The EU was thus at risk of degenerating “into a loose formation essentially focused on economic aspects.”

But “such an ‘enhanced’ free trade area could not cope with the existential problems of European societies and their external challenges,” the two men from Baden-Württemberg argued. To secure France’s backing for enlargement and get the EU institutions ready, Bonn should propose new measures for “a strong, capable and integrated Europe.”

État-Nation vs. Europe

Their idea: the EU’s founding members (except Italy!) should pursue political union on their own and form a “core Europe” with a common migration and social policy, coordinated budget policies, and strong defense and foreign policy capacities. Building this core Europe should “reconcile two a priori contradictory goals—deepening and enlargement,” Schäuble and Lamers wrote.

The proposition got almost no traction in France. As Berlin is today, Paris in 1994 was in a state of paralysis. François Mitterrand’s presidency had entered its last year, and the socialist in the Élysée had to share power with a center-right government. And while EU flags then as now fly next to the Tricolore above every school entrance in France, Paris is, when push comes to shove, often more than hesitant to give up sovereignty for Europe’s sake. France is after all the literal État-nation, where the state created the nation and still embodies it.

The clear-sighted Schäuble and Lamers anticipated this, writing in the 1994 paper that “when German propositions are unequivocally presented, then France must also decide clearly. It has to rebut the impression that although it does not allow others to doubt its fundamental will to Europe’s unification, it time and again hesitates on concrete integration steps.”

Joschka Fischer’s Avant-garde

At the turn of millennium, Foreign Minister Joschka Fischer revived Schäuble’s “core Europe” idea. In a speech at the Humboldt University, Fischer argued a group of EU countries should form “the avant-garde, the driving force for the completion of political integration.”

This time, Paris at least replied. Addressing the Bundestag, President Jacques Chirac called for a “group of pioneers” to cooperate more closely on economic and defense policy. But for the Gaullist, “pioneers” was code for a more inter-governmental mode of cooperation that would boost France’s leverage. A “European super-state” was not the goal, Chirac said. Paris was beaming with self-confidence at the time, as France experienced a brief economic boom.

Fischer did not get far with his proposal. At the 2000 Nice summit, Berlin and Paris preferred to fight over their respective voting rights within EU bodies. The French “No” to the EU constitution in 2005 did not help either. And once Eastern enlargement was a reality, Angela Merkel ditched the “core Europe” idea for good, arguing the new EU members shouldn’t be pushed to the periphery again.

Not Just a Market

This is all history of course. But there is one person who has studied it well: Emmanuel Macron. Before entering the Élysée, he had his shot at a Humboldt speech in January 2017, outlining his vision for Europe. Citing the Schäuble-Lamers memorandum and Fischer, he apologized that France had not taken up their initiatives and promised to continue their fight.

Macron has certainly kept his word and the overlap between his ideas and those of Schäuble and Lamers is indeed astonishing. Europe’s biggest mistake in the last decade “was to abandon this word: sovereignty,” Macron says. He doesn’t stop exclaiming “Europe is not a big loose market!,” but a political union giving citizens a sense of control in a globalized world.

And as Schäuble did in 1994, Macron believes creating this “sovereign” EU necessitates, first, that enlargement be linked to institutional reform. “Let’s be honest … the system of consensus at 27 doesn’t work. … The ones who want enlargement must also accept more qualified majority voting,” Macron told the press at the London NATO summit in December 2019. And, second, that the EU’s willing members need to move forward on their own, regardless of the others.

Full Circle

That Wolfgang Schäuble, now the president of the German Bundestag, endorsed Macron’s European initiative on December 5 in a speech at … yes, the Humboldt University, is thus nothing but consequential.

Schäuble said Macron’s “Europe that protects” slogan is the right formula. The EU needs to reimpose the primacy of politics in a globalized world. And in a sideswipe against Merkel, he added, “The French president is impatient—who could not forgive him? It is the result of too much waiting—for our answer, German ideas, and common leadership.”

Schäuble citing Macron who cites Schäuble relaunched his “core Europe” idea, arguing that “we cannot afford that the most hesitant, the slowest EU member determines the tempo.” Schäuble called for a “Google tax,” the protection of Europe’s data from the United States and China, the investment of Germany’s trade surplus in climate change measures abroad, more qualified majority voting in European foreign policy, and—chiefly—for Berlin to get serious about EU defense.

The security focus is not only a reaction to NATO’s “problems,” as Schäuble, a committed transatlanticist, put it in his speech. Instead, he sees security as “the inner core of sovereignty,” adding that “knowing about one’s own sovereignty is key to defining a people’s relationship to itself and each other.” Therefore, Schäuble argues that developing Europe’s “capacity to defend itself is an essential factor for the stabilization of an EU identity.”

