Merkel's Misstep: How Pragmatism Backfired

The euro has ruined Greece and benefited Germany most. And although there’s no denying that Greek banks borrowed huge amounts of money because of their own corruption and shortsightedness, German and French banks encouraged them to take loans that they normally wouldn’t have approved.

Rarely does German Chancellor Angela Merkel’s political instinct fail her as badly as it did this month. During a televised youth forum, she told a 13-year-old Palestinian refugee named Reem Sahwil, who had just shared that she and her family faced possible deportation after their permanent residency application had stalled for the last four years, that the young girl was “a nice person” but that “politics is hard” and “some [migrants] will have to go home.” When Reem burst into tears, Merkel looked distraught and gave her a gentle but terse stroke on the back. Soon after, angry comments flooded in on Twitter under the hashtag Merkelstreichelt (Merkel strokes). Posting later about Berlin’s role in the Greek bailout deal, the writer Evgeny Morozov tweeted, “This week has been fantastic for German public diplomacy. All that was missing was Merkel making refugee children cry.”

Merkel’s reputation for pragmatism, which helped her become Europe’s most powerful politician, thus backfired when she was confronted with the social reality of her policies: here was a girl who got hurt despite playing by the rules. The contrast seemed to strike at the heart of Berlin’s message that its system works.

The bad press comes at a sensitive time. Merkel’s position toward the Greek bailout deal has drummed up criticism in Europe and farther afield for being not just overly demanding but also unrealistic. As the various sides negotiate the agreement’s terms in the coming weeks, German politicians would do well to reevaluate the flawed assumptions on which they have built their policies: when it comes to the European project, much of Germany’s perceived pragmatism is a myth.

Merkel’s initial urge to empathize with the Palestinian girl evoked an image that her center-right Christian Democratic Union party has worked hard to advance: that of the chancellor as mutti, or “mom.” But it is hard to come across as a benevolent if stern caregiver when one is leader of a nation that, despite being Europe’s wealthiest country, wants to discourage the arrival of refugees fleeing conflict in Africa and the Middle East. Reem also highlighted flawed assumptions behind German immigration policy—that poor immigrants and refugees from Africa and the Middle East threaten to overburden the German state. Reem’s accentless German and polite manners told a different kind of immigration story from the one Merkel has tried to sell to the German public—one that revolves around the logic of “we can’t take in all of Africa.” Reem is just the kind of ambitious immigrant that the government says it needs to offset the demographic decline of a population with the world’s lowest birthrate.

The symbolism of Merkel’s interaction with Reem is unmistakable. Just as Germany is finally casting off the last of its insecurities about its postwar identity as de facto head of Europe, it begins projecting a stony and even callous image—the very traits from which Germans have spent decades trying to distance themselves.

 

Just as Germany is finally casting off the last of its insecurities about its postwar identity as de facto head of Europe, it begins projecting a stony and even callous image—the very traits from which Germans have spent decades trying to distance themselves.
Thomas Peter / Reuters A refugee cracks nuts with his walking cane during a break in a protest march through Germany near the village of Borkheide near Potsdam, October 3, 2012. A group of some 20 to 30 displaced persons, formally interned in German refugee camps, broke an official order that constrains their movement and embarked on a 500 km (310 miles) march across the country to protest at what they call inhumane treatment by the authorities.
Merkel’s approach to Greece has added to the irony. Despite the German argument that playing by the established rules is both fair and wise, a growing international consensus contends that the third bailout, a package of 86 billion euros ($93 billion) in exchange for more austerity, is no deal but punishment that will drive an already impoverished country to collapse. Some call it blackmail. Many consider it a triumph of narrow self-interest under the auspices of European unity.

Germans have promoted the deal by claiming that their own economic revival a decade ago was the result of former Chancellor Gerhard Schröder’s tough labor reforms and that Greece must follow a similar strategy in order to rebound. But that wasn’t the whole story. In fact, the creation of the euro in 1999 provided a major boost to Germany by giving its export machine a competitive advantage in the eurozone at the expense of other EU members. Ignoring the unfairness of the euro system, many Germans still believe in the pitch that helped launch the new currency a quarter century ago—that free market competition and integration benefits everyone.

That, of course, is not true. The euro has ruined Greece and benefited Germany most. And although there’s no denying that Greek banks borrowed huge amounts of money because of their own corruption and shortsightedness, German and French banks encouraged them to take loans that they normally wouldn’t have approved. Since then, Greece’s bailouts have gone mainly to rescuing those institutions: more than three-quarters of Greece’s bailout of 240 billion euros ($272 billion) has gone to the financial sector. Meanwhile, failed austerity has shrunk the Greek economy 25 percent in just five years.

Now the German idée fixe of opposing any suggestion that the EU would become a transfer union of funds flowing from north to south threatens the union itself. At a minimum, it may induce another crisis next year. Nevertheless, Merkel’s refusal to entertain the kind of debt write-down that many economists believe is needed to forestall collapse has found support in Austria, Belgium, Finland, Latvia, Lithuania, the Netherlands, and Slovakia. On the other side of the European fault line, France, Italy, Spain, and others are clinging to the hope that the European project can still be rescued through more integration in the form of a fiscal and political union. But France and Italy are skirting their own economic crises, and Spain is just steering away from the brink. The United Kingdom may well be on its way out of the EU altogether. At a time strong leadership is needed to rescue the very European project that enriched Germany, Germans are ensuring the continent is essentially guided by the base instincts of the economically successful northern countries that view themselves as more pragmatic.

But the policies of the Lutheran north are anything but pragmatic. In the long term, the collapse of European integration—a failed Greece and southern poverty—would threaten northern stability and future prosperity. Instead, the north—and Germany first of all—would do well to remember the real motive for enacting a European common coal and steel market 60 years ago: forming a political union to ensure another European war would be impossible. Securing the future of that project would be the truly pragmatic decision. In order for Germans to judge what kind of Europe they really want to live in, however, they must begin by dispelling their myths.

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