Angela Merkel’s tenure will be remembered as the cruelest paradox of Germany and Europe. On the one hand, she dominated the continent’s politics like no other ruler in peacetime – and leaves the German Chancellery considerably more powerful than she found it. But the way she built that power condemned Germany to secular decline and the European Union to stagnation.
There is no doubt that Germany is stronger today politically and economically than it was when Merkel became Chancellor in 2005. However, the very reasons why Germany is stronger are the same reasons. for which its decline is assured in a stagnant Europe.
The power of Germany is the result of three massive surpluses: its trade surplus, the structural surplus of its federal government and the influx of money from others into the banks of Frankfurt, due to the slow and endless crisis of the ‘euro.
While Germany is swimming in money, thanks to these three surpluses, much of that money is wasted. Instead of being injected into the infrastructure of the future, public or private, it is either exported (for example, invested abroad) or used to buy unproductive assets in Germany (for example, apartments in Berlin or stocks Siemens).
Why can’t German companies, or the federal government, productively invest these rivers of money in Germany? Because – and this is part of the cruel paradox – the reason why these surpluses exist is that they are not invested! In other words, under the reign of Merkel, Germany concluded a Faustian deal: by limiting investments, it acquired surpluses from the rest of Europe, and from the world, which it could not then invest without losing its future ability to extract more surpluses.
Looking more deeply at their origin, the massive surpluses that gave power to Germany under Merkel are the result of forcing German and, later, European taxpayers to bail out inane bankers in Frankfurt on condition of triggering a humanitarian crisis. in the periphery of Europe (Greece in particular) – a means by which the Merkel government has imposed unprecedented austerity on German and non-German workers (disproportionately, of course).
In short, low domestic investment, universal austerity, and the rise of the proud European peoples against each other were the means by which successive Merkel governments transferred wealth and power to the German oligarchy. Sadly, these means have also led to a divided Germany which now misses the next industrial revolution within a fragmenting European Union.
Three episodes offer a glimpse of how Merkel wielded her power across Europe to build, step by step, the cruel paradox that will be her legacy.
In 2008, as the Wall Street and City of London banks collapsed, Angela Merkel still maintained her image as a tough and financially prudent Iron Chancellor. Pointing a judgmental finger at the debauched bankers of the Anglosphere, she made headlines in a speech in Stuttgart where she suggested that American bankers should have consulted a Swabian housewife, who would have taught them a thing or two about managing their finances. Imagine her horror when, shortly thereafter, she received an avalanche of anxious phone calls from her finance ministry, central bank and her own economic advisers, all sending an unfathomable message: Chancellor, our banks too are in. bankruptcy ! To make the ATMs work, we need an injection of 406 billion euros of money from these Swabian housewives – by yesterday!
It was the definition of political poison. As global capitalism experienced its spasms, Merkel and Peer SteinbrÃ¼ck, its social democratic finance minister, ushered in austerity for the German working class, advocating the standard and doomed mantra of tightening their belts in the midst of ‘an all-powerful recession. How could she now present herself before her own MPs – to whom she had for years lectured on the virtues of penny pinching when it came to hospitals, schools, infrastructure, social security and environment – to implore them to write such a colossal check to bankers who, until seconds before, were swimming in rivers of cash? Necessity being the mother of forced humility, Chancellor Merkel took a deep breath, entered the splendid Federal Bundestag designed by Norman Foster, broke the bad news to her dumbfounded parliamentarians and left with the requested check.
At least it’s done, she must have thought. Except it wasn’t. A few months later, another barrage of phone calls demanded a similar number of billions from the same banks. Why? The Greek government was on the verge of bankruptcy. If that were the case, the 102 billion euros she owed German banks would disappear, and soon after, the Italian, Greek and Irish governments would likely default on around 500 billion euros in loans to German banks. Between them, the French and German leaders had a stake of around 1,000 billion euros in not allowing the Greek government to tell the truth; that is to say, admit bankruptcy.