Schäuble Support

In Schäuble’s thinking, the project of an EU army could bring Europe’s east and west together. And like Macron, Schäuble pleaded for reconsidering the EU’s relationship with Russia, while acknowledging that Germany’s commitment to Nord Stream 2 puts it in a bad position to reassure eastern Europeans.

All of this is strong stuff in Germany, and not yet wildly discussed. But as the Bundestag president says, the country needs this “unpopular debate.” Schäuble can certainly count on Paris not to let go.

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© REUTERS/Alkis Konstantinidis

You can read about the European Union’s horrible setback anywhere. At fault is the obstinate and callous austerity policy of Angela Merkel and especially Wolfgang Schäuble. The EU has deteriorated from a warm community of peace and prosperity to the cold detachment of an accountant’s office. One editor-in-chief described the chancellor, in a southern German daily, saying, “Merkel is a phenomenon. Without any apparent talent, she has managed to get far in life by doing nothing at precisely the right moment.” That is clearly nonsense –recall the sheer number of German and EU decisions she has negotiated or imposed since the beginning of the financial crisis. Certainly, one can disagree with her, but one cannot fairly accuse her of inactivity.

Why is this prejudice so persistent? It is likely Merkel’s deliberate and inconspicuous political maneuvering that is so provocative. In fact, the criticism isn’t really directed at Merkel personally. Rather, its target seems to be the complexity and general dullness of political events. Endless summit meetings, always in the routine Brussels setting, with the same morose journalist reporting endless negotiation, bargaining, and further negotiation – the inevitable impression being that a lot of energy has produced very little. It goes without saying that EU politics are especially unattractive.

The giant consensus machine that is the EU is clearly not immune to individual states with a predilection for breaking rules. And that appears to be a strike against the EU. For six months two Greek politicians harangued the rest of Europe, forcing many busy politicians to take part in incessant meetings on the same problem. On the one side, the Goliath EU – and on the other, the tiny Greek David. Naturally, the giant failed to leave a good impression.

That is not an entirely incorrect summary, yet impertinence didn’t quite win outright either. With a surprising and steadfast patience, the EU displayed its greatest strength. From a historical perspective, it is not that long ago that a conflict like the one that pulled Greece out of line would have exposed serious faults and forced nations into bilateral alliances against one another, into military skirmishes, and perhaps even into war. There was not one moment in the past six months where anything of that nature was at stake. The Greek attempt to mix up the EU shattered on the stability of EU institutions. Never did it come to bilateral alliances; the EU remained a unified front. There was no recourse to archaic, 19th-century acts. And not only the governments, but also the peoples of Europe were unconvinced. They did not rise up against Greece’s hubris, but at least accepted (albeit unenthusiastically) the patience of their leaders. Here is the 21st century at its best!

Although Grexit was avoided through last-minute compromise, Europe is not necessarily in a good place. EU representatives, who negotiate so devotedly, have made their bed and now must lie in it. There were many excellent arguments against monetary union and the common currency. The euro was born of will, not necessity – an excellent example of the sovereign power still possible in politics today. It was a half-cooperative, half-antagonistic German-French axis that ensured the euro’s existence. François Mitterrand wanted a common currency to both integrate and control the newly enlarged, economically strong German state. Helmut Kohl, chancellor of a country displaying humility despite an awareness of its resurgent power, agreed – in part because he wanted Europe’s blessing for German reunification.

Today, Greece is undergoing the terminal moraine of this decision’s fatal flaw – the compromises formed in the euro’s construction. Two economic and developmental philosophies were forcibly married, even though they were clearly not compatible: free market orientation and interventionist policy, liberalization and regulation. Much of the euro treaty was left intentionally vague in the hope that the dynamic of the euro would cause these contradictions to simply evaporate. This was only possible because the Germans holding the euro negotiation reins were not “Ordnungspolitiker” (politicians with a strong sense for order and procedural policy-making, such as then Finance Minister Gerhard Stoltenberg), but instead were European integrationists (Kohl and German Foreign Minister Hans-Dietrich Genscher). The Stability and Growth Pact from 1997, underpinning the euro, was an attempt to reconcile these two contradictory goals even in its very title, but has actually conjured dissent.

