Germany’s Not That Sorry Anymore

With market confidence in Greece and Italy further eroding, Germany’s cash reserves are now the last best hope for the euro. Without a bold, continentwide rescue effort led by Germany, the single currency is likely to disintegrate. Yet it now seems clear, as indeed it should have for the last three years, that Angela Merkel’s government would rather risk the euro’s collapse than act decisively.

Germany has profited mightily from the adoption of a common currency. Blessed with a dynamic export economy that does most of its trade within the eurozone, it has gained more than anyone else from the greater ease of doing business with its neighbors. What’s more, even Germans who remain nostalgic for the Deutsche mark should realize how catastrophic a collapse of the euro would be. The world economy would fall back into recession. German exports would shrink precipitously. German banks, which have large holdings of Greek and Italian assets, would require vast sums from taxpayers to survive. Unemployment and the national deficit would skyrocket.

Germans, in other words, ought to be falling over themselves to protect their currency from meltdown. And yet, at each and every turn, they have done as little as they possibly could. When pushed to the brink, Merkel has been willing to make available modest funds to avoid immediate financial meltdown; under intense international pressure, she has recently persuaded the Bundestag to increase Germany’s contribution to the European Financial Stability Facility, a bailout fund for the euro. But despite periodic promises, she has not even tried to look for a large-scale political or financial plan capable of ending the crisis. In fact, she continues to oppose any proposal — like a truly harmonized fiscal policy or the introduction of Eurobonds — that might help European economies regain the confidence of the markets. Why?

To explain Germany’s response to the crisis we must start from the fact that the country has undergone a dramatic transformation over the last 20 years. In the postwar era, leaders from Konrad Adenauer to Willy Brandt realized that, for Germany to be readmitted to the fellowship of civilized nations, it had to atone for the recent past. Germany thus paid reparations to Israel, concluded peace treaties with its eastern neighbors, and, above all, entered an unwavering alliance with former foes like Britain, France, and the United States.

But the contrite Germany of the postwar era has been long gone. Since Germany’s reunification, the need to atone for Auschwitz has been replaced by the desire to draw a definitive finish line underneath irksome talk of the Third Reich.

The first decisive step in this direction was taken in 1998 by Martin Walser, a famous novelist, when he called Auschwitz a "moral baseball bat" wielded by sinister outsiders intent on harming Germany’s interests. Germany’s assembled political and cultural elite feted Walser’s speech with standing ovations.

The call for a finish line went on to shape Germany’s foreign policy. In 2002, struggling with a difficult reelection campaign, then-Chancellor Gerhard Schröder decided to exploit his opposition to the Iraq war for electoral gain. His country, he promised, would no longer be America’s lapdog; instead, it would go the "German way." Schröder unexpectedly won reelection.

Finally, during the Libya crisis, Germany’s center-right government demonstrated that even the traditionally more hawkish and pro-American parts of the political spectrum are now intoxicated by this notion of independence. Foreign Secretary Guido Westerwelle not only refused to let German troops participate in the Libya operation — he even went so far as to abstain in the crucial U.N. vote authorizing the mission.

The same set of attitudes now also explains Germany’s reluctance to help its neighbors in the euro crisis. Many Germans are convinced that their country’s foreign policy has been driven by servile submission for too long. They have thus been particularly incensed by suggestions that, in light of Germany’s history, the country has a special moral obligation to bail out the Greeks. Sixty-five years after the end of the Third Reich, they insist that they no longer have any moral responsibility toward their former victims. As Bild, Germany’s largest daily, wrote recently: "In 1960, Adenauer’s government doled out 115 million Deutsche marks to indemnify Greek victims of the Nazis and their descendants. ‘Once and for all,’ as the contract stated."

In moderation, this resentment is understandable. It is indeed unfair that Germany’s frugal taxpayers should foot the bill for Greece’s mind-boggling waste. But if, as seems increasingly likely, public outrage will stop Germany from doing what is in its own, as well as its neighbors’, interest, then it is simply self-defeating. It may be unfair that Germans are now forced to spend their hard-earned money on helping out Italy and Greece. But that just doesn’t make it rational for Germany to let the European economy go up in flames.

The inability of Merkel and her colleagues to realize this basic point demonstrates how confused German foreign-policymakers now are about Germany’s past and present interests. The sober reality is that, though postwar Germany’s keenness to cooperate with its allies may in small part have been owed to genuine contrition, it also served the country extremely well. Compared with the United States, China, or Russia, Germany is a small power with an even smaller military. It needed the help of its American and European partners to be safe, wealthy, and influential.

This remains as true now as it was then. The Cold War may be over, but on its own, today’s Germany will be no more successful at solving global challenges from terrorism to energy security than yesterday’s Germany would have been at defending itself against the Soviet Union.

Germany’s seeming willingness to let the euro crash and burn thus indicates that the current leadership vastly underestimates the country’s need for long-term strategic partners. German politicians of the postwar era were masters at pursuing Germany’s self-interest even as they talked about noble ideals. German politicians today have naively taken their predecessors’ rhetoric at face value. Disgusted by a submissiveness that never actually existed, they have grown determined to be more assertive. As one leading member of the FDP, the small liberal party that is part of Merkel’s governing coalition, insisted: "For once, we’ve got to show that we’re capable of saying no." In that spirit, Germany’s leaders are talking up a storm about their country’s self-interest even as they gamble away the economic livelihood of their own citizens.

A transformed Germany now threatens the stability of the euro, and indeed the future of the European Union itself. But the reason is not just that the new Germany has grown more selfish. If Germans were simply acting rationally, they would bail out the euro. The problem, rather, is that the leaders of the new Germany are so mired in an overreaction to the past that they have become blind to their own self-interest.