Brookings: Topics - Germany

Germany: A Global Miracle and a European Challenge

Carlo Bastasin — Thu, 09 May 2013 14:00:00 -0400

INTRODUCTION

In 1994, five years after the fall of the Berlin Wall, the Germans feared that the unification of the two Germanys had failed. In 1997 the term "Reformstau" (the reform deadlock) had been elected as the "word of the year". In 1999 and 2000 the weekly magazine The Economist called Germany "the sick man of Europe". In 2003 the German economy was back in recession.

Until 2004, Germany was struggling in a spiral of a seemingly unstoppable decline, without precedent for its length. Since 2004, Germany has emerged from its economic sluggishness with a performance that, considering the preceding fifteen years, appears to be exceptional. Today, people commonly interpret the rebirth of the German economy as a new Wirtschaftswunder, an economic miracle comparable to that of the postwar period and able to provide such a political prestige and diplomatic assertiveness to determine the fate of the political and institutional framework of the rest of Europe.

Over the past seven years, other European countries have had comparable growth rates, Sweden and Switzerland in particular. France has been growing at higher rates if one takes into account a longer period, but probably as a result of the fiscal stimulus induced by a structural budget deficit which regularly exceeded the average of other euro area countries. But the German exception lies in having permanently transformed its economic model in line with the global challenge, showing that the opening of national economic systems can be an opportunity for prosperity. The transformation occurred by introducing more market elements in the economy. This has allowed the achievement of the traditional shared goals of German society - starting with full employment - which have always characterized the Sozialmarktwirtschaft, the social market economy.

Income divergence has increased. The labor market has become dual. Seven million workers, many of them foreigners or migrants, have become dependent on extremely low salaries.

However this has been possible only at the cost of giving up the traditional goal of egalitarianism, both within the German society and in the economic relations with the European partners. Income divergence has increased. The labor market has become dual. Seven million workers, many of them foreigners or migrants, have become dependent on extremely low salaries. Balance of payments disequilibria, and their re-distributional effects within the euro area have been regarded as irrelevant.

In order to defend at least some parts of the social market model, German governments since the early 1990s have accompanied the economy’s internationalization process initiated by companies and major financial institutions. The common political analysis behind this is that a population of 1.15 percent of the world, which currently produces more than 5 percent of global GDP4, can maintain its standard of living only by tying its growth to that of countries bringing 6 billion people out of relative poverty.

For this reason, the entire German production system had to and was able to strengthen its export orientation, while facing the major geopolitical changes that have directly involved the country: the German reunification, the European monetary unification, Eastern Europe opening to international trade and, finally, the entrance into the markets of large areas of the world up to the full development phase of globalization.

The German experience has been proposed by Chancellor Angela Merkel as a reference model for the entire euro area: "To be competitive in the world is not a requirement for Germany, but for the entire euro area, a group of countries which accounts for 7 percent of the world population but produces more than 20 percent of global GDP". Inevitably, it becomes important to understand whether the features of the German economic miracle are identifiable and replicable as a historical process of reform. The indications of this analysis are that the process of transformation of the German economy was born long before becoming a political project, under the impulse of a group of industrial and financial actors subject to the pressure of global competition. Only later, an intensive set of government-led economic reform programs accompanied the transformation of production, allowing the entire economy to benefit from their acquired competitive success. Therefore, the possibility of replicating the German success must lie not only in the process of political reform, but in a double and parallel evolution of the production structure and regulatory framework consistent with a long-term project. More importantly, Germany has deliberately forged its fiscal and labor policies as to ensure a very high net savings surplus. This strategy has drained resources from the rest of the euro area in two ways: The first via lower imports and the second through a huge amount of capital incomes flowing back from the countries of the euro area that had received huge German financial investments. I estimate this effect at a yearly 0.75 percent of German GDP and at an equivalent yearly amount subtracted from the euro area periphery for ten years. Given the incapability of the countries receiving the flows of capitals to put them to good use, the German strategy has aggravated the imbalances within Europe and — among other causes — seems to have contributed dramatically to the origins of the euro crisis.

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Carlo Bastasin

Image Source: © Tobias Schwarz / Reuters

A World in Turmoil: An Exploration of Issues Affecting Today's Global Order

Martin S. Indyk and Javier Solana — Fri, 05 Apr 2013 00:00:00 -0400

With a range of critical issues confronting the U.S. and the international community today, Distinguished Fellow Javier Solana and Vice President for Foreign Policy Martin Indyk discuss some of the most pressing challenges, from the war in Syria to the Euro crisis to Iran’s nuclear program.

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A World in Turmoil: An Exploration of Issues Affecting Today's Global Order

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A World in Turmoil: My Conversation with Javier Solana

Fri, 05 Apr 2013 00:00:00 -0400

There are many tensions and problems facing the world today. Distinguished Fellow Javier Solana and I discussed some of the most challenging issues in the current geopolitical landscape, including the Euro crisis, the war in Syria, and Iran's brinksmanship.

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A World in Turmoil: An Exploration of Issues Affecting Today's Global Order

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A World in Turmoil: An Exploration of Issues Affecting Today's Global Order

If Europe Doesn't Stand Up After Cyprus

Carlo Bastasin — Wed, 20 Mar 2013 00:00:00 -0400

Editor's note: This article was originally published in Italian by Il Sole 24 Ore.

Like what happens to less intelligent creatures, there was also a sudden disavowel of paternityin the Cypriot mess. No one in Europe admits responsibility for the project of forced confiscation on all bank deposits, also the more modest ones. A proposal that, while necessary, will not survive to its temerity and is putting in danger the stability of the Euro area. On the other hand, the confusion about responsibilities is due to the unbalanced decision-making mechanism that has characterized the last years of the European crisis.

Facing an emergency, Berlin sets the political priorities; the Eurogroup decides the least tricky technical solution for the governments; the heads of state communicate the decisions to their citizens, attributing the responsibility to Brussels; finally the EU commission and the European Central Bank execute orders, at times sanctioning countries and almost always taking the blame.

The anti-European short circuit is assured because the level at which decisions are made is never at the level where democratic choice happens. In fact, the problems arise when a National Parliament meets, as happened yesterday in Cyprus. The citizens circle the Parliament and the parties accuse Brussels or Berlin, also hiding the national responsibilities.

Contrary to what is said, for example, the confiscation of Cypriot deposits is a national fiscal measure. It does not violate the insurance of balanced bank accounts in the EU, that spring into action when a bank fails. It is a tax that will be discussed at the European level and that is conditional on European support, but will be done at the national level. However, in a certain confusion of roles and in a certain mess of solutions it was easy for the government and the Cypriot Parliament to turn it down like an error committed entirely by others.

Clarifying to citizens the allocation of responsibilities between Cyprus and countries in the Euro area is difficult because the transparency of the European decision-making process is really poor: there exist no memos of the Eurogroup meetings, whose last leader was chosen because he was not very garrulous; the heads of government then agreed bilaterally over telephone; above all a true public confrontation does not exist, but there are 17 members and 17 borders.

The only common thing is the confusion of blame that, if it was not tragic, would be funny. Try to follow the thread: on Sunday, all accused the German minister Wolfgang Schaublre for the proposal of forced withdrawal. Schauble however claims that he is opposed, with the IMF, to withdraw on small Cypriot money savers. Berlin, in fact, unloads the responsibility on the government of Nicosia, that (for fear of a bank run) did not want high withdrawal on the rich. But it accuses also the EU Commission and the German member of the ECB, Joerg Asmussen, who had observed that a bank run was already happening and that they needed to freeze accounts. Cypriot president Anastasiades retorts that he was blackmailed by Berlin and by the ECB, which would have cut funds that keep the country's banks alive. The Commision denies having defined the proposal and finally the ECB denies directly and categorically: the blame is on the political negotiations held in Brussels. All the institutions, however - IMF, EU, ECB - are together on having had to put a limit of 10 billion on the assistance to Nicosia. Officially to not bring Cypriot public debt to over 140% of the GDP, but in reality to appease crediting governments and to limit their expenditure. Are you lost? You have reason to be.

But we are still far from having unraveled the tangle. Behind the negotiation with Cyprus, there are in fact others that are more complex. The most important regards relations with Russia which leads with around 20-25 billion Euros deposited in Cyprus, one of the most obscure financial markets in Europe. To not touch the small Cypriot depositors, there is a need to withdraw 15-16% of big deposits. But Moscow had just loaned 2.6 billion to Nicosia, which now, pushed by European partners, they have to withhold like a tax on Russian deposits.

The European relationship with Russia is based on big interests and huge suspicions. Berlin first wants to impose on Cyprus the closure of financial channels with Moscow. It is a negotation of such implications from having to be leader of leaders of government or of ministers abroad rather than financial ones. But Europe has no real common foreign policy, least of all in the Euro area. The result is that Cyprus will end up asking Moscow for help. Hypothetically, it could end by depending on Russia so much that it detaches from the Euro area, opening the gate to the first devastating exit of a country from the Euro. Yet a European political initiative was possible: a battle against off-shore finance would collect the consensus of the vast majority of European citizens and would be difficult for Cypriots, facing European support, defending the abuses of their banks. As is seen, whether in foreign policy or in institutional assets, denouncing the lack of European political unity is anything other than an appeal to abstract principles of a dated Europeanism. However the Cypriot crisis shows also that the will of Europeans to help themselves in exchange for common policy (for example the fight against money laundering) is exhausted and weak bringing into doubt also the solidarity that will be indispensable to constitute a bank union. That is the project with which is necessary to avoid, like in Cyprus, a banking crisis sinking a country. A project on which depends the survival of the Euro.

It is estimated that Cyprus has until June to choose to form a tie with Moscow or fail. A somewhat long time that may keep the Euro area in check and may also coerce it brutally to change its strategy one more time.

Authors

Carlo Bastasin

Publication: Il Sole 24 Ore

Image Source: © John Kolesidis / Reuters

Time to Bite the Bullet on European Defense

Clara M. O'Donnell — Fri, 01 Feb 2013 00:00:00 -0500

Europe’s military spending is in free fall. As highlighted during a seminar organised by the CER in December as part of the FR-UK Defence Forum, the EU countries combined have reduced defence spending from €200 to €170 billion since the start of the economic crisis in 2008. In response, governments have signed up to a variety of new bilateral and multilateral initiatives. These are designed to limit the impact of budget cuts on their armed forces. But so far, the savings incurred pale in comparison. At the December discussions, participants estimated them at €200 to €300 million. Many sensitivities relating to national security make it hard for governments to implement collaborative defence efforts. But at a time when Europe’s neighbourhood is replete with instability and the United States is scaling back its own armed forces, Europeans need to do more to stem the damage to their militaries.