That’s when Angela Merkel’s team came out on top, finding a way to bail out German bankers a second time without telling the Bundestag that was what they were doing: they would present the second. bailout of their banks as an act of solidarity with the grasshoppers of Europe. , the Greek people. And make other Europeans, even the much poorer Slovaks and Portuguese, pay a loan that would temporarily go into the coffers of the Greek government before ending up with the German and French bankers.
Unaware that they were actually paying for the mistakes of the French and German bankers, the Slovaks and Finns, like the Germans and the French, believed they had to take on the debts of another country. Thus, in the name of solidarity with the unbearable Greeks, Mrs Merkel had sown the seeds of hatred between proud peoples.
When Lehman Brothers went bankrupt in September 2008, its last CEO pleaded with the US government for a gigantic line of credit to keep its bank afloat. Suppose, in response, the US President replied, “No bailout, and besides, I won’t allow you to file for bankruptcy!” It would be completely absurd. And yet, that is precisely what Angela Merkel told the Greek Prime Minister in January 2010 when he desperately asked for help to avoid declaring the Greek state bankrupt. It was like telling a falling person: I’m not going to catch you, but neither are you allowed to touch the ground.
What was the point of such an absurd double nein? Given that Merkel was always going to insist that Greece take out the biggest loan in history – as part of the second hidden German bank bailout (see above) – the most plausible explanation is also the most sad: his double nein, which lasted a few months, managed to instill such desperation in the Greek Prime Minister that he finally accepted the most crushing austerity program in history. Two birds were thus killed with a single bailout: Merkel surreptitiously bailed out German banks for the second time. And universal austerity began to spread across the continent, like a bushfire that started in Greece before spreading everywhere, including France and Germany.
The pandemic has offered Angela Merkel one last chance to bring Germany and Europe closer together.
Large new public debt was inevitable, even in Germany, as governments sought to replace revenue lost during the lockdown. If there was ever a time to break with the past, it was this. The time was crying for German surpluses to be invested in a Europe which, at the same time, democratizes its decision-making processes. But Angela Merkel’s last act was to make sure that moment was missed as well.
In March 2020, in a fit of harmonized panic following our EU-wide lockdowns, thirteen EU heads of government, including French President Emmanuel Macron, asked the EU about the question. common debt (a Eurobond) which would help change the burgeoning national debt from weak shoulders of member states to the EU as a whole, in order to avoid massive Greek austerity in the post-pandemic years. Unsurprisingly, Chancellor Merkel said nein and offered them a consolation prize in the form of a clawback fund that does precisely nothing to help meet the growing national public debt – or to help squeeze Germany’s accumulated surpluses into long-term interest of German society.
In typical Merkel style, the goal of the stimulus fund was to appear do the minimum necessary of what is in the best interests of a majority of Europeans (including a majority of Germans) – without really doing it! Ms. Merkel’s latest act of sabotage had two dimensions.
First, the size of the stimulus fund is intentionally macroeconomically insignificant; that is, too small to defend the weakest people and communities in the EU against the austerity that will eventually come once Berlin gives the green light to “fiscal consolidation” in order to bring debt under control booming national markets.
Second, the stimulus fund will, in effect, transfer the wealth of the poorest inhabitants of the North (e.g. Germans and Dutch) to oligarchs in southern Europe (e.g. Greek and Italian entrepreneurs) or to the German companies operating utilities in the South (eg Fraport, which now operates Greek airports). Nothing could guarantee the continued toxification of Europe’s class war and North-South divide more effectively than Merkel’s Stimulus Fund – the final act of sabotaging European economic and political unity.
She casually engineered a humanitarian crisis in my country to cover up the rescue of quasi-criminal German bankers, while pitting proud European nations against each other.
She intentionally sabotaged every opportunity to bring Europeans together.
She cleverly plotted to undermine any real green transition in Germany or across Europe.
She worked tirelessly to emasculate democracy and prevent the democratization of a hopelessly undemocratic Europe.
And yet, watching the pack of faceless and mundane politicians scramble to replace her, I’m afraid I’ll miss Angela Merkel. Even though my assessment of his tenure remains analytically the same, I suspect that before too long I will think of his tenure with more affection.