Germanization of European Unity: Source of Industrial-Financial Dominance

In the 70 years since the end of World War II we have seen, from the American perspective, a complete transformation (i.e., a revised enemies list), in which the former Axis Powers were almost immediately replaced by Russia and China as endangering world peace and US national security. The obsessive hate for communism (even when China and Russia have incorporated significant elements of capitalism into their respective structural systems) has, for America, led to conceiving Germany and Japan as keystone forces in countering presumed communist aggression while supporting America’s hegemonic claims to leadership of the world political-military framework. Even this past week, after many intimations, Japan is venturing into the international arms market, while Germany, for some time occupying a position of supremacy of wealth and industrial production in Europe, has, by representing the integration of the EU, strengthened NATO which, in turn, is the spearhead for the confrontation with Russia. The eastward march of the EU and NATO has made the Baltic countries a source for raw materials, a ready market for surplus goods, and—given the very recent buildup of heavy military equipment in Latvia—a staging area for such confrontation, eyeball-to-eyeball, predicated on a strong Germany to foster unity, with America (its long-term geostrategic vision going as planned) looking on.

The EU is designedly supranational, the organization of capitalism at a higher level. This is sophisticated and innovative: capitalism transcending national rivalries in order to present a homogeneous front to the world under a single leader—obviously, Germany (and in the international Great Chain of Being, the US seeking to guide Germany, not always successfully, as the European extension of its own power). To transcend national rivalries, however, may merely project rivalries onto a wider plane, broadly defined spheres of influence, so that capitalist contradictions have not been eliminated so much as suspended, in which the fuller maturation of trading blocs run up against each other in the search for markets. But first comes internal cohesion, in this case the EU and its common currency, the euro, and for this reason, Greece is far more important than Germany and the other members let on. Several countries, Germany in the lead, were prepared to welcome Greece’s exit from the EU and the eurozone, but by the weekend with the passage by the German Parliament (July 17) of the first step, approval of negotiations to resolve the crisis (in reality, nothing was conceded, “debt reduction” a euphemism for possible extension of the payment period and/or lower interest rates, and even there no promises), reason prevailed, that is, too much was at stake to disturb the fundamental architecture of UNITY.

Unity, implemented through a supranational framework, was the means of coercion and absorption by Germany of Europe, the common currency having the function of Marx’s commodity fetishism in that it serves as the reification of a central integrative basis for defining the European political culture. The euro is a psychological trap: whoever controls it controls wider economic arrangements. One size fits all, no devaluations, no national currencies; its rules both regulate and predominate, the leader, in this case, the economic powerhouse, calling the shots. Here I was intrigued by constant reference, among German leaders, their parrots elsewhere, and the press, that Germany is a stickler for the rules, as though rules purportedly depoliticize economic affairs, render them technocratic solutions and hence above board—efficient solutions, without fear or favor. This is precisely the way austerity is presented. Economics rises above class to pursue the general welfare. (I’ll cite evidence momentarily.) Austerity is Germany’s strong ideological suit in bringing all other affected nations into line, mandating balanced budgets, a shrinking safety net, the rollback of labor organization, gains, rights, pension cuts, and to be slipped in (ostensibly as a mode, as demanded of Greece, of repayment of debts), privatization of public property. That is what unity is all about, criticism of which faces extreme censure.


For immediate background, I refer to New York Times reporter Melissa Eddy’s article, “Germany’s Tone Grows Sharper in Greek Debt Crisis,” (July 16), just before the advantages of unity were perceived, not least the consideration that if Greece defaulted and left (or was ejected from) the EU this would set a bad example for similarly situated countries facing the adverse consequences for economic growth of austerity, at least four others gasping for air with high unemployment, decline of living standards, and lower per capita earnings. Unity uber alles, austerity uber alles: Greece must not be allowed to upset the applecart, the wealth of Germany and the half dozen or so other nations on top, and furthermore, a dim realization that Greece out, by whatever means, could lead to the fragmentation of the eurozone and the EU itself. Eddy writes adroitly, the day before the German Parliament’s vote: “Despite bitter opposition in many quarters to the austerity-first policies Germany has imposed on Europe’s poorer nations, Chancellor Angela Merkel’s government has hung on to its role as champion of integration on the Continent through deft use of diplomacy and the country’s economic clout.” Nothing in fact had changed, Merkel the hard-liner sought approval for negotiating the terms of a settlement without giving anything away and in recognition there remained significant defections in her own party ranks, which persisted the following day in the vote taken.