Notwithstanding their budget cuts, taken together EU states are still the second largest defence spenders in the world. And not all European countries are reducing the level of funding to their armed forces. According to a 2011 study for the European Parliament, Finland and Denmark have maintained military spending steady in recent years. Poland and Sweden have increased it.

But even prior to the economic crisis, most European countries spent less than 2 per cent of their GDP on defence – even though NATO members are in theory committed to devote at least that much to their militaries. And, according to the European Parliament study, most middle-sized European countries have cut their defence spending by 10 to 15 per cent since 2009. Some of the smaller EU states, including Latvia and Lithuania, have cut by more than 20 per cent. Britain is reducing its military budget by 7.5 per cent over four years. And according to Andrew Dorman from Chatham House, the actual reduction is nearly 25 per cent because the ministry of defence has many unfunded liabilities and has to unexpectedly pay for the replacement of the UK’s nuclear deterrent. France is expected to scale back its military once it announces its new defence priorities this year. As a result, US officials warn that Europeans will soon be incapable of deploying a mission like the one they sent to Libya in 2011.

European governments have acknowledged that closer co-operation between their armed forces could offset – at least partly – the impact of such large spending cuts. They have introduced some welcome measures. For example, last year, 14 countries agreed to buy surveillance drones for a joint NATO-run squadron. Eighteen states now take part in an EU network to facilitate maritime surveillance through information exchanges. Last April, Belgium and the Netherlands decided to co-operate in helicopter maintenance. In September, Bulgaria and Romania agreed terms to make it easier to police each other’s airspace. Britain and France are training together to develop a new joint expeditionary force. And the UK and other Europeans are providing logistical support to France’s deployment in Mali.

But governments remain wary of pooling military capabilities. They still fear that their partners may block their access to shared equipment if they disapprove of a particular operation. States also disagree on the best way to develop new military technologies. For example, the UK wants to acquire defence equipment with France bilaterally. But since President François Hollande has been in office, France has become increasingly keen to allow other European countries to take part in Franco-British procurement projects. Many countries are averse to committing to ambitious initiatives because they know that these can be costly in the short term – last year Britain notably abandoned its plans to adapt its aircraft carrier so that French planes could land on it, after realising how expensive the adjustments would be. Several EU states are loath to integrate their defence companies with those of other countries, as Germany illustrated when it refused to support the merger between BAE and EADS. Finally, governments do not want their defence firms to lose out on contracts. Many in France worry that several of the cost-saving projects proposed by NATO, including missile defence and the joint purchases of surveillance drones, favour US defence companies.

Europeans need to overcome some of these continued aversions to co-operation. Even though governments would prefer to avoid using military force, they might not have a choice. Several conflicts risk undermining stability in Europe’s southern periphery over the next few years – not least the partial take-over of Mali by Islamist militants, where French forces have already felt compelled to intervene, the civil war in Syria and a possible standoff with Iran. And Washington, struggling with its own budgetary constraints, wants its allies across the world to take more responsibility for their regional security.

President Hollande’s government can allay some of the French concerns about the lack of European industrial participation within NATO cost-saving initiatives. To do so, Paris could suggest projects to the alliance which involve equipment made in Europe. As a participant from the CER seminar has proposed, Berlin, London, Paris or Rome could sell some of their old fighter jets to countries in Central Europe which want to strengthen their arsenals cheaply.

As suggested by another participant at the December discussions, Europeans should buy cutting edge military capabilities only when it is necessary. Over the last few decades, the cost of defence equipment has grown exponentially. Even when their economies are stronger, European governments will increasingly struggle to arm their militaries. In some cases, national security will require governments to continue acquiring the most technologically sophisticated capabilities. But for less sensitive tasks, governments should explore cheaper equipment options and a greater use of civilian suppliers, for example in communications.

Finally, European governments must ensure that they do not duplicate their efforts to build the next generation of drones. European governments have long argued that it has been very inefficient for Europe to have three manned fighter jets programmes (Rafale, Eurofighter and Gripen). The duplication has prevented the various programs from benefiting from economies of scale, it has curtailed interoperability amongst European armed forces, and it has led Europeans to compete against each other in export markets.

Over the next few years, Europeans will decide how to develop unmanned combat aircraft and other sophisticated drones. It is still unclear how governments will proceed. France and Britain have announced plans to develop next generation drones bilaterally. EADS and Finmeccanica, Italy’s largest defence company, have floated intentions to do the same. And France has agreed to work on unmanned aircraft with Germany, too.

Under current spending trends, there is insufficient demand in Europe to support several competitive next generation large unmanned aircraft programmes. So Europeans must avoid several unco-ordinated efforts taking place simultaneously. EU countries could barely afford duplicating expensive aerospace programmes prior to the economic crisis. They definitely cannot afford it now.

Authors

Clara M. O'Donnell

Publication: Centre for European Reform

Muslim Integration in Germany

Jonathan Laurence — Wed, 28 Nov 2012 00:00:00 -0500

Editor's Note: In an interview with NPR's Charles Hawley, Jonathan Laurence discusses Muslim integration in Germany along with its implication of increasing cultural tensions.

Charles Hawley: Primarily I know that you’re mostly focused on immigration, Muslims in Europe. The debate in Germany I find to be somewhat unique, in Bonn a small party of anti-Islamist populists decided in their campaign for the state elections to display Mohammad caricatures in front of Muslim facilities and they engendered a response that was perhaps not surprising, but was nonetheless unfortunate, when Salafists attacked the police protecting the small demonstration. How is it that such a small tiny group could define the debate about Islam in the German press for months?

Jonathan Laurence: Well there are two tiny groups in that case that are defining the German debate rather unhelpfully at the same time. And each has its own place of primacy even though they’re really quite small. (Unintelligible) has its most recent experience in the public realm as the prime mover behind a campaign against the construction of a grand mosque in Cologne’s city center. Which is not far from the main cathedral. And their plan to build a Mosque in central Cologne inspired this small coalition of self-anointed anti-Islamization prophets basically who view any sign of permanence of Islam in Germany or in neighboring countries to be a real challenge to the country’s fundamental identity. So out of really very small numbers, they were able to mount this very visible campaign against the construction of the mosque and this lead to some real significant clashes. That fact brought out I think some of the worst in the Muslim origin population in that the mainstream organizations which are basically all of them said that if you don’t want us to have a transparent visible proper mosque in the city center, then why do you criticize the prayer spaces that we have that are in the second courtyard. We’re just trying to make ourselves at home here. And so the (unintelligible) movement has its roots in this and wound up provoking this Salafist fringe within the organized Muslim community, which is really tiny, we’re talking in the low thousands for the entire country.

Hawley: You spoke also of the fact that the (Unintelligble) is interested in maintaining the identity of that region of Germany as a whole. When talking to them of course, they also emphasize or they primarily emphasize that they are there to defend democracy. Is that an honest argument on their part?

Laurence: Not entirely, if you allow that this democracy with its constitution upholds religious freedom. And what they are objecting to within Islamic organizations within Germany is more a result of Islam not having found analogous institutional structures to the churches or synagogues and other religious communities that have been here for a while. The German constitution, the Grundgesetz, took over from the Weimar constitution a whole section concerning religious freedoms, allowing for religious communities to be formed, allowing for religious communities to be recognized as public law corporations, and to enjoy certain privileges. So to teach in public schools an hour of religion each week, to collect some funds, revenue, church taxes for the running of the community, to have seats on the boards of certain public broadcasting corporations. There’s a whole range of privileges, which Muslims now that they are becoming more and more part of the citizenry are asking for access to quite naturally. So the idea that preventing them from exercising their constitutional rights is a defense of democracy is somewhat disingenuous. But what they are objecting to in the (Unintelligible) circles are the radical fringes of the religion.

Hawley: What is it about that political background that makes Germany prone to these periodic orgies of angst?

Laurence: Well Germany has this funny experience of dual dictatorship in the 20th century, which has really conditioned the way that citizens experience democracy. The West German Federal Republic was already quite constrained in its international degrees of freedom because of its anchoring in NATO, but also because of the American occupation. And then of course the Soviet occupation, which wound up taking the form of East German Democratic Republic, extended also an experience of essentially totalitarianism from the Nazi period of the Third Reich. And so I think that those two experiences of dictatorship as perceived from the West led to a whole series of restrictions on how far freedoms should be allowed to go because of the risk of their spilling over into intolerance. And so a kind of anti-fascist broadly speaking mentality of no freedom for the enemies of freedom developed. And of course to have activities on the politically extreme is perfectly natural in Western democracy, it’s not possible that the parliamentary party system covers everyone. And if you have freedom of opinion, then you have to expect that there are going to be some people out there with really nasty opinions. But it’s very hard for I think Germans to feel quite responsible for those experiences of dictatorship and ensuring that they never occur again. So it’s often coming from a kind of well-intentioned place. When they want to prevent the spread of Islamism, that’s not just pulling out, that’s Germany government policy essentially. They don’t speak to groups that define themselves as Islamist even if they’re nonviolent. So the aims of that are perfectly understandable, they don’t want to come to a situation where there is a religious theocracy.

Listen to the full interview at nprberlin.de »

Authors

Jonathan Laurence

Publication: NPR Berlin

Image Source: © Thomas Peter / Reuters

Integration or Emancipation? (Muslime in Deutschland brauchen Emanzipation)

Jonathan Laurence — Sun, 18 Nov 2012 00:00:00 -0500

Editor's Note: In his article in Der Tagesspiegel, Jonathan Laurence takes a look at the degree to which Muslims in Europe – many of them immigrants – have become truly emancipated. Emancipation of a minority, he argues, is different from their integration or assimilation. As political situations come and go and change daily attitudes towards Germany’s religious minorities, Germany must be careful to preserve the small steps already taken toward minority emancipation. Read the article in English or German below.

German President Joachim Gauck’s visit to the Sehitlik mosque in Berlin before Eid al Adha earlier this month heartened critics who regretted his earlier hesitation to claim Islam as an integral part of federal republic. The about-face revealed a paradox within the man – just as within the country and perhaps the continent – that is tearing at the fabric of 21st century European Islamic life. Despite enormous progress, European Muslims still do not enjoy what has historically been called “emancipation.”

