Sunday, 12 February 2017

What kind of Europe? - Sunday discussion thread

The perennial "German Question" asks itself yet again right now. Will we see a more German Europe or a more European Germany, especially once the UK leaves the European Union?

Britain as a counter-balance to German and French interests and rivalries was one of the strongest geo-political reasons for staying in the EU, in my personal view. England's and Britain's foreign policy has been dominated pretty well forever by the need to prevent the dominance of Europe by a single power. 

German politicians - reflecting most of the electorate one expects - will always profess not to want German hegemony in Europe. A leading role for Germany, perhaps, but not a dominating one. But one also suspects that having established itself as the leading economic power of the Eurozone, Germany is rather enjoying having its cake. On the one hand, witness the outrage when Team Trump suggested that Germany gains rather unfairly from its membership of the Euro. Yet when it comes to the Brexit settlement, the same Bundesbank thinks it should be able to set the agenda on regulation for the entire continent.

Which is it? Is Germany subject to rules set independently to suit the entire bloc, or is it calling the shots?

Is Germany's massive (and illegal under the Eurozone rules) current account surplus a result of thrift, sensible policy decisions, and a productive workforce or did they simply get their competitive devaluation in first? Germany and the Eurozone are, of course, stuck. If Germany deliberately relaxes its spending and wage policies to unwind some of its competitiveness, then the inflationary pressures would almost certainly require the Eurozone's monetary policy to tighten - setting the rest of the continent back. If Germany continues to be thrifty then it continues to improve its competitiveness against the rest of the Eurozone, sucking yet more of Europe's economic activity Germanywards. Germany can't win, unless it sends colossal amounts of investment to Europe's laggards; and that just ain't gonna happen. So German politicians and bankers revert to the old chestnut: the rest of Europe must become more [economically] German!

This forms the basis of the question that European countries must answer. Do they want to be a collective of friendly but differing neighbouring societies - forever linked by geography, history and some elements of their culture - or do they want to be a more uniform and possibly richer and more powerful unit? They can either be more similar to each other and succeed as a unified bloc or more relaxed about their differences. Integrate further or form a looser confederation. And when they integrate, they must surely accept that they will lose some of the characteristics that made them separately-identifiable societies.


dearieme said...

British policy was to stop anyone powerful and aggressive from controlling the ports in the Low Countries. If the Dutch and Belgians are determined to abase themselves to Germany (for understandable reasons) there's not a lot we can do about it.

AndrewZ said...

Does it really matter who is the dominant power in Europe?

There's no risk of war between any of the nations in the EU. The extent to which any one nation can gain an advantage over the others through diplomatic or economic means is severely limited by the fact that they have to work within the institutional structures of the EU and the Euro. Regulations are increasingly decided through global trade and technical standards bodies rather than at the EU or national level, so they have little room for manoeuvre there either. Germany's current position is about as dominant as any one nation can be within this system. It's a problem for the rest of the Eurozone because it has an adverse effect on their economic growth, but it doesn't really affect us.

It means even less to the rest of the world. Any changes in the balance of power within the EU will have little effect on its protectionist trade policies. The military power of Western European nations relative to the rest of the world is steadily declining. Economic development in China, India and many other countries means that Europe's economic importance is also declining. Its cultural dominance ended when the imperial powers had to give up their empires. In the English-speaking world, British influence has been utterly eclipsed by American cultural exports.

So, it's no longer important which nation dominates Western Europe. As a basis for British foreign policy today it's about as relevant as the Schleswig-Holstein Question.

andrew said...

Looking in from the outside, it does seem that the germans really do not want 'German hegemony in Europe'.

But if they are obviously(*) paying for it, they want control.

IMO, the things that make/made Germany do relatively well are not just thrift and efficiency, it is the culture and the pre-existance of the mittlestand.

A Spanish person who wants to make a thing will probably not know of someone 20 miles away who makes something very much like one of the key components and it would be perfect if they could just slightly adapt it.
Placing a high value of engineering skills means more engineers and these people have a lower barrier to understanding each other.

What will happen next?

Trade follows a gravity model. That Spanish person making a thingy does not just have to be as efficient as a German person making the same thingy, he/she has to be _more_ efficient to cover transport and export (**) costs.
Take into account the cultural issues - you are more likely, all things being equal as a German to contact a German speaking supplier nearby.

following this logic, you will see an increasing number of german factories making the complex components (high value add) and then an increasing number of spanish & other country factories assembling things (low value add) for final sale.

So I think that the north and east EU will become more German and the rest will erm, have an increasing dependence on tourism.

Paying into a central budget where many others pay in too and all get paid out is ok (EU budget). I think Germany also makes large internal transfers - it certainly did in unification.

Paying when it is obviously a transfer so that someone can benefit and benefit more that a german - i.e. subsidising greek train dirver pensions from 55 whereas german train drivers dont get to retire from that age is another - never mind the fact that things are not really that simple -
is not ok.

(**) yes, the eu is supposed to be border free, but, while the internal rates of tax differ - especially VAT, there are costs to sending good over borders - pointed out here by someone else a few months ago.

andrew said...

So, it's no longer important which nation dominates Western Europe. As a basis for British foreign policy today it's about as relevant as the Schleswig-Holstein Question.

Fair, but, it should be noted that :-

"The Second Schleswig War resolved the Schleswig–Holstein Question"

Easy to forget war in Europe when the youngest person who was in it is now over 90, and all the recent ones have been a long way away.
Ukraine is along way away.
The equivalent in Poland is not.

