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The author of The Myth of America’s Decline on Chancellor Merkel: ‘Power has fallen to Angela’s lap like an overripe plum.’Mathis Wienand/Getty Images

In this series, Rudyard Griffiths, chair of the Munk Debates, Canada's leading public-affairs forum, discusses issues and trends just over the horizon with renowned analysts and policy-makers.

You have called Angela Merkel the modern-day empress of the eurozone. What do you mean?

The title empress reflects, in my view, two realities of present-day Europe. First, the Germans look so strong because the others look so weak. The British are withdrawing from Europe. The French are down but not out. They're unable to rev up their economy – same thing for the Italians, same thing for the Spaniards. So, when you add it all up, who is the last man – or in this case, the last woman – standing?

The second reason is more concrete – the Germans have been in the vanguard of driving home fealty to the eurozone's foundational treaties. These conventions enjoined member states, like Greece, not to overspend and over-borrow and, at the same time, to make their economies more efficient. Merkel and her finance minister are not austerity mongers as everybody is harping on about. They are committed to the original treaties' stated rules that require eurozone members to reform their economies and become more competitive.

Are Germans up for being Europe's economic and political taskmaster?

Are the Germans really leading Europe? When you look at the most recent bailout package for Greece, plus the two previous ones, the Germans have in all three cases yielded. They have forked over the money, and they have assumed the largest share of the liability. Same thing during the latest battle earlier this summer. The Greeks are going to get €86-billion and a third bailout. The fact is that the Germans could not really wield the whip. They could not be the martinet of Europe, and the Greeks learned something important. They found out that all of Merkel's threats about a "Grexit" were, in the end, empty and that Europe, including its strongest power, will save Greece over and over and over again. So who really has power?

While you criticize Greece for free-riding on Europe, isn't Germany guilty of the same thing?

This is a classic Marxist critique: The Germans are making themselves rich on the backs of the poor. But what are we actually saying? Are we saying that the Germans – the golden boys of Europe again – should conduct the same kind of economic policy that has gotten everybody else, from Spain to Portugal to Greece, into trouble? Should they vastly increase government spending? Should they generously increase transfer payments ? Should they build cars not as good as Audi or VW or Mercedes? I find this a silly critique that says just because you run faster than the others that means you have to put lead weights on your ankles .

If you were sitting in Paris or Rome watching an ascendant Germany, would you be worried?

That's a question that requires a subtle answer. We always look at countries and power relationships in terms of the past and then we draw analogies. Germans in the 20th century tried to reach twice for European dominance and they failed more bloodily each time. Germans learned that you don't do power plays like this any more. So the question of the moment is, are the Germans lapping up their top-dog status? I don't think so. There's a strange kind of cultural transformation in Germany, which we've seen in countries like Sweden. Sweden used to be the scourge of Europe in the 17th century. And Sweden has become as aggressive as a pussycat. And here at a juncture when we might expect the Germans to behave like they did in the first half of the 20th century, not only do they not reach for power, they're deeply uncomfortable with it. You see this in the way Angela Merkel operates on the global stage: There's this hesitance, this rhetoric, which is not at all about, "We are going to do this. You have to follow us. We are number one." Instead, it is almost like an embarrassment. Power has fallen to Angela's lap like an overripe plum and she's staring at it and doesn't quite know what to do with it.

The conventional wisdom is that this latest bailout is doomed . What do you think ?

I think it very easy to predict. It's going to be a debt haircut, and a substantial one, because, with Greece saddled with a foreign debt twice its gross domestic product, there's no way in the world that it can ever repay its creditors. So there's going to be a haircut plus more large-scale debt relief in the form of extending the maturities for Greek bonds. If you extend a maturity from 10 to 40 years, that's almost again like forgiving your debt. What we have done, in spite Finance Minister [Wolfgang] Schaeuble banging his fist on the table, is take a large step into a transfer union, or what you call equalization in Canada. Now, Europe and Germany can afford a transfer zone that includes an ailing Greece, but nobody can afford to bail out large economies like Italy and France. These two countries do not have systems capable of marshalling the political capital that it takes to enact drastic reforms, uproot vested interests, challenge public-sector unions, and reducing the size of the state to lower government expenditures and deficits. This is where I become something less than optimistic about Europe's future. It could really kind of call into question the whole idea of the eurozone when you have independent, sovereign countries with different social contracts and dispensations, all suddenly having to obey one-size-fits-all monetary and fiscal policy.

Given these big challenges and tensions, just how steadfast is the German public's support for the larger European project?

There is an old rule, "If you don't know the facts, assert the principle." The principle is that the Germans are very strongly attached to the euro, which over all has served their interests quite well. And, at the same time, at least the political establishment is deadly afraid of the euro falling apart and going to hell. The reality is that Germans are going a long way to save the euro, by hook or by crook. How long? That again is something I can't predict. But if you subtract the far left and the far right, the country is pretty solidly committed to the eurozone. I think that this consensus will shape German behaviour for, to pluck a number out of the hat, the next five years.