No mainstream politician denies the permanence of Islam’s presence. But as Islam is more visibly accommodated in the public sphere, it elicits fiercer resistance from nativists, who want proof of loyalty and a higher tribute in exchange for admission to the nation. Islam-critical populism no longer lingers on Germany’s political extremes alone. This reopens a wound that 1999’s historic citizenship reform was intended to heal, leading to “hyphenated” Germans’ frustration with limits on religious liberties and apparent double standards in the fight against political and religious extremism.

Rooting Islamic organizations and religious observance in domestic institutions in Germany and elsewhere in Europe is undeniably underway: the Deutsche Islam Konferenz and other consultations have led to hundreds of new prayer spaces in construction, the availability of religious education, and scores of imams, teachers and theologians who are being locally trained.

The legal and political status of Islam, nonetheless, escapes easy categorization. Two trends are impeding the anchoring of Islam. Within Europe, Islamkritik has slipped from aiming to preserve the “neutrality” of the public sphere or to defend “western human rights,” and towards a basic dubiousness about Islamic religious practices in general. This in turn reinforces the protective instinct within the countries of origin, where new ministries are to maintain religious, political and economic ties with diasporas abroad.

Emancipation in the sense of the way Prussian reformers Stein and Hardenberg used the term, offers a robust and realistic way out: The mass entry of a previously excluded group into the democratic order, based on the rule of law and equal rights and obligations as citizens -- including collective rights, if they choose to join a religious community or certain other types of secondary association. Of course, it has also always implied new duties, including taxation and the possibility of military conscription. Emancipation is a generational process that takes time; France’s Jews received full rights in 1791, whereas it took the 1871 Imperial Constitution (Reichsverfassung) to grant the same across a united Germany. The process has always been characterized by a “dual movement.” With one hand, the state liberates, equalizes and enfranchises, and acknowledges collective identity. While with the other, it forces adaptation and the reform of community structures.

Over the long and winding course of democratization in 19th and early 20th century Europe, Groups who were once absent from the body politic – including Jews, minority Catholics, and the working classes – gradually acquired full citizenship. And they were soon thereafter granted “group” status –in the form of central councils, concordats or trade unions — to administer institutional privileges and to anchor their organizations domestically within a constitutional framework.

But why use this outmoded expression? The word evokes the failures of German democracy, but it might as well point a way to reclaiming some of the brighter spots in the country’s democratization. Twelve years of Third Reich should not be atoned by reneging on earlier progress.

Emancipation also offers a way out of the false dichotomy of integration or assimilation. Integration cannot be the appropriate word for the millions who were born, raised and educated here, and who don’t consider themselves to be foreigners or immigrants. And to them, assimilation sounds like a euphemism for dissolution. In other words: if you uncover your hair, give up your minarets, stop your brutal halal slaughter and cruel circumcision rituals – then we have a deal: Welcome! Emancipation, in contrast, has historically meant becoming subject to the rule of law – and thus winning protection from administrative arbitrariness – and armchair theologians.

Why even bring religion into this discussion? Isn’t the focus on religion divisive and problematic and a contribution to needless communitarianism? There is no reason to pretend or to wish that Islamic identity or piety be the defining trait of the generations born here of immigrant background. Just as with “free markets”, which do not exist suspended in a theoretical space, but are regulated in myriad ways, so too is “universal citizenship” structured with many formal and informal institutions. Citizenship guarantees individual religious rights. But it is group status – usually in the form of public law – that gives meaning to those rights in city halls, government ministries, armed forces, prisons, schools, hospitals and sometimes even in public streets.

While not all European states have immigrant or foreign culture-oriented policies, all have religion offices and maintain some privileges, and often, a formal relationship with faith communities. State-Islam relations have begun to lay the groundwork for German Islam. Muslim students in NRW now have the option of Islam religion classes. Hamburg just concluded a historic state contract with several major Islamic federations. At eight universities, there are now centers of Islamic studies or chairs training future teachers, imams and theologians. This is still at a small scale: the cumulative enrollment is in the low dozens, while there’s an existing need for more than 2,000 imams and religious leaders in Germany.

This new institutional presence has already helped reduce tensions related to the “defense of Islam” in the public sphere and helped manage cyclical religious scandals. The YouTube user who uploaded an anti-Islamic video that went viral in September was a geistiger Brandstifter (intellectual arsonist). But the Muslim communities of Europe proved they are not a tinderbox, waiting to catch fire at the slightest provocation. Images of attacks abroad on schools, consulates, and embassies were dispiriting, yet all of the tragic violence occurred elsewhere. In Europe, the angry responses took the form of lawsuits and small demonstrations.

It’s tempting to think that nothing has changed in the quarter century, since Rushdie’s Satanic Verses. But the reaction to violent extremists should be proportionate to their numbers. The legal complaints filed against authors and magazines illustrate the power of formal institutional access that comes with full emancipation. By registering their offense, by protesting discrimination where they see it, European Muslims have begun to employ their democratic rights.

Another example of this came during last spring’s NRW elections. In the aftermath of a violent Salafist protest against the Prophet cartoons in Bonn, something much more meaningful took place. Federations representing hundreds of thousands of German Muslims condemned the violent protesters and implored constituents to express their dissent by fulfilling the civic duty of voting. As the proportion of Muslims of foreign nationality living here decreases, democratic political institutions are increasingly kicking in.

Nonetheless, the mixed experience of the current Federal Interior Minister reminds Germans of the need for non-partisan (überparteilich) consensus on Islam policy. The NSU murders and revelations of rightwing infiltration of the security apparatus, moreover, in addition to differences in counter-radicalization strategies, has broadened and deepened the sense of mistrust vis-à-vis German institutions.

Perceptions matter, and many German Muslims perceive that their community’s status shifts dramatically from one President to another, and from one coalition government to the next. The communication channels between Islamic organizations and the authorities during these crises never completely broke down, but relations have suffered. This is not unique to Germany, of course – France, Italy, Netherlands, Spain and the UK all have experienced some form of it. In the absence of that consensus, it pushes the discussion in minority communities back towards the option of dual citizenship, just in case. The loss of confidence in German or European institutions would mean a return to internationalization.

But this is also a genuine opportunity for Germany to push back. The dual citizenship battle shouldn’t be about confiscating foreign passports. It is rather about endowing the German identity card with binding commitments. Without a basic minimum set of guaranteed rights there will always be a market for protection – whether from ancestral homeland governments or transnational political movements.

This is a complex and multi-level interaction between state and religious actors within and across borders. Nonetheless, it is the nation-state that is ultimately responsible for guaranteeing the free exercise of its citizens’ religious rights. Only individual European governments can emancipate Europe’s Muslims, and the longer there is no final status agreement – in whatever form that take, whether it be Religionsgemeinschaft, Körperschaftstatus or something new – then the more fragile and reversible that progress will be. Until then, a real danger exists that the modest early accomplishments of emancipation will be undone before Muslims’ incorporation has even taken place.

Muslime in Deutschland brauchen Emanzipation

Anlässlich des muslimischen Opferfestes hat Bundespräsident Joachim Gauck im Oktober die Berliner Sehitlik-Moschee besucht. Seine Kritiker ließ diese Tatsache Hoffnung schöpfen – jene Kritiker nämlich, die seine frühere Weigerung bedauert hatten, den Islam als integralen Bestandteil Deutschlands anzuerkennen. Diese Kehrtwende legt Gaucks paradoxe Haltung offen, die in Deutschland und vielleicht auf dem ganzen Kontinent vorherrscht und die das muslimische Leben im Europa des 21. Jahrhunderts bestimmt.

Trotz enormer Fortschritte genießen die europäischen Muslime immer noch nicht das, was im historischen Kontext „Emanzipation“ genannt wird.

Kein demokratisch gesinnter Politiker in Deutschland leugnet, dass die Präsenz des Islam in Europa von Dauer sein wird. Aber während der Islam in der Öffentlichkeit demonstrativ willkommen geheißen wird, löst er zunehmend heftigen Widerstand bei den Nativisten aus, die von Muslimen einen Loyalitätsbeweis und mehr Integrationsbemühungen als Gegenleistungen für ihre Zugehörigkeit zur Gesellschaft einfordern. Islamkritischer Populismus ist längst nicht mehr nur an den Rändern des politischen Spektrums zu Hause. Dieser Populismus reißt eine Wunde wieder auf, die 1999 durch die Reform des Staatsangehörigkeitsrechts geschlossen werden sollte. Die neuen „Bindestrich-Deutschen“ sind frustriert angesichts der Grenzen, die ihrer Religionsfreiheit gesetzt werden und angesichts der Bigotterie im Kampf gegen den politischen und religiösen Extremismus.

Die Einbindung islamischer Organisationen und auch ihre Einbettung in bestehende gesellschaftliche Strukturen in Deutschland und Europa funktionieren zunehmend besser: Die Deutsche Islamkonferenz und ähnliche Gipfeltreffen von Politikern und Verbänden haben zu Hunderten neuer Gebetsräume und Gotteshäuser geführt, auch wenn viele davon noch im Bau sind. Ebenso positiv anzumerken sind die verbesserten Angebote religiöser Erziehung in Schulen und die immer größere Zahl von Imamen, Lehrern und Theologen, die im Land ausgebildet werden.

Der rechtliche und politische Status des Islam in Europa hingegen entzieht sich trotz aller Bemühungen einer Einordnung. Zwei Entwicklungen behindern seine Verankerung: Die Islamkritik in Europa verschiebt sich von der Betonung der Neutralität des öffentlichen Raumes und der Verteidigung westlicher Menschenrechtsvorstellungen hin zu einem generellen Unbehagen gegenüber allen muslimischen Glaubenspraktiken. Das wiederum ruft in den Herkunftsländern Beschützerinstinkte hervor, Ministerien werden geschaffen, um die religiösen, politischen und wirtschaftlichen Bande mit der Diaspora zu erhalten.

Das ist der Ausweg aus der falschen Dichotomie von Integration und Assimilation

Die Emanzipation in dem aufklärerischen Sinn dieses Wortes, den die preußischen Reformer Stein und Hardenberg meinten, bietet einen sicheren und realistischen Ausweg aus dem Dilemma: Den Eintritt einer zuvor ausgeschlossenen Gruppe in eine demokratische Gesellschaft, basierend auf bestehenden Gesetzen, mit den gleichen Rechten und Pflichten für alle Bürger. Emanzipation umfasst auch Kollektivrechte, falls diese Bürger sich entschließen, einer religiösen oder einer anderen Art von Gemeinschaft beizutreten. Natürlich waren damit immer auch Auflagen verbunden, wie solche zur Steuer- oder zur Wehrpflicht. Emanzipation ist ein ungleichmäßiger Prozess, der sich über mehrere Generationen hinzieht. Die Juden Frankreichs erhielten bereits im Jahr 1791 gleiche Rechte, wohingegen jene in Deutschland bis zur Reichsverfassung 1871 warten mussten. Ihm eigen war dabei schon immer eine Art doppelter Handschlag zwischen Staat und Religionsgemeinschaft: Mit der einen Hand sorgt der Staat für Gleichheit und erteilt Rechte. Mit der anderen erzwingt er Anpassung und eine Reform der Gemeindestrukturen.

