Undoing Germany's "Reluctant" Hegemony

 July 30, 2015

To those in the know, the Italian peninsula was not only the cradle of the Roman Empire or Rome the centre of the Catholic faithful, but also the birthplace of capitalism and of countless statecraft innovations and institutions still widely used around the world today.

During the middle ages, the Italian city-states thus discovered and perfected what is commonly known among IR specialists as the “balance of power” mechanism. Every time one of the city-states became too powerful economically or militarily and tried to subdue the others, most of the rest of the city-states would form a coalition against the offender, thus preserving their sovereignty over their economic and political affairs.

This time-honoured tradition continued long after the development of nation-states and was successfully used to control the hegemonic designs of European powers, such as France or Germany, to give but two of the best-known examples. For the past two centuries, until some sixty years ago, balance-of-power arrangements were initiated, financed and operated by Britain, which succeeded in defeating both Napoleon and Hitler and in bringing their hegemonic designs to an end. British leadership in this field prevented the loss of sovereignty by continental nations and during the 20th century it preserved democracy and the rule of law, albeit not always by peaceful means.

It would be a mistake to believe that old hegemonic designs nurtured by economically more powerful European nations have vanished since the creation of the European Union. If anything – as demonstrated by the recent developments from the 13th of July 2015 – such hegemonic efforts which chiefly belong to Germany are played out within the existing political structures and institutions of the European Union.

Institutions such as the Eurogroup, although they do not have a legal existence, nevertheless wield enormous power over the economic and financial affairs of EU member-countries since the introduction of the euro. Within this group, Germany plays the leading role and with the help of a few satellite-states makes all the important decisions.

There are other EU institutions, such as the ECB, the ESM or the Commission, that are manned by technocrats who have more decision-power than any elected political leader of any country. Here too, Germany has succeeded in throwing its economic weight around and has used the European Union’s design imperfections to establish its de facto leadership .

Reluctant or not, German dominance within the EU is by now an established fact and should be actively resisted by the rest of the EU member-states, like any other hegemonic episode in our continent’s history.

When one country becomes economically or militarily too powerful at the expense of all other members of the group it belongs to, there are usually two standard responses to such a situation: bandwagoning or balancing.

Today, countries like Austria, the Netherlands or the Baltic states have preferred to bandwagon, becoming German satellites in the process. They have displayed a propensity to endorse Wolfgang Schaeuble’s vision of “reform” for the EU’s structures. The German Finance Minister has declared during a conference at Brookings Institute in April 2015 that even Germany’s former arch-rival France, not only Greece, needs to be “restructured” by a troika, citing however “democracy” as a temporary stumbling block…

The other response – that is balancing – is the preferred method of Italy and France, consummate operators of balance-of-power mechanisms in the past. This is how Shahin Vallée, former advisor to ex-President Van Rompuy, has recently described the current situation in The New York Times:

“This forceful attitudes and the several taboos it broke reveal that the currency union that Germany wants is probably fundamentally incompatible with the one the French elite can sell and the French public can subscribe to. The choice soon will be whether Germany can build the euro it wants with France or whether the common currency falls apart.

Germany could undoubtedly build a very successful monetary union with the Baltic countries, the Netherlands and a few other nations, but it must understand that it will never build an economically successful and politically stable monetary union with France and the rest of Europe on these terms.

Over the long run, France, Italy and Spain to name just a few, would not take part in such a union, not because they can’t but because they wouldn’t want to. The collective GDP and population of these countries is twice that of Germany; eventually, a confrontation is inevitable.”

Since the 13th of July 2015, the number one priority in most EU capitals is no longer the Greek crisis, but how to deal with Germany’s latest hegemonic offensive. Ideally, a “Dexit” followed by the formation of a two-union Europe along the lines I have described in my earlier posts could replace the current dysfunctional union. Alternatively the union might disintegrate, USSR-style, into a myriad of nation-states large and small, dominated by populist or nationalist governments. Such a development, however, would gravely affect economic life as well as the security situation on our continent.