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Germany and Europe:Uncomfortable Leadership

Lord Green of Hurstpierpoint

Author, Reluctant Meister: How Germany's Past Is Shaping its European Future

Hans Kundnani

Research Director, European Centre for Foreign Relations; Author, The Paradox of German Power

Chair: Quentin Peel

Mercator Senior Fellow, Europe Programme, Chatham House

19 January 2015

Transcript: Q&A

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2 Germany and Europe: Uncomfortable Leadership: Q&A

Question 1

I would like to ask Hans a little bit more about Germany's fears: economic fears, fears of a coalition of

weak economies rather than a coalition of powerful forces and military forces as before. I'd like to take

you back to the situation before the euro, when there was a coalition of the willing (economically) around

the Deutsche Mark. I mean, it was called the Deutsche Mark zone. Is there a possibility that Germany,faced with the deadlock in the eurozone which is likely to get worse – no signs of it getting better – would

actually come back to thinking in terms of reconstituting this coalition of the willing, in monetary terms?

At that point, what happens to the political relationship, above all with France but also with Italy and the

[indiscernible] in general?

Question 2

I'm concerned about the feeling that I'm getting – that we're looking at Germany as a monolith and as a

hegemonic power, when a lot of the commentaries I'm reading seem to suggest that there are huge

internal stresses and potential strains within the country. I mention simply the aging infrastructure,

which is lacking investment; the aging manufacturing base in parts of the country, again which is lacking

investment; the aging population, though we've all got that problem; the failure of the traditional

tolerance toward immigration which we're seeing in the current protests by PEGIDA. Then continuing

fallout from the reunification, where Ossis are still complaining they're not getting the rights and the

salaries and the opportunities that they feel their cousins, the Wessis, are obtaining. So I see that

Germany is potentially in a much weaker position to negotiate than you seem to be suggesting. I'd love

your commentary on that.

Question 3

Given Britain's particular relationship with Germany, stretching back to the point where in the 1750s, the

Elder Pitt proclaimed that 'we are winning our empire on the banks of the Elbe', and Frederick the Great

appeared on every beer mug in every pub in England – leaping forward now to the point where Britain are

looking again, in a sense, at our cousins across northern Europe, I'd be very interested to know how you

would characterize our present relationship with Germany and whether we can exercise any kind of

influence together with Germany to break the European deadlock.

Lord Green

To the second question, yes, I think there are plenty of internal sources of German angst – it's not for

nothing that angst is a German word, by the way. Germans worry endlessly about what is happening to

their body politic and the economic prowess that they've grown up with. You mentioned demographic

aging and you said we're all getting older – well, not as fast as the Germans are. They have a real

demographic problem. Indeed, on some forecasts and depending what you assume happens to Turkey in

the context of the EU, Germany could end up being the fourth-largest country in the EU after (Turkey

depending) Britain and France. Not between here and next week, obviously. That has its implications for

the economic burden, the dependency ratio. You say lack of investment – that wouldn't be quite true, but


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transforming the EU into something very different from the EU we know, and very different from the EU

the founding fathers had in mind, just in order to keep the single currency together. That's really my fear,

rather than actually a breakup.

However, a caveat to that is that – it's interesting to me that the growth of German Euroscepticism (on

both the right and the left, actually) and given how quickly the Alternative für Deutschland (the

Eurosceptic party there) has grown, and if you listen not just to them but to serious academics, to the

Frankfurter Allgemeine, I wonder whether there may come a tipping point or a breaking point, as it were,

where Germany says, 'We can't go any further'. Then you're back to a very acute crisis that could lead to a

breakup of the euro.

Quentin Peel

This is where I would disagree with you, Hans. One, the media you quote – Frankfurter, Bild, Spiegel –

have always been against the euro. They have never at any stage been supportive. So quoting them as sort

of representing, if you like, a very clear swing in Germany isn't really on. Secondly, I would disagree about

something else, which is that Draghi and Merkel are actually at loggerheads. When Draghi said, 'I'll do

whatever it takes', I'm 98 per cent convinced that Angela Merkel had said, 'Go for it'. She has throughout

allowed him to do what he was doing and not spoken out against it. She's allowed Jan [indiscernible], you

know. So it's a much more subtle thing. I think this is where we come back to perhaps also the differential

mood. I wouldn't overrate the rise of the Alternative für Deutschland.