Auf dem langen und schwierigen Weg der Demokratisierung im Europa des 19. und 20. Jahrhunderts wurde von der politischen Teilhabe ausgeschlossenen Menschen – Juden, Katholiken, die Arbeiterklasse – nach und nach das volle Bürgerrecht gewährt. Ihnen wurde auch der Status „gesellschaftliche Gruppe“ zugestanden, sie konnten sich in Verbänden, Interessengruppen und Gewerkschaften organisieren, um institutionelle Privilegien wahrzunehmen und ihre Interessen innerhalb eines gesetzlich verankerten Rahmens zu vertreten.

Aber warum sollten wir heute noch den überkommenen Begriff „Emanzipation“ verwenden? Das Wort beschwört die Misserfolge der deutschen Demokratie herauf, dabei könnte es auch die lichten Momente des deutschen Demokratisierungsprozesses beleuchten. Zwölf Jahre „Drittes Reich“ sollten nicht die schon zuvor errungenen Fortschritte negieren.

Authors

Jonathan Laurence

Publication: Der Tagesspiegel

Image Source: © Thomas Peter / Reuters

Islam: The Long Way to Integration

Jonathan Laurence — Thu, 01 Nov 2012 00:00:00 -0400

Summary: In an interview with ParisBerlin Magazine, Jonathan Laurence discusses the differences between the French and German Muslim immigrants and the divergent ways in which the peoples and governments of those two nations have responded to the change in their demographics.

Download the interview in German here (PDF) »

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Islam: The Long Way to Integration

Authors

Jonathan Laurence

Publication: ParisBerlin

Image Source: © Thomas Peter / Reuters

Mass Protests in Greece Against Merkel

Daniel V. Speckhard — Tue, 09 Oct 2012 00:00:00 -0400

Editor's Note: On October 9, 2012, Daniel Speckhard was interviewed by Dan Matheson of Canada's CTV News, on German Chancellor Angela Merkel’s visit to Greece and the ensuing protests against European Union policies in Athens. Watch the video on ctvnews.ca.

Dan Matheson: Mr. Speckhard – Mr. Ambassador, can we ask you what your sense of how grim the situation right now is in Greece? It’s been relatively quiet in recent weeks. Does that mean there’s been improvement or is it just as grim as it’s been all along?

Daniel Speckhard: Well, it’s very grim. They revised downward the estimate as a 7 percent decline in the economy in 2011, and they’re looking at a 5 percent decline here in 2012. Job unemployment is at 25 percent overall and about 50 percent for people under 25. So it’s a very difficult situation right there now. It’s been relatively quiet, though, because there’s been a new government. The government has made some impressive moves in the first few months of its tenure to show that it’s on top of the situation and try to move forward on some of the reforms and try to repair some of the damage in relations with the other Europeans. I think that’s given them a little bit of breathing space.

Matheson: We’ve heard from the Prime Minister of Greece they need more money by November.

Speckhard: Yes, well that’s what they’re working on right now. There’s a group in town, it’s the EU IMF and East European Central Bank are negotiating this next release of 31 billion euro for the next tranche of assistance. If they don’t get that by November, they would be out of money. Partly why Chancellor Merkel is in town today is to discuss with the prime minister the final efforts to put in place a program and get support within the EU to move forward on that progress. But that’s just the next tranche of this particular bailout program that they’ve been on all along.

Matheson: We hear two philosophies on how this works. From the top looking down it sounds fine to impose austerity measures for three or four years to get the economy back on track. From the bottom looking up you hear the people cannot live with 26 percent unemployment. You can’t live with your entire family having nobody working, and your prospects are really grim indeed. So how do you balance what the people need with what the economy needs? How do they do this?

Speckhard: This is very difficult because I think the answer to that is in the form of structural adjustments. It’s not just cutting budgets, but you actually have to be changing the economy so that you’re offering opportunities for new economic activity to take place. That’s very, very difficult in a situation like this because the banks are in such terrible shape, they’re no longer willing to lend to businesses or to new entrepreneurs. There are not a lot of jobs in the private sector to take over for the cuts in the public sector. So in the short term you get into a really downward spiral that you mentioned. The IMF just recently said what their projections are is that Greece is not going to make the targets for reducing their debt to GDP ratio to 120 percent by 2020, they are well off that track. They’re saying this country is going to need new financing or new debt restructuring, something that the European leaders don’t want to hear right now at a very political time.

Matheson: Meanwhile, we have the chancellor in Athens today for the first time in three years I take it. Is it this a helpful thing to do?

Speckhard: Well I think this is important for this very fragile government in Greece to show that it has some support from the German government, which in their mind is calling the shots on additional support for Greece. It’s particularly important because three or four or five months ago there was a lot of talk about perhaps letting Greece exit the eurozone. This is a sign that Germany at least for now is saying it wants Greece to stay in. Two thirds of Greeks says they want to stay as part of the Euro. They are tired of the austerity measures, but they do feel strongly about being part of the eurozone. So this gives the new government a boost in the arms to say that hey we do have some friends in very high places. The challenge is what’s going to come next. I think in the next month or two you will see a release of this additional assistance for this next tranche, but over the next four or five months they’re going to have to negotiate new additional aid packages or new debt restructuring. That’s going to be very, very difficult given that there’s going to be elections in Germany next year and that there’s a lot of concern over how they manage Spain and Portugal as well as Italy.

Authors

Daniel V. Speckhard

Publication: CTV News

Image Source: © Yannis Behrakis / Reuters

The European Central Bank’s Bond Buying Program: Is Berlin the Greatest Beneficiary?

Domenico Lombardi — Tue, 25 Sep 2012 09:47:00 -0400

Editor's note: This piece is translated and adapted from Domenico Lombardi’s bimonthly column Pennsylvania Avenue in the Italian daily Il Foglio.

The euro crisis has just entered a new stage. The European Central Bank’s establishment of the Outright Monetary Transactions program, the new bond buying program, has been greeted by Italy and Spain as manna sent from heaven. However, the real political beneficiary of the program is the government of German Chancellor Angela Merkel, just as she prepares to enter the battleground for reelection.

It became clear over the past few weeks that Spain was about to request another program of assistance, in addition to the one needed for recapitalizing its banks— a request that would have put the German chancellor in a politically fragile situation. Since the European rescue fund, officially known as the European Financial Stability Facility, only has €150 billion, net of existing commitments, a new program with Spain would have forced Merkel to ask the Bundestag for an increase in the financial capacity of the fund itself. Should Spain’s difficulties have spilled over into Italy, the Italians would have most likely also needed to request a program of assistance. Even assuming that the Bundestag had, in the end, given the green light, the political cost for the German chancellor would have been huge. It was still uncertain only a few days ago whether the European Stability Mechanism, the permanent rescue mechanism for Europe, would be ratified by Germany with a pending decision by the constitutional court on the matter.

With the ECB’s new bond buying program, Merkel is now able to translate onto the ECB the financial burden of any assistance to Italy and Spain. This puts her relationship with the Bundestag and the German electorate on a better footing. In fact, under the assumption that the mere introduction of the OMT program continues to keep interest rates in Italy and Spain in check without these countries even requesting to use it, the German chancellor might even succeed in completely avoiding the domestic debate about what such a request would entail. This would further strength her position on the domestic front. Internationally, by accepting the ECB’s engagement in potentially unlimited transactions, she meets a key request made of her insistently by the U.S. administration, which has since the beginning emphasized the need for the ECB’s proactive involvement in the European crisis.

Lastly, by making the ECB’s intervention conditional on a formal request for assistance to the EFSF/ESM by the country in difficulty, Berlin has achieved a two-fold objective: first, it maximizes its control by subjecting the range of unconventional monetary policy interventions to formal political scrutiny; second, it minimizes the costs and the risks of its financial exposure to future programs of assistance to the systemic debtors in the eurozone, rendering the financial role of the EFSF/ESM entirely ancillary to the unlimited fire power of the central bank.

As for relations with Greece, the ECB’s new program protects Germany from pressures by the Greek government, which deprives Athens of its most important playing card: the potential ability to destabilize Spain and Italy in the event of an uncontrolled Greek default. With a hint of satisfaction, already some German sources note that the OMT program represents the most powerful line of defense for Spain and Italy in the event of an implosion of the Greek crisis. Not by chance, Greek Prime Minister Antonis Samaras returned empty-handed to Athens after his recent visit to Berlin, and it is likely that his subsequent visits will not produce any better results over the course of the next 12 months, roughly the amount of time left before the German elections.

In the upcoming days, Samaras will try to get the green light from his parliament for a program of spending cuts and revenue increases of €11.5 billion, equal to 6 percent of Greece’s GDP. However, despite expectations in Athens, this provision will not pave the way for a second restructuring of the Greek debt, which is currently mostly held by the ECB, EFSF and IMF. Yet again, Samaras will be forced to bide his time and wait for the reconfirmation of Angela Merkel in her third mandate as chancellor next fall. The White House also finds itself in a similar position although the time horizon is much shorter; it has been reported that U.S. officials have already recommended freezing any action or decision on the Greek crisis until after the U.S. presidential elections in November.

In the meantime, the ECB will help.

Authors

Domenico Lombardi

Image Source: © Cyril Iordansky / Reuters

Wrong Signals on Religious Rights in Germany

Jonathan Laurence — Fri, 14 Sep 2012 00:00:00 -0400

The Cologne court's decision to halt non-medical circumcisions earlier this summer marks a new low for religious freedom in 21st century Europe. It is the latest dip in a slippery slope that began with the condemnation of burkas and other forms of extremism but has landed squarely in the mainstream of religious practice.

In January, Dutch MPs called Islamic headscarves "a symbol of oppression." Months later, the French Prime Minister suggested rethinking "ancestral traditions that are out of sync with the modern era," such as ritual animal slaughter.

After the Cologne ruling, hospitals in Switzerland and Austria also suspended circumcisions. Last month, a Norwegian official proposed raising to fifteen the minimum age at which a boy may undergo the procedure – in direct contravention of Muslim and Jewish rites.