It has not been quite as Mitterrand had hoped. Germany’s economic strength did not decline; instead it continued to flourish despite turbulence surrounding reunification and the turn of the century. The cleft between north and south grew; in the latter, the introduction of the euro created a spending bubble that harmed economic strength. The EU, now more powerful given its eastern enlargement, today experiences exactly the north-south problem that philosophers and practitioners never envisioned, with folk psychology having been banished to the dustbin of history. These amicable EU agreements have contributed to “Olive Belt” states assuming giant debts they cannot shoulder themselves or even with EU aid. It must be a difficult pill for the Greeks to swallow that today, the leading German politician touting “more Europe” is also the leading Ordnungspolitiker, in contrast to 20 years ago. In trying to do the right thing, Wolfgang Schäuble worked out the central eurozone dilemma with relentless acuity.

It is in no way assured that Schäuble’s path is passable for every eurozone country, even those with the best intentions. In 2009 Germany’s Constitutional Court ruled on the constitutionality of the Lisbon Treaty and was scolded by many for answering maybe. Yes, it is constitutional, but only in a restricted sense: “Unifying Europe on the basis of a treaty between sovereign states cannot be realized in any way that does not allow each of the member states enough room for the political organization of its economic, cultural, and social living conditions,” the court pointed out. Greece chose to follow the eurozone path. While many in the north knew exactly what they were getting into (but held their tongues for the sake of peace), the Greeks clearly had no idea. They believed they had entered a community of guaranteed economic success. Now they are realizing that their desire for the euro has likely cost them any room for the political organization of their economic, cultural, and social living conditions. Neither the EU nor Schäuble should take this condition lightly.

There is little to suggest that Greece, as it lives and breathes, has either the will or the power to rebuild its state. Prime Minister Alexis Tsipras faces a Herculean project in which there will be a strong desire to let the situation degrade further, to delay land registry reform and taxation of the rich, and to rely on both the forgetfulness and the clemency of the EU. Tsipras may wield a lot of power, but any attempts to reform Greece will have to contend with ingrained traditions and mentalities that have stymied progress so far.

The post Halftime in the Greek Crisis appeared first on Berlin Policy Journal - Blog.

© REUTERS/Axel Schmidt

Watching Germany’s finance minister Wolfgang Schäuble of late in Berlin has been like watching a reborn Francis Urquhart, the irredeemably devious politician played by Ian Richardson in the original BBC version of the political drama “House of Cards”.

For the last two weeks, as the Greek bailout storm clouds returned, Schäuble has been sending out thunderbolts in all directions – electrifying Athens, Berlin’s EU partners, and even his own boss, Chancellor Angela Merkel.
 For the last five years she has counted on her flinty finance minister to negotiate tough EU-IMF bailout deals with crisis candidates, and then sell them at home to her increasingly skeptical Christian Democratic Union (CDU) MPs and voters.

But cracks have now appeared in Berlin’s most fascinating political relationship.
 It all began two Saturdays ago when, at yet another crisis meeting of euro finance ministers in Brussels, Schäuble launched a strategy Francis Urquhart called “putting the stick about”. His ministry circulated a paper to other euro finance ministers – and a German Sunday newspaper – that Greece should consider a “time-out” from the eurozone to restructure its unsustainable debts.

The ministry insisted that they were merely following the logic of failed bailout talks with Greece to its conclusion. But many of Berlin’s partners were horrified that the euro’s corner-stone member was, in effect, drizzling blood into the shark pool to see what would happen.

What happened was this: the “time-out” option never made it into the final roadmap to a third bailout, agreed 24 hours later after an all-night leaders’ summit in Brussels.
 Chancellor Merkel had intervened to take the Grexit stick from her finance minister. But, three days later, he was waving it about again in a curious broadcast interview.
 On Germany’s most influential radio show he said Greece had no future in the eurozone if it wants to restructure what most people view as an unsustainable debt burden.

Critics around Europe have decried his “time-out” proposal as a dagger to the heart of the currency union and European integration.
 Schäuble disagrees. Two decades after he devised the concept of a two-speed Europe in a 1994 paper, he has believed that keeping Greece on board, whatever the cost, is a sure-fire way to a no-speed Europe.
 However, loyal minister that he is, Schäuble left those concerns at the Bundestag door when German MPs voted last week to allow Berlin open talks with the Greeks on a third aid program. 
It was a bizarre piece of political theatre when, in a nod to Greek leader Alexis Tsipras, Schäuble made the case for the third program in which, on the radio a day earlier, he admitted he doesn’t believe.

Senior coalition figures in Berlin say that Schäuble has been “agitating” against further aid for Greece with CDU backbenchers for some time. 
In the Bundestag last week, however, he left it at reminding deputies that they will have another chance to vote on any actual program, some time in August. Then, if he wants to, Schäuble could sow a few more seeds of doubt about Greece’s eurozone future and recast the third bailout vote as a confidence vote in Merkel’s euro crisis strategy.

