This is no time for schadenfreude. Germany’s car crisis and sinister new Nationalism is a perfect storm – and terrifies me
IF A WEEK is a long time in politics, a month is an epoch. The tsunami of criminal charges and class-action suitsnowswampingVolkswagen was hardly on the horizon this time last week. But think back to the end of August. Then Chancellor Angela Merkel bestrode the EU like a colossus and was respected around the world. Seventy years after Hitler, Merkel seemed to have solved what Henry Kissinger called Germany’s age-old problem – ‘Too big for Europe, too small for the world’.
A few weeks ago, Germany’s Chancellor since 2005 seemed to have achieved the leadership of Europe by consent, which her predecessors had tried to grab by force. Her economy was the world’s number one exporter. Even her footballers were world champions.
At home, Merkel had pushed through painful reforms to reenergise German industry to get on top of the world. Abroad she had taken the EU by the scruff of the neck and sorted out the euro crisis, but also acted as Europe’s spokesperson in the crisis with Putin’s Russia over Ukraine.
Merkel’s finest hour came a month ago when she proclaimed that her version of Germany had an open door to refugees from around the world. Hitler’s Germany was truly dead and buried. Merkel’s ‘come-one, come-all’ invitation was intended to shame the rest of us into following the New Germany’s foreignerfriendly lead.
But Merkel has had no time to bask in her glory. For a start, no preparations had actually been made to house so many newcomers. Germany has even had to import tents from America.
But nothing matched the sudden shock to Germany’s export-led economy, which had ridden out the world economic crisis, when it was hit by one of its own making. Eleven million VW cars now seemed ‘jerry-built’ junk.
UNTIL the last week it was common to hear that the miraculous boom years of the ‘Wirtschaftswunder’ in post-war West Germany were repeating themselves in Merkel’s united Germany. Then came VW’s ‘Wirtschafts-blunder’.
Caught red-handed fiddling the environmental tests leaves Germany’s biggest exporter teetering on the brink of financial disaster.
But this is no time for schadenfreude. These dramatic and unsettling developments in Germany have the makings of a perfect storm that terrifies me.
After decades of democracy in a post-Hitler Germany, these ingredients of mass immigration and the car industry scandal threaten to plunge the country into an economic and unemployment crisis.
There is an alarming potential for destabilising Germany and fostering the rise in dangerous nationalism that threatens to undermine the ‘Good Germany’ that has been built up in the 70 years since 1945.
In reality, hard times have been creeping up on the German economy before VW’s self-inflicted wounds. But they broke into the open at the moment Merkel was adding hundreds of thousands to Germany’s expensive welfare bill.
As often is the case in tragedy, Merkel’s problems today stem from her past success. With her Finance Minister, Wolfgang Schäuble, she imposed austerity throughout the eurozone.
Making Greece swallow an even more bitter pill in July than Athens had been offered in January was merely the harshest example of Berlin’s unyielding stance. But by pushing down on big countries like Italy, Spain, even France, Germany has been achieving her aims for the euro at the expense of her own exports.
With their economies in the doldrums, more and more Europeans in the eurozone have been cutting back. Big-ticket items like German cars are not replaced nearly as often. Worse still, German exports to both Russia and China are shrinking. The tit-for-tat sanctions between Russia and the EU over the Ukrainian crisis have hit German business hard.
Fat-cat Russians can’t afford as many Mercs, or even BMWs, as before and the big Russian oil and gas companies aren’t allowed to buy sophisticated products from the likes of Siemens.
China’s slowdown is even more ominous for Germany. Until yesterday, China’s new rich snapped up luxury products from Germany but like the insecure affluent in the eurozone, they are quietly tightening their belts.
Losing ground in export markets has added to German big business’s gripes about Merkel’s turn towards a green eco-economy. The Chancellor pushed through abolishing nuclear power in Germany, but electricity prices are soaring to make renewables pay.
Rising energy costs, an export
downturn and now a reputational disaster for the country’s premier brand have all put Germany on edge. What risks making these economic problems toxic is that they are brewing up as Germany takes on the costs of a wave of immigration not seen since 1945.
After Hitler’s defeat, West Germany absorbed ten million Germans who fled from the Communists. That was not easy but the new arrivals were set to work in a labour intensive economy. Today, Germany’s hightech economy is short of skilled labour and her population is set
The end of Merkel’s glory days is our problem too
to shrink sharply. But are Third World migrants, often unskilled, even illiterate, the answer to that problem?
Angela Merkel seemed supremely confident that they would be a boon when the migrant wave surged in August. Then the Chancellor talked blithely about her country taking in 800,000 in its stride, year on year.
Her strict financial policies meant that Berlin had the cash in reserve to cover the housing, education, health and other costs of so many arrivals. Even before VW hit the buffers, Merkel was demanding that the rest of the EU share the migrant burden. Her poorer Eastern neighbours lacked the cash to take on the costs. Berlin seemed to be demanding they pay the price for its moral stance now its economic woes were mounting.
After decades of watching the Germans waltz past us in every field – including our national game – you’d have to have a heart of stone not to gloat for a moment. But anyone with a brain can see that a Germany on the rocks is not good for us either.
Germany is too important a trading partner and too close a neighbour to indulge in schadenfreude. Some Tory eurosceptics see this as the moment for David Cameron to push hard for EU reform while Merkel is weak.
Maybe, but the existence of the EU itself is suddenly in play. Merkel’s high-handed approach to so many issues has alienated many other EU leaders. But while they agree on disliking being bossed around from Berlin, they have no common solutions.
At the same time, the scale of Germany’s problems seems to be reawakening the slumbering dragon of German nationalism.
Stirrings of discontent were first felt in old East Germany. Despite losing four million people since reunification, there was no enthusiasm for welcoming a wave of Muslim migrants.
The danger now is that Germany’s ‘Welcome to refugees’ will turn terribly sour. With that, Germany’s reputation as a stable democracy at the heart of Europe could curdle quickly as her political establishment is tarnished by blunder after blunder.
The end of Angela Merkel’s glory days is not just Germany’s problem. Her self-inflicted crises will be our problem too.