Ironically, these debates have sharpened at the very moment when European countries, led by Germany, had begun to make space for its newest citizens’ "ancestral traditions" alongside their own. As in neighboring countries, the German government realized it couldn't do without a legitimate administrative partner if it was to assure the same rights – and corresponding state oversight – enjoyed by other recognized religions practiced by German citizens. Before the establishment of state-mosque relations, expansion of religious rights for Muslims in Germany happened largely in the courts, an arduous and time-consuming process that took for granted an adversarial administration.

Through institutions like the Deutsche Islam Konferenz (DIK), federal and local authorities have assumed ownership of state-mosque relations. To Chancellor Merkel's credit, the DIK is arguably Europe's most successful example of its kind. Its six years in existence have sent a strong signal to the real protagonists of religious integration under the constitution – local administrators – to engage and incorporate Islamic associations in their own cities and towns. As a result, for example, North-Rhine-Westphalia implemented large-scale Islamic education in public schools and Hamburg concluded an historic concordat with its Muslim communities.

At this moment of generational change, however, public debate has not helped observant Muslims blend into their new institutional contexts. Politicians perpetuate commonplaces and manufacture debates, ranging from the claim Muslims engage in willful deceit, to accusations of child endangerment or animal torture. Far-right groups repeatedly taunt mosque-goers with the prophet cartoons that caricature Muhammad, sometimes provoking major urban unrest.

Questioning whether Islam "belongs to Germany” is nowhere near the same register as "unerwünscht" of the bad old days. Nor does it represent much progress in the decades since "Deutschland ist kein Einwanderungsland" or "Kinder statt Inder." These slogans contribute to the perception of a hostile state and society that Muslim minorities are being asked to "integrate" into with a smile.

Despite the importance of robust debate to a well-functioning diverse society, the circumcision moratorium signifies a qualitatively different threat. Unlike the case of head coverings or halal meat, opposition isn't motivated by fears of conquest or the desire to consign religion to the "private sphere" (It's hard to think of a more discreet profession of faith.) Instead, the ban signals a frontal attack on the religion itself – and like the proposed restrictions on halal slaughter, it ensnares Jews as well.

State by state, prominent outsiders are being enlisted to reach a compromise that would allow for circumcisions under tighter regulation. And it is not unreasonable to assume that religious practices will continue to evolve as a function of place and circumstance, if the precedent of 19th century Judaism provides a glimpse of what to expect. Many Muslims in the West have started donating to charity instead of carrying out ritual slaughter at feast time. The sightings of the moon that set Ramadan's start and end are increasingly likely to rely on European measurements. European Muslims have begun theological doctorates at local universities, and imams have a greater familiarity with local languages and mores. Still, the implicit correlation between proposed religious reforms and social integration is tendentious: the real contest lies elsewhere, in schools and on the job market.

Opponents to mainstream Islamic and Jewish practices often couch their intentions in laudable terms, mobilizing on behalf of free speech and women's or animal rights. However, they undermine religious rights guaranteed by the same constitution they brandish. This hardens positions and politicizes religious practices.

Most damaging of all, they weaken the movement to synthesize "ancestral" and European state traditions embodied by the participants of Islam councils like the DIK. This places religious leadership in the unenviable position between the "hammer" of the State and the "anvil" of Community. If current trends prevent them from delivering basic religious freedoms to their constituents, what's to keep European Muslims from searching elsewhere for a more aggressive brand of advocacy?

Authors

Jonathan Laurence

Publication: Der Tagesspiegel

Image Source: © Vincent Kessler / Reuters

Will the Euro Survive?

Liaquat Ahamed — Mon, 20 Aug 2012 00:00:00 -0400

Editor’s Note: Liaquat Ahamed delivered this speech on the future of the euro at the 2012 Sun Valley Writers’ Conference. Ahamed, who is a Trustee of the Brookings Institution, won the 2010 Pulitzer Prize for History for Lords of Finance: the Bankers Who Broke the World (Penguin, 2009). Brookings President Strobe Talbott asked Mr. Ahamed to share his speech on the Brookings web site.

Europe is today at a critical juncture in its history. In the fourth year of a giant financial crisis that never quite seems to get resolved and keeps spiraling on, hundreds of billions of dollars of capital is fleeing the weaker countries. It is tearing the banking systems apart. It has driven several governments close to insolvency and default. The economy has reeled back into recession for the second time in three years. People are now talking about a lost decade. More worrying, some parts of the continent are in an actual deep depression. Unemployment in the so-called economic periphery of Europe—Greece, Portugal, Ireland, and Spain—has risen above 20%. In some parts youth unemployment is as high as 50%. These are Great Depression sort of numbers.

Not surprisingly this is bringing political turmoil. In the last year, 11 of the 17 eurozone governments have been rejected in the polls or fallen prematurely. Extremist parties, especially nationalist ones, are on the rise. Support for the euro in both the weak countries and the strong countries is eroding.

What is particularly scary is how impotent the authorities seem to be. Massive centrifugal financial forces are ripping through the eurozone. And yet, whatever the authorities try seems to have no impact. In the last two years, the leaders of the euro countries have held 19 summits; they have created a bailout fund of close to one trillion euros; the Greek debt has been restructured not once but twice, and a third makeover seems to be on the cards; the European Central Bank has sought to support the government bond market in various ways and pumped in three trillion euros into the banking system. Most recently they have agreed to use the centralized bailout fund to recapitalize the Spanish and Irish banking systems.

And yet nothing they have thrown at the problem has worked; indeed matters seem to be getting worse.

What is fascinating is that in commentary from this side of the Atlantic the overwhelming consensus is that the eurozone, as it is currently constituted, cannot survive. Whereas most Europeans—apart obviously from the British who are a breed apart—believe fervently that the euro will hold. When you point this out, Europeans will typically reply that this is because Americans don’t fully appreciate the political dimension of the single currency. To most Europeans monetary union is much more than just an economic arrangement. It is a reflection of a much deeper political commitment to an integrated Europe that has motivated the continent’s statesmen since the Second World War. And until you appreciate that, Europeans insist, you will never fully be able to understand what is going in Europe.

This paper tries to address three questions. First what led to the creation of the euro in the first place? Second how did it get into the mess that it is in today? And third, why has it been so difficult for the Europeans to dig themselves out of the hole they are in? It deals less with the pure economics of the situation, and more with the politics of the euro—and in particular the role and position of Germany.

****

The idea of a unified Europe has been around for a long time. As far back as the18th century, one finds George Washington writing to the Marquis de La Fayette that “one day, on the model of the United States of America, a United States of Europe will come into being.” And already by the middle of the 19th century, visionaries like Victor Hugo had begun dreaming of a single European currency.

But it was only after the Second World War when the nations of Europe saw themselves squeezed between the two great superpowers, that the idea got any real traction. The right alignment of geopolitical forces was clearly a big factor behind the European idea. But essentially it was a small group of French and German statesmen who really gave life to the idea.

The initial architect was Jean Monnet. Born in 1888, he was the son of a cognac merchant and entered his father’s business at 16. He happened to stumble into international economics during the First World War when he was drafted to work on the challenge of getting Britain and France to cooperate economically. For the next twenty years he alternated between two quite improbable careers, on the one hand selling cognac, which sounds like a very pleasant and relaxing way of life, and on the other a high-flying career as an international financier and civil servant, including, by the way, a stint in his early thirties as the deputy secretary general of the League of Nations.

After the Second World War, he came up with a scheme that became known as the Schuman Plan. France was then the biggest steelmaker in Europe, but had no coal to speak of. Germany on the other hand had the largest coalfields in Europe. He proposed that France and Germany pool their resources in coal and steel. In this way Germany would be guaranteed a market for its coal, and France would be guaranteed a permanent supply of raw materials.

When he first advanced the idea, Monnet saw it as a defensive measure. In the immediate post-war period the French were not surprisingly deeply mistrustful of the Germans. But, ever practical, Monnet believed that a partnership with Germany would protect the French steel industry and thus restore prosperity to Northern France.

There was also an idealistic dimension. The hope was that the two countries, which had over the previous 80 years fought three terrible wars, would in the process learn to work with each other.

The European Coal and Steel Community did not in fact achieve very much in economic terms. But it provided the key psychological impetus for cooperation between the key nations of Europe and in 1958, under the Treaty of Rome, six of them committed themselves to creating a free trade zone.

Monnet was no Utopian. He understood that it was no easy matter to forge an economic federation out of a bunch of countries, all with different languages and customs and laws, many of which had been repeatedly at war with each other over the centuries. So his approach was to start small and then step-by-step to chip away at the obstacles to trade.

Monnet may have been the economic architect of the Common Market. But the credit for the political vision that an economic bond between the countries of the continent would not only bring prosperity but also peace in its wake belonged to two statesmen—Konrad Adenauer, the first chancellor of postwar Germany and General Charles de Gaulle of France.

Adenauer had been mayor of Cologne between 1917 and 1933. Dismissed after Hitler took power, he spent the years of Nazi rule as a private citizen, in and out of jail, including after the failed assassination attempt against Hitler in 1944. In 1949, at the age of 73, he became West Germany’s first chancellor, a position he held for the next 14 years. When he finally retired in 1963 at the age of 87, he was the world’s oldest elected leader.

As a Catholic from the Rhineland, the area of Germany both physically and culturally closest to France, he was deeply suspicious of the sort of Prussian militarism that had caused Germany so many of its problems and was acutely sensitive to the German responsibility for two world wars. As chancellor he decided not to oppose the indefinite division of Germany that occurred after the war, but instead to accept it and focus all his efforts on rehabilitating Germany in the eyes of the rest of Europe.

In 1958 he met Charles de Gaulle, and was totally captivated. De Gaulle was a larger-than-life figure. He had this wonderfully overblown view about the destiny of France and was infamous for his grandiose rhetoric —over the top statements like “France cannot be France without greatness.” He had also developed a rather epic view of himself, seeing himself was one of those handful of French heroes, people like Joan of Arc, Napoleon Bonaparte, or Clemenceau, called to greatness to save their country at a moment of national weakness.

For all de Gaulle’s grandiosity and bluster, he was actually quite a realist. He had been deeply marked by the constant military defeats to which France had been subject and recognized that on its own France would be condemned to be a second-rate power. But at the head of Europe it would have to be accepted as part of the first tier.

“Europe is the means by which France can once again become what she has not been since Waterloo: first in the world,” he declared.

