Germany: Europe's China

By Dobrescu, Paul; Ciocea, Malina | Romanian Journal of European Affairs, June 2013 | Go to article overview

Germany: Europe's China


Dobrescu, Paul, Ciocea, Malina, Romanian Journal of European Affairs


Abstract:

The paper analyses Germany's ascent not only as Europe's most important economic power, but also as its leader. Figures show that Germany overcame the crisis; in fact the crisis legitimized its development model. Which would be Germany's main strategic choices, confirmed by the historic evolution of the recent years? First, its option for manufacturing, which allowed Germany to turn into Europe's factory. Second, the option for reform. "Agenda 2010", initiated by Gerhard Schroeder in 2003, is a crucial moment in the country's evolution. Special attention is paid to Germany's position on the single currency. Germany's performance is that it managed to turn the euro into a kind of European Dmark. The euro now formally "obeys" German rules, agreed upon from the very beginning, and is mainly coupled to the evolution of German economy. Germany is now sitting its most important exam: the European one. Today, Germany is Europe's most powerful state, but it must become its leader, whose development model would be accepted throughout the continent. Some German economic options are strikingly similar to China's.

Keywords: development model, federal vs. national approach, German reform, dominant/hegemonic power, strategic options, Euro crisis

1. The crisis in the developed world

Four, five years into the crisis we can ask ourselves: who has benefited most in these difficult times and who has lost most? The obvious answer to the first question seems to be: those countries which have developed constantly (BRIC countries, for instance). Turkey, Mexico, South Africa, Indonesia, South Korea, Poland also join the ranks of those who took advantage of the crisis.

To grow is one thing; to transform growth into a development model is completely different. When can we refer to the beneficiaries of crisis, those states which have acceded to economic success and prestige because of the crisis? Not until the experience of a country has developed into a model, which can be inspirational to others, can guide development efforts in other parts of the world, can grow into knowledge which can be passed on irrespective of the evolution of source states. From this perspective, we can consider China and Germany as the two most important beneficiaries of crisis.

What brings these countries together? In short, patterns of development, which turned the former into the world's factory and the second, into Europe's factory. They are also united by their decisive focus on export: China is first and Germany, second, in world export volume. Most importantly, they have been guided by a vision of their own development, an effort to adapt, an evaluation and estimation of future developments. Crisis has merely acknowledged the validity of such insight.

Who are the main losers? The US is an obvious choice. At the beginning of the crisis, Germany's former finance minister, Peer Steinbruck, believed the new financial crisis to be "an American problem", a product of "American greed" and inadequate regulations - we would be justified in adding shortcomings in the American development strategy - which would cost the US its "superpower status."1 Another choice is Europe, which has lost its former glory and faces a leadership crisis, far more dangerous than the economic crisis. The latest developments encourage us to believe that Europe is the favoured seat of crisis. In short, four, five years into the crisis the main loser is the developed world, with its most representative actors: the US and Europe.

The paradox lies in the fact that despite the European Union struggling against the crisis, Germany rises as one of the greatest beneficiaries of these difficult times. How can we account for this?

2. "Forget Bruxelles! Berlin has the real power!"

In a recent article, Gideon Rachman pointed to Berlin as the true capital of the Union.2 Crucial decisions for Europe are now taken in Berlin. They are then effectively adopted in various European institutions, but their economic and judicial rationale comes from Germany's capital. …

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