In a final masterstroke before his holidays, Schäuble put the stick about again in Der Spiegel, underlining his differences with his boss on Greece and floating the idea of a resignation. 
German ministers are primarily responsible to their office, he said, and no one can force them to act against their convictions. 
“If someone tried that, I would go to the president and ask to be discharged,” he said. Asked if he was thinking about such a step, Schäuble replied innocently: “No, how do you hit on that?”

It was classic Francis Urquhart: plant an idea in someone’s head and, when asked for more, say, “You might think that, I couldn’t possibly comment.” 
A day later, a flushed Angela Merkel insisted on public television that “no one had asked me to be discharged.”
 With that, the chancellor and her finance minister headed off on holidays and put some distance between them: Wolfgang Schäuble to the fresh North Sea breezes of Sylt, Angela Merkel south to the bombast of Bayreuth and on to the Dolomites.

And those of us in Berlin are left with a tantalizing question, like a great television cliffhanger: if push came to shove, and Merkel’s disagreement with Schäuble on Greece escalates, who would CDU deputies listen to more on a third bailout vote?
 Neither politician has deep roots in the back benches but, when Merkel thanked her finance minister for his “hours and endless hours” of work in the euro crisis last week, the sustained Bundestag applause for him was far more enthusiastic that any she’s ever earned in the chamber.

So what if, after 43 years in the Bundestag, the 72 year-old Schäuble has reached the end of the road and has decided to give Angela Merkel a kick on the way out to even an old score?
 Schäuble was once Helmut Kohl’s crown prince and, in 1998, his successor as CDU leader until both became ensnared in an illegal party donations scandal.
 Kohl refused to name his donors while Schäuble admitted that an arms lobbyist gave him an envelope containing 100,000 Deutschmark for the party coffers.

The scandal was enormous, the credibility of the party in tatters. Spotting her chance, Angela Merkel, then Schäuble’s number two, broke with him and her mentor Kohl to snatch the party leadership in 2000. It was five years before they worked together again, after Merkel invited her former boss to serve in her cabinet.
 As finance minister since 2009, Schäuble has become the most influential bailout negotiator in the Eurogroup of finance ministers – and one of the most loathed men in Europe.

But not so in Germany. 
His tough line on bailouts in general, and Greece in particular since 2012, has seen him nudge past Angela Merkel in opinion polls, with 69 percent popular support compared to her 68 percent. Just 21 percent of Germans are dissatisfied with the finance minister’s work, compared with Merkel’s figure of 28 percent. 
With his open campaigning against Greece staying in the eurozone, Schäuble is in good company. Neither Germany’s Bild tabloid, nor the conservative Frankfurter Allgemeine Zeitung (FAZ) broadsheet nor a who’s who of influential German economists believe that anything more can – or should – be done for Greece.

On Friday (July 24) the Handelsblatt business daily has made Schäuble its cover boy. Merkel may be the queen of hearts, but the Handelsblatt have crowned Schäuble the “Kanzler der Vernunft” – chancellor of reason, rationality, or sanity. 
Of course, after a decade in power, Angela Merkel remains at the peak of her powers; unassailable and beholden to no one. Almost.

Her one vulnerability might yet prove to be Schäuble, a man she needs now more than he needs her.
 If he decides he’s had enough of politics, enough of all-night crisis sittings in Brussels, enough of empty Athens promises, he could decide to depart the stage quietly. Or he could leave with a bang over Greece. Some 16 years after Angela Merkel humiliated him, Wolfgang Schäuble could yet return the favor.

The post Waving the Grexit Stick appeared first on Berlin Policy Journal - Blog.

© REUTERS/Fabrizio Bensch

The most telling moment following the breakdown of German-Greek talks took place on June 29 in a snazzily renovated electricity substation, the E-Werk in central Berlin. More than a thousand guests had gathered to celebrate the 70^th anniversary of the founding of Germany’s Christian Democratic Union (CDU), the party headed by Chancellor Angela Merkel. It was Monday morning, the first working day since the government in Athens called a referendum and talks in Brussels broke down.

Everybody’s mind was on Greece. Europe’s stock markets had taken a beating, as had the euro. Merkel gave a lackluster speech that fell totally flat with the audience. The assembled crowd of dignitaries only seemed roused once: when Merkel praised Finance Minister Wolfgang Schäuble for working so hard to find a compromise in Brussels, the audience broke out in loud applause lasting several minutes. But Merkel’s Christian Democrats were not celebrating Schäuble’s willingness to compromise – they were applauding the fact that Schäuble had finally said “No” to the Greeks, and they were not alone. An ARD-DeutschlandTrend poll conducted at the end of June put his support at 70 percent nationwide.