For his part Adenauer saw the Common Market as a way for Germany to earn its way back into the community of nations. In the early 1950s, Germany was still occupied by foreign troops and still viewed as a problem country. Adenauer realized that by joining up with France and ceding some degree of sovereignty to Europe, Germany could restore its own legitimacy as a nation. He was also fully aware that German leadership within Europe was at that stage unthinkable. So he agreed to take a back seat and allow France to be in the driver’s seat. What made that acceptable was his admiration for de Gaulle.

That Franco-German partnership, with France behind the wheel and Germany providing the economic motor, was to provide the formula for the next 35 years.

In its first two decades, the European Common Market was an enormous economic success. Trade between the European countries increased fourfold, much of the impetus coming from the West German economic miracle. As a consequence countries within the community grew at double the rate of the countries like Britain, which did not join.

****

While the European Community was remarkably successful in achieving free trade in goods and to a lesser degree services, its experience with money and currency was much more checkered.

In the early 1970s Europe was hit by a series of shocks including the oil price rise and the collapse of the Bretton Woods system of fixed exchange rates. For a variety of reasons, Germany was able to handle those economic shocks much better than the other members of the Common Market and it emerged as the unquestioned economic powerhouse of Europe.

With the anchor of the dollar gone and fearing the sort of instability that had led to the currency and trade wars of the 1930s, European countries decided to tie themselves to the deutschmark, the German currency. In effect the mark would replace the dollar within Europe. The driving force behind this arrangement, which came to be known as the European Monetary System, was again a Franco-German duo, Valery Giscard d’Estaing of France and Helmut Schmidt of Germany.

Their careers ran in parallel. They both came to power in May 1974, within 11 days of each other, and held office for almost the same length of time, 8 years in one case and 7 years. Each had been his country’s finance minister before becoming the head of government and both of them understood money.

Despite their different backgrounds—Schmidt came from a humble middle class family of teachers from Hamburg, while Giscard had somewhat aristocrat pretentions—they had very similar personalities, difficult men who did not suffer fools gladly.

The main push for the European Monetary System again came from the French. Throughout the late 19th and the first half of the 20th century, even though Germany had been the industrial giant of Europe, France had actually been the dominant country financially. For example, Paris had always been much more of an international financial center than Berlin and France had always had much larger gold reserves than Germany. By the 1960s all that had changed. France was now financially in second place within Europe. Giscard decided that the way to reestablish his country’s credibility in financial matters was to piggy-back off the German currency.

Schmidt’s motivation was almost the opposite. He was worried that German banks and insurance companies were becoming so dominant within Europe that a reaction was bound to occur. He conceived of the European Monetary System as a way to make German economic might less obviously visible.

Over time, however, the French became increasingly dissatisfied with the European Monetary System. By tying the franc to the deutschmark, France did get the benefits of German monetary stability. But it also meant that all decisions about interest rates in France were taken by a bunch of Germans in Frankfurt. And so the French began to push for full monetary union, run by a full European central bank, believing that monetary union would allow France to have its cake and eat it too—to get all the benefits of a German-style hard currency but with a seat at the table.

At this stage French and German attitudes began to diverge. Both sides embraced the need for a step-by-step approach, which has always been the hallmark of the European way of handling such issues. But at each juncture, France always seemed to want to take bigger steps than Germany. The Germans, supported by the Dutch and most central bankers, kept arguing that Europe was not yet ready for a single currency. The structure of the economies had to converge first. Once these fundamentals were in sync, then countries could think of fixing exchange rates and moving to monetary union. Whereas the French, supported by the Belgians and the bureaucrats in Brussels, believed that it was possible and necessary to force the pace somewhat. Take bolder steps, they argued, even if these seemed at the time premature. That would force changes in economic policy and bring about convergence faster.

By the late 1980s this difference had led to a stalemate. It all came to a head in 1989 when the Berlin Wall came down.

****

Which brings us to the third great partnership between a German and a French leader, that between Helmut Kohl and Francois Mitterrand. Coming to power and in the early 1980s, both would end up as the longest serving leaders of their respective countries since 1870—Mitterrand for 14 years, Kohl for 16.

By virtue of the generation that they were born in, both were acutely aware of the intertwined and tragic histories of their two countries. Kohl had been born in 1930 in the Rhineland, close to the French border. He would take foreign visitors into the garden of his home there and show them the countryside around, and talk very emotionally about how the soil was soaked with the blood of French and German soldiers.

Mitterrand had been similarly marked by the war. Born in 1916, the year of the Battle of Verdun, he spent 18 months after the Fall of France in 1940 in a German prison of war camp. After twice trying to escape but being recaptured, he succeeded on his third attempt. But he often spoke about his experiences as a German prisoner of war.

They had contrasting personalities. With his jovial manner and provincial accent, Kohl liked to give the impression of being a good-hearted country bumpkin. He was constantly being underestimated and mocked in the press for his lack of sophistication. Mitterrand by contrast was the epitome of sophistication, an aloof intellectual who kept his cards close to his chest and developed a reputation for cunningness and opportunism.

Despite this and despite the fact that they did not share a common language—all their conversations had to pass through interpreters—they struck up a great friendship. There is, for example, a very poignant photo of the two of them holding hands at a memorial ceremony for the war dead of Verdun.

The fall of the Berlin Wall in November 1989 at first created a deep rift in their partnership. When it happened Kohl decided to grab history by the horns and, without consulting any of his allies, developed a plan for German reunification, which he then presented to the world. Mitterrand since 1981 had been predicting that the Soviet Union would fall apart and that Germany would be reunified. Nevertheless when it happened, it occurred so fast that he was taken completely by surprise. On learning about Kohl’s fait accompli, he supposedly threw a temper tantrum lasting several hours.

Over the next month there ensued a flurry of negotiations between the two leaders. Fearful that a united Germany would go off on its own and upset the European balance of nations, Mitterrand kept threatening to veto German reunification. Finally in order to get the French to accede, Kohl offered monetary union as a quid pro quo, arguing that this would guarantee that a united Germany would be irrevocably bound to the rest of Europe. And so the bargain was struck: the single currency in return for German reunification.

Monetary union was therefore a fundamentally flawed project from the start, pushed for all the wrong reasons. Neither Kohl nor Mitterrand had any clue about finance and allowed political considerations to trump economics.

From an economic point of view monetary union had two big flaws. First, such an arrangement only really makes sense in a large continental-size area like Europe if workers can move freely from areas of high unemployment to those where jobs are plentiful. That is essentially why monetary union in the U.S. works pretty well. Americans think nothing of moving from state to state. So, for example, when a housing bubble bursts in, say, Nevada, unemployment there may shoot up for a while—but, over time, workers will move out of the state looking for job opportunities elsewhere. By contrast, in Europe, workers are much more tethered to their local economies by linguistic and cultural ties. As a consequence pockets of deep unemployment can persist for years and even decades.

The second problem is that, in a single currency area, credit conditions are by definition roughly the same for all regions, which only makes sense if the member economies are at roughly comparable stages of development. Otherwise the one-size-fits-all credit policy can cause all sorts of problems, which in Europe it did.

The economic flaws were important. But even more significant for today’s situation was the fact that from the start the single currency was never popular with the man in the street in Germany. The deutschemark was a symbol of Germany’s postwar economic success and the public feared that abandoning it would sap German economic might. And it did not help that the Bundesbank, the German central bank, made no secret of being vehemently against the single currency. In fact most of the economic establishment was against the idea. In early 1998, as the deadline for the single currency approached, 155 German professors of economics signed a letter proposing that the whole scheme be put on the back burner.

On this side of the Atlantic, most economists, on both the left—people like Paul Krugman—and on the right—people like Marty Feldstein—were also deeply skeptical of the idea. But these criticisms were dismissed, especially in France, as self-serving rationalizations by Americans fearful that the euro would compete with the dollar as the world’s main reserve currency and thus undermine U.S. economic dominance.

****

For all these sour predictions, the first few years of the euro were surprisingly trouble-free. Public finances in southern Europe were actually quite disciplined. Italy managed to cut its budget deficits, and though some creative accounting was involved, progress was very real. In places like Spain and Ireland, massive inflows of capital set off a boom, which allowed the government to pay down its debt to remarkably low levels. The big exception was, of course, Greece—but we did not know the extent of the problems at the time because it was systematically cooking its books.

The real problem was not in the public finances but in the one-size-fits-all monetary policy, which kept interest rates in the Southern Tier far too low during the good years. This in turn created a credit and real estate bubble in places like Ireland and Spain. Another effect of this boom was to drive up wages. So in the first decade of the euro, while the Germans agonized about how uncompetitive they had become, and went furiously to work restructuring their economy and restraining wages, the southern European countries were letting it rip. During the 2000s, labor costs in Germany rose 20%, in Italy by 40%, and in Spain they rose 60%.

As a consequence by 2008, the economies of southern Europe had become seriously uncompetitive and were really only being kept afloat by flows of money from French and German banks: money that would prove to be very fickle.

When the crisis hit in 2008, both the U.S. and the Europeans were determined not to make the same mistakes as the Japanese when faced with similar troubles back in 1990. So on both sides of the Atlantic interest rates were cut to the bone, though the Fed was a little quicker off the mark than the European Central Bank. Bank balance sheets were cleaned up and banks were recapitalized. Again the U.S. authorities acted with greater dispatch and more aggressively than the Europeans. And finally governments on both sides of the Atlantic attempted to jump-start their economies by allowing budget deficits to expand. In Europe this process was much more automatic because the social safety net there is more extensive than here. In the U.S., it took a big fight in Congress to put the same stimulus in place.

If the Europeans essentially followed the same playbook as we did, why then are they in such worse shape?

The financial crisis has uncovered the fundamental structural flaw of the euro system. In a downturn European economic policy operates in a completely perverse way. It actually works to make the weakest parts of the eurozone even weaker. The problem is that power is vested with the member states. As a consequence the economic response to a downturn has to occur largely at the national level.

Take Ireland for example. The cost of bailing out the Irish banks was about E70 billion. In the scheme of things this is not a lot of money. But Ireland is a small place: 4 million people with an economy the size about the size of Connecticut. Because the Irish taxpayers had to foot the whole bill, it ended up amounting to some 40% of their GDP, something like 70,000 euros per household. In relative terms it was the second largest bank bailout in history, only exceeded by what happened in Iceland. Had American taxpayers to bear a comparable burden, the cost here would have been $6 trillion. And not only did the Irish taxpayers have to come up with money for the banks, they also had to lay out had for their own unemployment insurance, all at a time when their tax revenues had collapsed.

To understand the effect of this, try the following mental exercise. Just suppose the cost of cleaning up the Nevada housing bubble, all those bad mortgages, and resulting bank losses, and unemployment checks had been left entirely in the hands of Nevada taxpayers. How do you think Nevada would have fared?