This posed a dilemma. Merkel and her finance minister Schauble wanted to show no mercy and had no love for Greece, and yet she at least recognized that failure to accept the results of the foreign ministers’ meeting in Brussels would subject Germany to criticism and undermine its preeminence in the EU. Eddy notes: “But in negotiating a new deal this week to bail out Greece, Germany displayed what many Europeans saw as a harder, more selfish edge, demanding painful measures from Athens and resisting any firm commitment to granting Greece relief from its crippling debt.” Schauble, the day before the vote, was still calling for Greece (if it wanted favorable terms) to exit the eurozone; significantly, when he spoke to the German Parliament the next day, when the vote was taken, he chastised Greece for its ways but no longer mentioned an exit. Actually he hinted twice during the week about a Greek exit, and said on German radio (July 16), “’We have not said that we will impose this, we can’t, we don’t want to, and no one has suggested it, but perhaps it would be a better way for Greece.’” With friends like that, Greece does not need enemies. Schauble questioned whether granting Greece all that it asked would necessarily help to make the crisis manageable: “’Nobody knows in the moment how it is supposed to happen without debt relief, but everyone knows that debt relief is not possible within the eurozone.’” This is precisely what I meant by promulgating, then hiding behind, the rules, rules whose function was to reinforce the dominance of the stronger party.

For further background I turn to NYT reporter Alison Smale’s article, “Germany Votes to Move Ahead With Greek Bailout, but Opposition Grows,” (July 17), announcing parliamentary passage of the next stage in the process—the air still roiled by criticism: “German lawmakers on Friday [July 17] approved entering into detailed negotiations for a Greek bailout amid a simmering international debate over providing more debt relief to Athens and [this next is important] intensifying questions about whether Greece would be better off leaving the European common currency.” No wonder the demonstrations in the streets of Athens—simmering (?), more like a seething cauldron, yet still without a real Left in Berlin or Athens, to force debt reduction, the proverbial haircut, else Greece’s complete break with the EU, the eurozone, and, mirabile dictu, NATO itself. Given the provocation, the situation is remarkably quiet. It is as though power, perhaps seen as a runaway process (the effect Germany all the while seeks to create), engenders consent. The foregoing aside is mine, not Ms. Smale’s. The vote itself, despite the urgings of Merkel and Schauble, was 439 for, 119 against, 40 abstentions, and in her own bloc twice the number of defections than occurred in February, when Parliament voted on a previous plan for Greek debt relief. In Friday’s debate Merkel warned, not passing the agreement would lead to “’predictable failure,’” and, although she doubted Greece’s ability or intentions to carry out austerity, she added: “’We would be grossly negligent, even irresponsible, if we did not at least try this path.’” Yet, no concessions had been proffered, and even Lagarde of the IMF, identified with a more moderate approach by admitting that a bailout plan would not work without debt relief, nevertheless “excluded debt forgiveness,” mentioning “’considerably extending’ maturities and the grace period during which no repayment is required, and of reducing the interest rate.” Rules are rules, debt forgiveness not one of them.

Finally we have NYT’s Steven Erlanger, whose article, “Germany Risks Its Reputation With Idea of Greece Exiting Eurozone,” (July 18), does an important service by broaching the topic of German overreach and therefore the coercive aspects of unity and austerity. He begins with Germany’s long-term leadership: “For decades, Germany saw its role as the financier and beneficiary of European unity, a combination of penance for the past [which to me is doubtful] and self-interest. The rest of the Continent came to rely on it as the country that could be trusted to keep its great experiment moving forward.” (Perhaps this is already Europe, awed by Germany’s economic power, and itself in somewhat of a stage of senescence, willingly following the Leader and fully complicit in the arrangement. Among Greece’s sins vis-à-vis both Germany and the EU, beyond the threat of default, was the referendum, a slap in the face of unity, the questioning of austerity, and ideologically unacceptable as the challenge to authority.) Yet even being habituated to follow the lead of Germany, hemmed in by the accompanying rules and procedures, can break down when trust is broken and the “great experiment” is seen as a dodgy grab for more power.

This is Erlanger capturing the moment of doubt; whether or not it will last is another matter, given the mounting European resentment against Greece: “But with the handling of Greece’s bailout package, Germany is at risk for losing that trust…. By taking what sounded to many as an aggressive, punishing, contemptuous tone toward Greece, the German leadership may have undercut its moral authority…. And by floating the notion that Greece might be better off leaving the common currency, Germany displayed its national interest more nakedly than in the past and made it clear there are limits to its willingness to put European unity first.” Well said, except that he may not appreciate the beauty of unity from the standpoint of exercising social control, i.e., the turnabout of Merkel and Schauble before the Friday parliamentary vote, in which they came to realize unity was the way to achieve preeminence and the wisdom about not being so public, particularly Schauble, in their authoritarian leanings. Here Erlanger reminds us that Schauble “has suggested several times that Greece would be better off leaving. He has come to represent, in many eyes, the hidden face of German power. In Greece, he is portrayed as a Nazi.”