Tony Harrison said...

Andrew's penultimate para (above) is on the money: turning the EU into a "more uniform and possibly richer and more powerful unit" is all very well, but it's almost impossible to see Club Med states such as Greece becoming "uniform" vis-a-vis Germany. They can never be more than client states, vassals if you like, and the anti-German sentiments in Greece (probably other countries too) are still simmering, as shown during the initial phase of "austerity measures" - Greeks have long memories, and their memory of Turkish opression is much further removed in time than that dished up to them under German occupation - within living memory still, for many people. For how much longer can or will Greece undergo 2nd class citizen status in the D-Mark Oops! I mean Eurozone? Seems to me just a matter of time.

Nick Drew said...

That's Germany ... now, what about France?

It must surely be on the cards that 'just Marine' (as we must now call her) upsets the received wisdom about French elections as much as Trump etc ...

FR pulling out of the EUR would be hilarious

We are still watching for Juncker to pull the trigger on all the things he wants to do but has been holding back. Can't wait for the transaction tax

Anonymous said...

we all know of course that nothing can be done until after the French and German elections and the crats must be absolutely sh1ting it over the French outcome.
Assuming it all ends up largely as is however they are still going to have to work hard at sorting out their new even closer union as well as dealing with Brexit negotiations. Crats and States will be under pressure so at particularly from the former viewpoint they are more likely to cut up rough in dealings with the UK.
Moving on from that I can only wonder how Herr sausage on the Berlin tram is going to react when someone has to openly admit to him there will be a formal transfer union to save the Euro and preserve 'solidarity.'
How will they 'spin' it?

Blue Eyes said...

Andrews of various hues make interesting points. Italy was the superstar of the postwar era, until they locked in with the Euro. Did they postively decide to do that? Arguably yes. Have they benefited? Definitely not. Can they decide to row back? Not easily.

France. Well. France. They know, KNOW, they cannot carry on as they are. There was a chap who looked like he might be a reformer and electable except it looks like he might be a generation late in terms of the way he spreads his duck-houses about. So Marine c'est vous.

Nick Drew said...

how Herr sausage on the Berlin tram is going to react when someone has to openly admit to him there will be a formal transfer union to save the Euro and preserve 'solidarity

as I have often said hereabouts, we (Brits) don't fully grasp the depth of sentiment in Germany for 'solidarity' and the prices they have been willing to pay, implementing policies that fly the solidarity flag

(I have lived there, I have spent huge amounts of time there on business - and I see it but don't have a gut-feeling understanding of it)

BUT - whether Transfer Union would be a step too far, well I kinda think it might. But I've been surprised before

Blue Eyes said...

Nick/Anon, people cleverer than I have estimated that if Londoners transferred to the rest of the UK as little as Deutschland does to the rest of the Eurozone then London could abolish income tax.

Steven_L said...

How will they 'spin' it?

As the UK's fault for taking our ball home.

andrew said...

Germans differ from us at the core. Key example:-
If you are 50 yo german, your country's boundaries got redrawn in your lifetime (unification), and again in your parents lifetime (1945) and again in your grandparents lifetime (1919) - and probably in 18xx when germany came into existance.

The British concept and understanding of nationality probably seems between completely nutty and irrelevant to them (never asked).

As such yes, they are v. open in many ways.
However, Different things do set them off

A key one I noticed is - rule breaking whilst they are watching.

Blue Eyes said...

Andrew in my limited experience they don't often think about nationality at all. They feel like Schwabs or Bayerns or doughnuts, etc..

Anonymous said...

"Andrew in my limited experience they don't often think about nationality at all. They feel like Schwabs or Bayerns or doughnuts, etc.."

When you go to Germany look at the cars every car is German look at the manufactured products in the shops they are all German.Herr sausage will always buy German it has been that way since 1945 onwards. Yes they do think about nationality.

Electro-Kevin said...

Whenever I've met Germans or visited Germany (thrice) I've liked them very much indeed, partly because they seemed to like me ! I think they have a superiority complex and - in many ways - they are justified in having one.

It is difficult to overstate the impact reunification has had on their country and the disappointed in East Germany that, just as they are experiencing Western standards of living, they are being forced to share.

Continental style extremism is a very different beast to that which is alleged to exist in Britain (virtually non existent except in the fevered imagination of the Left and the BBC.)

Anonymous said...

"do they want to be a more uniform and possibly richer and more powerful unit?"

BE still seems to think that people are fungible, interchangeable units of production. Were that so, Africa would be the world's richest continent, given its manpower and natural resources. Germans are not Greeks. Hell, Northern Italians aren't Southern Italians.

In a more uniform (i.e. less nationalistic) Europe, the average worker will be poorer, not richer, because in a less nationalistic society it will be easier to import workers who'll accept lower wages and lower living standards. See the UK for details, where real male median wages were lower in 2015 than in 1997. Now some people would be much richer, but they are already very rich.

Anonymous said...

AndrewZ - "does it matter who is the dominant power in Europe?"

Some people are very determined that Russia should not have any power, even in areas which were part of Russia within a couple of decades. And if European electorates voted for the 'wrong' candidates, I'm sure who controlled what would suddenly become important.

When NATO was expanding, I don't remember any national debate, or the parents of soldiers being asked if they were sanguine about the prospects of their children fighting in Latvia or (of all places) Albania.