Like the U.S., where the epicenter of the housing bubble was concentrated in a few sunbelt states—Nevada, Florida, Arizona, California—the European economic disaster was similarly concentrated in a few countries, Portugal, Ireland, Spain, and Greece. Now, the U.S. economic woes are by no means over. But compared to Europe, we are in much better shape. And what has helped the U.S. is that its response to the downturn was largely federal, paid for through the federal budget. Neither Nevada nor Florida nor California nor any of the states that were badly hit had to cope with the crisis on their own. All the states chipped in. And the astounding thing is that it all happened quite automatically.

The political machinery kicked into gear and we had New Yorkers and Midwesterners paying for the mistakes of Floridian homeowners or bailing out a bank based in North Carolina or financing unemployment checks in Michigan. We did not have lots of op-eds decrying the inherent fecklessness of people in Reno or Miami Beach. We did not have demonstrations in the street. And we did not need 19 different summits of state governors to figure out how the burden should be shared.

****

That brings me to my final battery of questions: How does Europe get out of this hole and will the euro survive?

Unfortunately I have no idea. No one has. It depends on too many imponderables: on how much economic pain the politicians of southern Europe are willing to impose on their electorates, on how much money the Germans can be persuaded to put on the table, and what they calculate the costs of a breakup to be.

But as you can tell from the tone of my remarks, I am pessimistic. The dilemma is that there is almost nothing that Spain, Ireland, Portugal, and even in some respects Greece, can do by themselves that will get them out of the hole they are in. All of them are caught in a vicious downward spiral where the only action available to them, which is to curb borrowing by taxes or cutting government expenditure, will deepen their recession, throw more people out of jobs, increase the bad debts of their already fragile banking systems and possibly even worsen their budgetary situations.

The solution to the euro problem will therefore have to come from some action at a European-wide level. And that will be largely decided in Frankfurt and Berlin.

There are three big hurdles that I see.

First the German diagnosis of the problem is totally at odds with what most of the others think. Without going into abstruse economic debates, the Germans basically believe that the problem arose because of failures in the way each of the southern European countries managed its economy. So they insist that the solution is for the southern Europeans to get their own house in order. Angela Merkel supposedly likes to quote Goethe: “If everyone just sweeps outside their door, the whole city will be clean.” It is a view that owes as much to moral philosophy, in particular the Lutheran stress on the virtues of self-sufficiency, than to any economic theory.

The opposing view is that the Europe is in trouble primarily because of systemic failures in the way the eurozone operated. Thus the solution lies in some form of collective European action.

As with almost all economic debates, there is some truth to both sides. The Germans are right that the southern European economies have been badly mismanaged. Greece had an egregiously corrupt government. Italy squandered an opportunity to reform itself. Others like Ireland and Spain were unlucky, short-sighted and foolhardy.

But those who argue that the euro had some fundamental systemic flaws that enabled all this bad behavior on the part of governments and banks are also right.

Because the Germans have such a different interpretation of the problem, they end up being the spoiler. Every serious proposal advanced to deal with the systemic issues—some form of burden-sharing through eurobonds, a European bailout fund for banks, more active use of the ECB to stabilize government bond markets, more aggressive monetary policy by the central bank—ends up being vetoed by an intransigent Germany. As a result, aside from its small group of allies, Finland, Austria and the Netherlands, Germany is becoming increasingly isolated in the European corridors of power.

The second problem is the conflict about money: who pays and how much. There is a very simple tradeoff. Southern Europe will only be able to grow if it can restore its competitiveness by some very painful and deep cuts in wages. The more money that Germany puts on the table, the less the required cut in the standard of living of the average Spanish or Italian worker. The Germans have a nightmare that they will end up in the sort of position that northern Italy is in, which has been transferring money to southern Italy ever since the unification of Italy 150 years ago.

The third problem, which is the biggest problem as far as I am concerned, is the erosion of commitment within Germany to the euro. As I have tried to describe in this talk, for the last 60 years German leaders, from Adenauer to Kohl, men who had lived through the Second World War and its aftermath, saw in the European project a way for Germany to atone for its sins and rehabilitate itself in the eyes of the rest of Europe. That is why they allowed themselves to be bounced by the French into a single currency that they did not really believe in. That generation of leaders is now gone. The new generation of Angela Merkel and Wolfgang Schauble grew up in a postwar Germany that is proud of German economic achievements and sees little reason to keep apologizing for the actions of its grandparents.

****

In 1953 the novelist Thomas Mann gave a speech to an audience of students in Hamburg. The central challenge confronting the country, he told them, was the deep mistrust of German intentions in the rest of Europe. As a result their goal should be to strive not for “a German Europe but a European Germany.” And thus, during the following fifty years the Germans assiduously avoided any hint that they sought continental primacy. They always tried to keep a low profile in Europe, to avoid the leadership position, leaving that role to France. And by the way the French were always happy to oblige.

Here is the great irony of the current situation. In the seventy years before Thomas Mann spoke, the main threat to European stability had indeed come from German attempts to dominate Europe. The continent now faces the opposite problem. The only hope for stability is actually for the Germans to step up to the plate and take on the mantle of leadership within Europe, with all the burdens and responsibilities that go with it. Frankly that goes against all the instincts of the generation that has grown up in post war Germany.

Economists do not have a great reputation for their forecasting ability. Understandably so. After all they seemed to have missed every single major crisis that we have had over the last four decades. This is one exception. In 1997 the American economist Marty Feldstein wrote an incredibly prescient piece in Foreign Affairs in which he argued that the single currency, far from cementing the European Union, would, in his words, “lead to conflicts over economic policies … that could reinforce long-standing animosities based on history, nationality, and religion.” He has proved to be right.

This crisis has thrown open a new faultline across Europe, between Germany and all the other major countries, especially France, Italy, and Spain. It is a conflict that is destined to remain with us for decades to come and will define the future of the continent.

Authors

Liaquat Ahamed

Publication: Sun Valley Writers' Conference

Greece's MAD Strategy

Thomas Wright — Mon, 11 Jun 2012 00:00:00 -0400

On June 17, Greece faces its second national elections in six weeks. Alexis Tsipras, the 37-year-old leader of Syriza who wants to reject the terms of the EU bailout while remaining in the euro, has a serious shot of topping the polls. To some observers, defaulting on debt while staying in the Euro is a contradiction, but there is a clear strategic logic to Tsipras's position.

Tsipras believes his trump card is that Greece is too big to fail. So, rather than touting a graceful way out of the euro, he wants the prospect of a Greek exit to be as horrific and contagious as possible -- an economic cataclysm that would drag everyone else down, as well. Essentially, he is arguing that Greece and Germany exist in a state of Mutual Assured Destruction: Germany will never pull the plug on Greece regardless of what it does because the risk to itself is just too high. And if Tsipras can convince the Greek people of this, they may vote him in -- they'd get to have their cake and eat it too.

Read the full article at foreignpolicy.com »

Authors

Thomas Wright

Publication: Foreign Policy

A Plan for Euro Bonds Revisited

George L. Perry — Tue, 22 May 2012 13:01:00 -0400

France’s new president François Hollande is expected to push for jointly-issued eurozone bonds this week, a move German Chancellor Angela Merkel is likely to oppose. The political resistance to backing the bonds of other member nation is understandable. But so is the resistance to foreigners dictating a nation's fiscal policies. A well-designed system for euro bonds would provide strong incentives for responsible fiscal actions over the long run and greatly reduce the likelihood of that special assistance if needed in the future. The proposal I offered in 2010, “A New Plan for Euro Bonds,” does this.

Authors

George L. Perry

Meet the GUTS: The Rise of Germany, the United States, Turkey, and South Korea

Bruce Jones and Thomas Wright — Thu, 17 May 2012 00:00:00 -0400

Friday's G-8 summit at Camp David may seem something of an oddity -- an archaic reminder of a time before the rise of the BRICs and the supposed decline of the Western powers. But the West is still very much alive and kicking -- and, driven by its most dynamic members, has a chance of remaining on the top of the heap for the foreseeable future.

The West is not in decline, at least not in its entirety. Rather, the financial crisis has created a two-speed West. Four large countries -- Germany, South Korea, Turkey, and the United States -- are actually increasing their international influence, while the others are stuck in a rut.

Ironically, America's obituary as a great power has repeatedly been written over the past three years even as it has grown stronger on multiple fronts. U.S. influence in Asia has risen at a rapid clip since 2008, driven largely by regional anxiety about Chinese assertiveness. The United States deepened its traditional alliances with Australia, Japan, and South Korea. It developed strategic partnerships, including with the Philippines, Vietnam, and others in ways that were previously unthinkable. Paradoxically, Chinese economic growth has weakened its own geopolitical position and benefited the United States. Such are the ways of world politics.

The United States is rising in other areas too. On national security, the U.S. position is also stronger than it has been in many years. The U.S. military and intelligence services have shown impressive dynamism in bringing al Qaeda to the brink of total defeat, something many analysts believed unlikely only a few years ago. The Pentagon has been at the forefront of the drone and robotics revolution, which may give it an edge in 21st-century conflicts. Meanwhile, U.S. diplomats have developed innovative new means of international cooperation, notably with the Nuclear Security Summit and the Open Government Partnership.

America's greatest vulnerability remains its weak economy. Significant challenges lie ahead, but it is worth noting that the United States has significantly outperformed the eurozone and has better prospects for growth than most other Western states. It remains a hub of innovation: Just consider the rise of social media and the technology-driven exploration for shale gas. Over the long term, the fiscal challenges confronting the United States must be weighed against the very real -- and very underestimated -- internal strains on the Chinese and Indian economies.

It's not just the United States that is propping up the West. Germany stands apart as a rising power amidst a weakened Europe. Its unemployment rate is at a post-Cold War low and its timely market reforms have allowed it to export its way out of the recession. The euro crisis is Germany's greatest challenge but, ironically, it has also made Germany the continent's preeminent diplomatic and geoeconomic power: For better or worse, Chancellor Angela Merkel's government has won argument after argument about the future direction of the EU, often despite deep reservations from other member states. Francois Hollande's election in France will complicate but not erode Merkel's position. And even if she loses power next year -- an unlikely prospect despite her recent setbacks in regional elections -- a different German leader will continue to profit from Germany's economic strength within Europe.