But I want to come to the third question, because you both have thoughts about just how you would

characterize the British-German relationship. Stephen, you've been a minister right in there, and a

banker.

Lord Green

Let me start by answering not from either of those perspectives, because I do think what we've been

discovering in the last year or two – and it is quite recent – I think the question actually used the word

'cousins', and I do think we've been rediscovering some of that deeper connectivity that goes back to the

17th century. It was James I's daughter who was married off to Friedrich V, elector of the Palatinate,

whose daughter becomes Sophie, whose son is George I. (Have I got all that right? I think so.) Then

through the 18th and really into the 19th century, the proliferation of connections is something we're beginning to remember. They are extraordinary. Von Tirpitz sent both his daughters to Cheltenham

Ladies College. Bethmann-Hollweg had a son at Oxford, and you can go on. And on the other side too.

Quentin Peel

But with all this, why do we misunderstand each other?


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Lord Green

Because there was the caesura of the First World War, which then changed it. But we're rediscovering that

heritage. There is also the football phenomenon. I do think 2006 – it's easy to laugh but actually 2006

subtly established Germany as the Weltmeister (there you have Meister again) and made Berlin a cool

place to go. Now if you try to get on a plane to Berlin they're almost always chockablock, because it has become not merely the place that politicians trek to and businesspeople get drawn to, but also it's the

place for hen parties, it's the coolest place for hen parties and so on.

Quentin Peel

Do you go to them?

Lord Green

I don't get invited. So I think we're beginning to rediscover that. Ironically, I don't think that translates

into necessarily an easier dialogue over the question of the relationship between Britain and the rest of

Europe. I insist on using that phrase 'the rest of Europe'. The Germans will be dismayed if Britain leaves. I

might as well say it: I think it will be disastrous if we leave. But certainly the Germans would be dismayed

if Britain left, for all sorts of reasons. They'd be afraid of what the rest of the remaining Europe would be

like to operate in. They'd be afraid of themselves, I think.

Quentin Peel

Which is why you've got this fascinating relationship between Merkel and Cameron.

Lord Green

Yes. And yet there are also the red lines. They will not countenance any suggestion that we should tug the

rug from under the four fundamental freedoms embedded in the treaties. We all know what the

implications of that are for any potential negotiations. So on the one hand, you've got some realdifficulties, and on the other hand, a kind of readiness to try and work with each other (and work quite

hard with each other, on their side) and the beginnings of a rediscovery of some historic relationships that

went really quite widespread.

Quentin Peel

Hans, why do we misunderstand each other all the time?


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Hans Kundnani

I'm not sure the problem is a lack of understanding or a lack of will. I don't think, in the end – again, I

have a slightly darker take on this – I don't think that having culture in common really helps. It seems to

me that there is a structural problem. Again, I do think there are some parallels with the previous

situation between Britain and Germany. In one sense, what seems to me to be happening now is that bothBritain and Germany are sort of reverting to their historical pathologies in relation to Europe. On the one

hand, Germany reverting to this position as Europe's central power; Britain, on the other hand,

disengaging, as it's done many times in the past, only at some point to realize that its national interests

are so directly at stake that it needs to intervene. Again, I'm not suggesting for a moment that there's a

danger of war. This is the idea of a sort of geo-economic version of these historical patterns. But it does

seem to me that you do have this dynamic now where Britain is finding itself increasingly marginalized

within the EU and Germany is increasingly powerful within the EU. That has a dynamic of its own, which

it's not necessarily possible for politicians or ordinary people just to show greater understanding of each

other and overcome that.

Quentin Peel

I see the problem as being that Germany sees the European Union as a place to find solutions to problems

and the Brits tend to see the European Union as a problem that needs a solution.

Hans Kundnani

Yes. It still begs the question why that is though, why we have such different perceptions.