What a strange reaction: Europe is struggling with the biggest crisis in EU history, and the dominant feeling among Germany’s ruling conservatives is one of relief: relief and surprise that eurozone finance ministers have finally ended their tortuous negotiations with Athens; relief and satisfaction that Merkel and Schäuble did not give in to a Greek government that has raised everybody’s hackles; most importantly, relief at being spared a difficult and divisive vote in the Bundestag on prolonging the Greek rescue package.

Merkel’s party is, after all, deeply split on this issue, with the “No” camp steadily gaining ground. When the Bundestag last approved aid for Greece back in February, 29 parliamentarians from Merkel’s conservative bloc rebelled, voting against their own government. More than a hundred officially registered their reservations. For any party leader, this would constitute a dangerous situation.

No wonder, then, that Germany’s chancellor is not keen to hurry any decisions. On July 1, in a speech to the Bundestag, she rejected demands to resume negotiations with Athens before the referendum. Not even French President François Hollande’s call for an immediate continuation of talks could sway her. “We can wait this out in quiet,” Merkel said in the Bundestag. “Europe is strong, much stronger than five years ago when the European debt crisis began.”

And Merkel has much to gain from waiting out the result of the Greek referendum. Either Greeks vote “No” to the EU’s reform demands and carry the responsibility for their country’s likely exit from the currency union; or a majority go against their own government in order to approve the EU package. That would leave Prime Minister Alexis Tsipras few options but to step down, ridding Greece, and Europe, of a – from Merkel’s point of view – thoroughly irrational and unreliable government. His Finance Minister, Yanis Varoufakis, who is particularly disliked in Berlin, has already said he would resign should “Yes” win.

Losing the Bigger Picture

While maneuvering of this kind makes a lot of sense within the framework of party and power politics, the bigger picture of the Greek crisis is getting lost. There is no discussion in Germany about how to restart the Greek economy – along with those of other countries of southern Europe – no debate on how to balance reform and growth. Nor is there a discussion about what these events mean for the legitimacy of the euro and of European integration. What will happen to the region as a whole if Greece really breaks down?

The Social Democrats, Merkel’s junior partners in government, have certainly not raised any of these questions. Party leader Sigmar Gabriel’s rhetoric on Greece has lately been even harsher than Schäuble’s, and not even the powerful left wing of his party has challenged his stance. Disappointment over Tsipras’ failure to fulfill his election promises to combat corruption and levy taxes on Greece’s wealthy runs deep.

In fact, some leading German Social Democrats feel personally let down. After Tsipras’ election victory, Martin Schulz, the president of the European Parliament, traveled to Athens to try and help pave the way for a new accord on Greece’s debts. Today, he sounds particularly bitter. Negotiation tactics employed by the Greek government were “very annoying and also disappointing, but most importantly, dramatic for the Greek people,” Schulz said in a recent interview. “This zig-zag is really tiresome, and there are many people who are fed up with it.”

It is not just the parties in government that are toeing Merkel’s line either. In the debate on Greece, the opposition hasn’t made much of a mark (no pun intended). The Greens wring their hands but have yet to propose anything substantial, and the populist, right-wing, euroskeptic “Alternative für Deutschland”, which should be crowing at this course of events, is occupied with infighting.

With the Liberals having disappeared from the Bundestag (and public awareness), only the Left Party, a strong Tsipras ally, is protesting Merkel’s policy. “Soup kitchens and ever more soup kitchens,” said Gregor Gysi, their leader in the Bundestag. “Isn’t that enough for you yet? Does it really have to go down any further?”

Gysi’s eloquence only highlights the absence of a more far-reaching debate. On this issue, the German public is completely behind Merkel. Having suffered through Chancellor Gerhard Schröder’s reform package (which was partly rolled back by each of Merkel’s successive governments), Germans firmly believe that others should take their medicine in turn. Hearing Tsipras and Varoufakis blame everybody else for Greece’s ills has just reinforced that sentiment. Greece’s recent demands for hundreds of billions of euros in restitution for World War II damages have even further soured relations.

America is urging Germany to be more helpful in the Greek crisis, China is worried about its consequences on the world economy, and despite a long history of enmity even Turkey is concerned about the situation. But none of that seems to impress Merkel and the Germans. Whatever happens next in Athens, do not expect any quick resolution from Berlin.

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