In East Asia, South Korea's strong economic performance since the financial crisis led some analysts to argue it should be added to the BRICs, but as one of America's oldest and most reliable allies, it belongs in the West's column. It has become a powerhouse of high-end manufacturing and is on course to become richer than Japan in per capita terms within the next five years. Internationally, South Korea responded robustly and responsibly to North Korea's aggression by strengthening the alliance with the United States and embarking upon controversial defense cooperation with its old enemy, Japan. It has also taken an active role in upholding the international order, hosting the G-20 summit in 2010 and the nuclear security summit in March.

Turkey, a longstanding U.S. ally and NATO member, is the fourth member of the rising West. Prime Minister Recep Tayyip Erdogan has transformed Turkey into a regional powerhouse -- its economy has more than tripled under his watch, registering growth rates on par with China. After years of eschewing its Muslim identity, Turkey is emerging as a model, albeit an imperfect one, for Islamic democrats in the Arab world. Turkish assistance is indispensable in dealing with the Syrian crisis, and its diplomats play a pivotal role in mediating international negotiations with Iran. Yes, the new Turkey has a tendency to chart its own path -- but even if Erdogan is often at odds with other NATO members, Turkey represents a bridge from the West rather than an island apart from it.

But even as these four countries have expanded their influence, the West is also hobbled by four countries that have yet to recover from the financial crisis: Britain, France, Italy, and Japan. All suffer from lower growth rates than the rising West and, unlike the United States, they have not compensated for economic weakness with bold advances in other areas. Britain and France tried to take the initiative with the Libya intervention, but the war merely illustrated their yawning technological shortcomings, and showed how heavily NATO allies rely on U.S. airpower.

Britain has the best chance to join the rising West if it can turn its economy around. Its leadership of the G-8 next year offers an opportunity to demonstrate some of its old flair for global leadership, especially if it takes creative steps to reach out to dynamic new players like Turkey and Indonesia. Another state, Australia, is between the two Wests -- it avoided a recession after the fall of Lehman Brothers but has not had the impact of a rising power in recent years. However, its geographical position, close security relationship with the United States, and vast energy supplies means it is likely to become more influential in global politics.

The rising West is a force to be reckoned with. It is no coincidence that U.S. President Barack Obama has been closer to the leaders of his fellow rising Western states than to the leaders of the rest; he named South Korean President Lee Myung Bak and Erdogan as two of his closest international allies. (He appears not to be as close personally to Merkel but Germany's centrality in the euro crisis means he is in constant contact with her.)

So don't write off the West yet. The rising powers in the developed world will not always agree, but when they do they will be hard to resist. And they will be important interlocutors for the BRICS as they engage the Western order. Unfortunately, Friday's G-8 summit is unlikely to harness their power -- Turkey and South Korea's leaders are at home.

Perhaps these rising powers need an acronym if they are to be taken seriously. Is it time for the BRICS to meet the GUTS of the West

Authors

What French and Greek Election Results Mean for European Economic Unity

Justin Vaïsse — Tue, 08 May 2012 00:00:00 -0400

Editor's Note: In an interview with the Diance Rehm Show, Justin Vaisse speaks about the current situation in France and what the election of Francois Hollande as France's President means for Europe and the world.

Diane Rehm: And turning to you, Justin Vaisse, during his acceptance speech, Francois Hollande promised to behave like a normal president. What does that mean?

Justin Vaisse: Francois Hollande has campaigned on his contrast with Nicolas Sarkozy. He emphasized that where Sarkozy was impulsive, unpredictable, sometimes ostentatious, he would more behave like the sort of standard, traditional definition of the French president which was set by Charles de Gaulle in the ‘60’s and that he would be precisely predictable, thoughtful, less impulsive and that he would be, for that reason, a better partner for his international counterparts.

DR: What is France’s economic status at this point?

JV: France is not in recession as are, I think about now 11 European countries. Growth has been on par with that of Germany in the recent years, but the situation is much more dire in terms of unemployment, which is close to 10 percent, in terms of deficit which has reached 5.2 percent in 2011 and the debt is now nearing 90 percent of GDP. So the situation is not catastrophic, but it is not good either and there is hope that by embodying the new ‘pro-growth’ consensus in Europe, Francois Hollande could precisely give a jolt to that situation.

Listen to the full interview at thedianerehmshow.org»

Authors

Justin Vaïsse

Publication: The Diane Rehm Show

Don't Be Fooled: Integration in Germany is Making Progress

Jonathan Laurence — Mon, 12 Mar 2012 11:56:00 -0400

With his highly selective summary of a 700- page integration report—focusing on the one in four "non-German Muslims" who resist majority society—Interior Minister Hans-Peter Friedrich confirmed his pattern of expressing skepticism about Muslim integration in Germany.

From the moment Friedrich took office, he updated the 1990s conservatives mantra that "Germany is not a country of immigration" for the post-citizenship reform era by arguing that Islam did not truly "belong" to Germany. He thereby inserted himself in a decades-long tradition of conservative politicians in denial of the country's ethno-religious diversity.

Germany is lacking the mainstream political leaders who can take away the punchbowl of nationalism and assume the adult role of informing the German public that they are now a diverse society. The new nationality law may mean that most Turkish-Germans would be born with German citizenship from 2000 onwards, but German politicians have still not fully digested the implications of cultural diversity that follow from that reform.

Diversity Deniers

Friedrich is the latest in a line of diversity deniers who have preferred to wear blinders rather than break the news to the German electorate. These politicians share a basic refusal to accept that the categories of Muslims and German might not be mutually exclusive.

The views of Hans-Peter Friedrich have a long pedigree that crosses partisan lines. They don't appear so different from those of Thilo Sarrazin, the former federal banker who argued that migrant stock was "dumbing down" the country, and who said he felt justified by the recent study.

Sarrrazin, in turn, had significant overlap with former CSU Interior Minister Günther Beckstein in Bavaria, who was an ideological successor to the former Berlin/Brandenburg Interior Minister Jörg Schönbohm.

This national kabuki surrounding the place of Islam in German identity, however, is increasingly belied by a number of encouraging trends in German Muslims' citizenship and institutional integration.

Positive Development

Oddly, the transfer of a Turkish-German prisoner to Düsseldorf last month may turn out to be a far more meaningful event for the future of Turkish-Germans in the Federal Republic. The family of Murat Kaya, a Turkish German sentenced to four years in a Serbian prison, sought the aid of German authorities to allow him to serve his term at home in Germany - and against expectations, their wishes were granted.

The Kaya family had reason to despair. Germany's track record of offering diplomatic protection and claiming "ownership" of Turkish-Germans in the pre-citizenship era had been mixed.

The 1998 Bavarian deportation of "Mehmet," a 14-year-old juvenile delinquent raised in Germany, who spoke only German and who was sent "home" to Turkey, seemed to illustrate perfectly the country's ambivalence toward this minority.

Kurnaz Saga

Turkish-Germans growing up in the decade after "Mehmet" then witnessed the saga of Murat Kurnaz, born and raised in Bremen, who spent five years in American custody (mostly at Guantanamo) after being arrested but never charged on terrorism suspicions.

Shortly after Kurnaz's release in 2006, Green Party chairman Cem Özdemir met with the vindicated Bremen resident and asked in (news magazine) Der Spiegel: "Would it have been possible to get Kurnaz out of Guantanamo sooner?"

Generations spent as "native-born foreigners" intensified the feeling that institutional life lay beyond reach, becoming a self-fulfilling obstacle to Muslims' political integration in Europe.

But the six years since Murat Kurnaz returned to Germany from Guantanamo have seen vast changes in the institutional integration of Turkish-Germans, from the extension of full consular representation to the accommodation of Islamic religious requests alongside other recognized communities.

This time, German federal authorities fought hard to convince Serbians to transfer Murat Kaya to Germany, including making arguments about required medical attention. A publicity campaign by a major regional news outlet contributed to public pressure.

The Milli Görus federation, an Islamist group that seeks ties with German authorities, greeted the news with gratitude for officials' extensive efforts on Mr. Kaya's behalf: "The Justice and Foreign Ministries have sent a strong and positive signal to people with a foreign background. Such signs build trust and strengthen the feeling of togetherness."

Institutional Inclusion

This episode is the latest demonstration of the important role played by gestures of institutional inclusion that German governments have undertaken for the past six years, from the Chancellor's integration summit to the Interior Ministry's German Islam Conference, from local schools making space for Islam within their religious curriculum, to universities training theologians and religion teachers.

Since policy competency over religion falls under local state control - not Berlin's - progress is most visible at the local level. The end of 2011 proved to be particularly eventful. Germany's most populous state (North Rhine-Westphalia) recently announced it would offer Islamic instruction in 130 schools, alongside existing religious classes, for the state's roughly 320,000 Muslim public school students.

This fall, the first class of German Muslim theologians began doctoral studies at four different universities. The University of Tübingen launched a new teacher-training program for instructors of Islamic religion, while Osnabrück University has stepped up its efforts to provide supplementary training to imams for a German context.

Local Efforts

Two local state-mosque forums - inspired by the German Islam Conference - also recently saw the light of day. First, the 40 participants in Baden-Württemberg's "Islam Roundtable" discussed Islam's public image, education, basic liberties, and gender roles and "concrete measures to improve the integration of Muslims and Islam in Baden-Württemberg."

And second, the government in North Rhine-Westphalia initiated the "Islam Dialogue Forum," chaired by the local integration minister, to "intensify and improve the dialogue and cooperation with Muslims and Muslim organizations" that will address integration, education, and inter-religious dialogue.

There are now no fewer than three state-government level ministers in German Länder who are of Turkish origin: Bilkay Önay in Baden-Württemberg, Aygül Özkan in Lower Saxony and Dilek Kolat in Berlin.

The recent arrival on the scene of these three up and coming political stars is a solid rebuke to anyone who thought Cem Özdemir's success was a flash in the pan of German "diversity politics." (Adding to Turkish-German pride, Foreign Policy named Özdemir one of its top 100 global thinkers.)

Who would have guessed, so soon after Thilo Sarrazin's anti-immigrant best-seller "Germany Does Away with Itself," the endless debates about whether Islam is "from" Germany or not, and then the recent revelation of a gruesome series of neo-nazi murders of Turkish-German residents that daily political integration is going better than expected?

Lamenting Wulff

The national and Land-level governments and Muslim organizations are getting to know one another better, and community leaders are being drawn into a context that encourages their continued adaptation to life as a minority in Europe.

Perhaps it's no wonder that German Muslims lamented the recent resignation of German President Christian Wulff, who defied his Christian Democratic party colleagues by declaring that "Islam belongs to Germany."

Muslim groups across the political spectrum spoke out on his behalf to say: "Hey, that's Our President."

Authors

Jonathan Laurence

Publication: Deutsche Welle