Question 4

Relations between Germany and Poland. Pomerania and Silesia were two large territories, and wealthy

ones, that were essentially lost in 1945. When Poland became a full-fledged member of the EU, as I recall,

there was a seven-year moratorium on land purchases because the Poles were very sensitive on that

subject. That's passed now and yet we haven't heard much about it. My guess is there's an awful lot of

German money going east into Poznan, Breslau, Wroclaw, etc. Do you think that Poland could solve

Germany's demography problem without having the distaste of Islam, which is what the issue is about

Turkey and the gastarbeiter? Secondly, do you think that Poland as a rising power, given it is growing

and it has a lot of people, can be a counterweight to France? You mentioned earlier about a new eurozone

with Poland in it. There are moving parts here.

Question 5

At a seminar the other week, in fact just on Friday, we were talking about the usual complaint that in the

security and defence arena, Germany does not pull its weight militarily, even though it is of course the

European economic powerhouse. It was raised at the seminar, however, and I would be very grateful for


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the views of the panel, how comfortable would Germany be and indeed would the rest of Europe be if

Germany does increase its defence spending to the NATO standard of 2 per cent? It was suggested that

could mean as many as 250,000 extra soldiers. Is that something that everybody, both in Germany and

outside Germany, is comfortable with?

Question 6

On the question of hegemony, economic now, that you've translated into an economic hegemony – it's not

acting as a German nation, it is acting as the major creditor. Just as Washington, with the Washington

Consensus, acted as a creditor to these insolvent countries who couldn't run their own economies. The

thinking in Berlin is no different from the thinking in Washington during the Latin American debt crisis.

So it has obviously something to do with Germany but essentially it's a creditor-debtor relationship.

Hans Kundnani

Poland, I think, is one of the most fascinating countries in Europe right now, partly for the reasons you've

described. Some people have suggested that Poland is the new France, from a German perspective. I'm

slightly sceptical about that. I don't think Poland does quite have the weight to play that kind of role.

You're right that there's lots of German money in Poland that's welcomed by the Poles. In fact, there's a

security dimension to that, which is that I've heard Polish officials talk about the euro as a geopolitical

initiative. Even if it's not in Poland's benefit in economic terms to join the single currency, it has a

strategic benefit, which is essentially the idea that the more German money you have in Poland, the more

secure you are. I think though there's a bit of rethinking going on since the Ukraine crisis began. Inparticular, a kind of return in Polish thinking towards NATO as the kind of real security guarantee and a

little bit of frustration about Germany since the Ukraine crisis began.

On German defence spending, I think most people would be comfortable with an increase. I suppose it's

not just about defence spending as a proportion of GDP though, it's also partly a question of capabilities

and a willingness to deploy those capabilities. But it does seem to me as if during the first decade after

reunification, during the 1990s, it did seem as if Germany was converging with France and Britain on the

use of military force. That culminated in Germany's participation in the intervention in Kosovo. That was

a shift that everybody in the West, and in particular France and the UK and the US, welcomed. What's

happened in the decade since then, since the millennium, is Germany has kind of gone into reverse.

Opposition to the use of military force has hardened. It seems to me that even after the strategic shock ofthe annexation of Crimea, it's very unlikely that there will be a significant increase in German defence

spending or in terms of German capabilities or the willingness to deploy.

Finally, is Germany essentially acting in a similar way to the US in the Latin American crisis? I think it's

right that this is essentially a relationship between creditors and debtors. It seems to me slightly different

from the US for a couple of reasons. Firstly, there is a single currency, so it does seem to me as if Germany

has different obligations towards other countries in a single currency that it's committed to join than the

US did in relation to Latin America.

But also, and this takes us back to the discussion about German hegemony, lots of the debate about

hegemony have been implicitly based on hegemonic stability theory, which is based largely on the model


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of what the US did in the 1950s. All of the things which the US did at that time, many of those things,

Germany is not doing now. For example, acting as a consumer of last resort. They are precisely the things

that Germany is refusing to do in the current crisis. So it does seem to me as if it's slightly different than

in the Latin America crisis.

Quentin Peel

But in a way, the nightmare of the eurozone crisis is precisely that it began in Greece, where the entire

German narrative –

Hans Kundnani

Yes, it's a tragedy.

