If polls are correct, Angela Merkel is on track to win a record fourth term as German chancellor on Sept. 24. The temptation, after such a long run of electoral success, is to keep the formula unchanged and carry on giving the voters what they want. The trouble is, what makes sense for Germany and its people isn’t quite what’s needed by the European Union as a whole.
Germans want stability and prosperity, and they have both. But the German model, combined with the economic rigidity of Europe’s single-currency system, isn’t conducive to the success of the rest of the EU.
There’s no disputing Germany’s success. Its economy, Europe’s biggest, has shrugged off the recession and is growing well; exports are up despite the strong euro; and the government’s budget is in surplus. But in a single-currency area, Germany’s very success is a problem for many other EU countries. If they were to emulate German economic policy in every respect, they could do as well – but that is asking a lot. Wholesale reform of labor markets, fiscal policy and other economic institutions won’t come easily – and in the meantime, differences in competitiveness cannot be regulated through currency realignment.
As a result, sound economic policy for the EU as a whole requires Germany to bear some of the adjustment burden. Recalling the enormous benefit that the euro has conferred on its own export-centric economy only underlines the point. Closer integration and larger fiscal transfers are part of the answer. Yet Germany’s voters aren’t willing to accept these costs of economic leadership.
Merkel needs to change their minds. She has backed the idea of a European Monetary Fund to provide financial assistance during crises, but she has resisted more ambitious plans, advanced by French President Emmanuel Macron, for a common euro-zone budget and other forms of closer economic integration. Merkel was unlikely to speak up for such measures before the election; afterward is a different matter. Germany shouldn’t claim it wants a unified, growth-oriented and economically stable Europe and then shirk its essential role in bringing this about.
To be sure, the burdens of leadership aren’t confined to economics. Germany and Europe face the biggest foreign policy challenges since the Cold War. Donald Trump is testing relations with the U.S. to destruction; the U.K. is leaving the union; the EU’s friendship with Turkey is breaking down; Russia looks more threatening than it has been for years; and populist, euroskeptic governments flouting EU rules pose yet another threat to European stability. German leadership will be indispensable on each and every front.
If it wants to lead, Germany can no longer be content with success at home. That success, in any case, rests on Europe’s long-term vitality. Merkel needs to take ownership of Europe’s prospects. That’s the ambition Germany embraced through its commitment to ever closer union – and then made real by adopting the single currency.
If the chancellor is returned to power, she needs to broaden Germany’s idea of its place in the world and be willing to make the hard choices that follow. The Editors, Bloomberg