Critics are coming forward. Erlanger puts his finger on a possible fault line, one I’d add that the Greek situation—its importance—brings out: “It may be too soon to say for sure whether the harsher German tone signifies a turning point in its role within Europe, or if it is the transitory result of circumstances.” He cites the writings of Hans Kundnani (“The Paradox of German Power”), who sees that the Greek crisis “’revealed a more brutal Germany, embodied in Schauble,’” and went on to declare: “’But we see, with this crisis, a qualitative transformation of the European Union into a more coercive bloc, different from the one the founding fathers had in mind, or even the creators of the single currency. And Germany is at the heart of that.’” This qualitative transformation, my observation, may well be the fascistization of Europe, for notwithstanding founding fathers and creators of the common currency, benign in purpose as the heavens, it must be said that the EU was conceived at least partly in sin, as the complement to NATO, thus strengthening the forces of confrontation (and making NATO appear less militaristic and warlike in representing Europe). Too, the single currency, angelic concept though it be, is a brilliant stroke in cementing an alliance, at once economic-commercial-financial, and, as the underpinning, the military dimension. Kundnani concluded that the conflict over Greece “’took these developments to a new level—a more German Europe and a more coercive E.U.’”

Other voices of warning and dissent can also be heard. Erlanger cites Francois Heisbourg, referring to “the brutality of the negotiations over Greece in Brussels [which] has damaged Germany’s reputation” in the EU, who observed, “’I think the Germans have crossed a line, and it will be very difficult for them to walk it back.’” The respected Jurgen Habermas believed that Merkel and her coalition government, yes, which includes the Social Democrats, “’have gambled away in one night all the political capital that a better Germany had accumulated in half a century.’” Was there a better Germany in all that time, or the systemic and systematic quest for power? Even Habermas may have been wearing rose-colored glasses. He told the Guardian that earlier German governments showed “’a postnational mentality.’” It is true, as the reporter states, “For much of Germany’s postwar history, patriotism was considered shameful, the German flag was not widely waved,” etc., the change coming, he believes, with Schroder, who “pushed for a more rules-based system, trying to remove politics from economic management inside the eurozone.” Merkel, he asserts, is less a “European federalist” than Schauble, but apropos of the rule-based social order, Erlanger adds: “But in his view federalism means not an open-ended commitment to rescuing neighbors but a willingness to abide by accepted rules.” As for the euro, Schauble “has been a prime proponent of institutions to monitor members’ economic performance and to discipline outliers [i.e., Greece].”

This put Tsipras and Syriza on a collision course with Schauble and Germany because substantive debt-restructuring would be an unacceptable game-changer, the former largely relenting, however, to effect a settlement (much to the disgrace of a hypothetical Left all but invisible). The chorus of rules, rules, and more rules, nominally for their own sake, but really to enforce a power relationship detrimental to working people, the poor, the elderly, the unemployed, seemed everywhere. This is what Heisbourg meant when he said, the Greeks “’have been their own worst enemies.’” Daniela Schwarzer, director of the German Marshall Fund, explains: “’For the moment, blame is put on Germany, but the Germans believe that the Greeks were not playing by the rules. Merkel now has a double fight—at home [the support of Parliament]… and in Europe, where she will still have to show power to make sure the Greeks keep their commitments and play by the rules. The whole euro system depends on that.’” She couldn’t be clearer. Erlanger paraphrases her thinking: Rules, “economic strictures and a strong central bank are best in order to depoliticize the euro as much as possible,” in contradistinction to France and Italy, which believe that “’politics is there to define policy, especially budgetary and economic policy.’”

Perish the thought, politics as code for the democratic, as opposed to alleged technocratic, determinant of public policy! Here we cut to the chase: rules, by Germany’s (and many other government’s) apologia for policy-making depoliticizes the EU and the euro, when the reverse is true. Rules may sound neutral and nonpolitical (referring to the genesis and administration of power), but one can ask: who formulates the rules, implements them, and with what consequences? Rules define class power, or, projected to the EU, national power as a function of capitalist development. Germany is ahead of the game because ahead of the other countries in industrial-financial growth, which has led to an arrogance that just stops short of the nazification of modernization. Unity is to coercion what austerity is to societal deprivation, a synchronicity making for the mutual advancement of both.

My New York Times Comment on the Erlanger article, same date, follows:

Bravo Erlanger. While European criticism of Germany is known abroad, the topic is not covered in the US. US sympathies always lie with the creditor, and Tsipras’s mildly Left government (for it is only that) reinforces the bias. Yet it is questionable that Germany had been motivated by “penance,” and rather had pushed its industrial-financial supremacy within Europe for decades. (One wonders at this stage whether reunification was such a good idea.)

Schauble is the true voice of German arrogance, his rule-based society for him all well and good provided Germany defines AND enforces the rules. Unity is a convenience, the better for Germany to tighten its hold on the Continent. And still, the American public looks at Greece as a renegade or spoiled child. I agree with the sentiment that Nazism (Hitler saw to it that the trains ran on time) lurks just below the surface.

What is not mentioned is Russia. For the EU was, is, and will remain a cover for NATO, the political formation having a military foundation. Europe per se, following Germany’s leadership, both extends America’s global leadership and keeps alive the Cold War. Greece deserves respect for its ordeal, not calumny. Erlanger for the first time brings out that dimension.

Norman Pollack Ph.D. Harvard, Guggenheim Fellow, early writings on American Populism as a radical movement, prof., activist.. His interests are social theory and the structural analysis of capitalism and fascism. He can be reached at