Quentin Peel

-- therefore becomes 'it's their fault'. Which it was. If it had started in Spain or somewhere else, that

argument couldn't have been made.

Hans Kundnani

Exactly. It's a tragedy that it started there. But I guess it's no coincidence that it started there either.

Quentin Peel

Stephen, start on Poland – and just one thought to throw in on Poland. This is a personal thought and

nobody has said this to me in Berlin. I'm sort of convinced that Angela Merkel is being so tough on Crimea

because the thought of changing borders again is actually, to her, absolute no-go area, precisely because

there are other borders that might get changed.

Lord Green

Whether or not that's in her mind, I don't know, but very clearly the east European settlement was

extraordinarily painful in all sorts of ways. Events in 1945 and onwards, the whole postwar and Cold War

experience. Poland has emerged for the first time in a very long time as a stable, independent country.

Understandably nervous of its borders to the east and to the west. But I think there's some very

interesting things that have happened if we take a slightly longer-term perspective. Back in the 1950s,


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1960s, 1970s, even 1980s – certainly still in the 1980s – the Bundesvertrieben was still an important

political force within domestic German politics.

Quentin Peel

Just translate Bundesvertrieben.

Lord Green

The grouping of the 12 million Germans who were living (first in West Germany and then united

Germany) who had come from the lost eastern lands. They were an important political force. That's now

gone. There is no – I wouldn't say no voice, there is probably an occasional voice – but all but no voice for

revisiting the question of the Oder-Neisse line and East Prussia. This is a big step forward when you

consider the previous 700 years of east European history.

From Poland's point of view, the embedding in NATO as well as in the EU are cardinal to their existential

concerns. It's not at all surprising that with recent developments in the Ukraine, they should be focusing

again with a clearer eye on NATO. I don't doubt that what's true of Poland is even more true of the Baltic

states. If German money is flowing into some of those economies, as it certainly is – both business money

but also property investment – I think that is likely to be broadly welcomed for the sorts of reasons that

Hans has hinted at.

Do I think Poland can become a new France? I think that is to overestimate its potential for the next 25

years, at any rate. This is a country which in 1939 had an economy about the same size as that of Spain

and is now well behind Spain, never mind France. It's got a long way to go in terms of economic weight

and influence. As an aside, I think we're in danger of writing off France too much and too quickly. France

is still the second-largest eurozone economy and is not going to disappear into a black hole. So I think we

shouldn't get too carried away with that kind of shift. There is a shift in the centre of gravity from Paris to

Berlin, no question, but let's not overdo the point.

On security and defence, I don't know whether it is possible to envisage defence spending getting towards

the 2 per cent target. What I am clear about, and I essentially agree with Hans, is that the political

appetite or the domestic appetite among people generally for active military work has, if anything,

declined in recent years. By the way, it's declined in Britain and France too. So I think if anything, there's

probably a convergence in the general direction of being less likely to do it. One of the reasons why

Germany is clearly in the lead on the Ukrainian question is precisely because nobody really thinks there's

a military question involved in dealing with the Ukraine. There are other reasons, like its important

energy, it's next-door and its past history.

Hans Kundnani

But some NATO countries do see military means as being part of the solution. There has been this

disagreement between Germany and other countries in NATO about having a permanent NATO presence


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in the new member states. This is one of the things that caused anger in Poland. That was something that

Germany opposed. So obviously nobody is talking about putting boots on the ground in Ukraine, but

there is a difference between the UK in this case and Germany on the question of what role the military

means play in the response to Russia. In particular, do you need to take measures in terms of deterrence?

Lord Green

You may need to protect your airspace, as we've discovered over the Baltic states.

Quentin Peel

I think we're at a very fascinating tipping moment. A fascinating moment of transition, where in some

ways Germany is becoming more British and Britain is becoming more German: hesitant, not so keen, not

wanting to do it. It's a thought to leave with you. With great regret, I'm going to have to wind up this

debate. I would urge you once again to grab copies of the books if you want. There's a reception upstairs

afterwards. But I would like above all to thank our two speakers very much for giving you a taster of all

the riches that are in their books. Thank you both very much.

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