European Council on Foreign Relations

Kanzleramtology

The euro crisis has made Germany so important that anyone interested in the future of Europe – or even of economies outside the eurozone like the UK – now has to spend a lot of time trying to understand German thinking. As discussions continue about the details of the “fiscal compact” that will be agreed at the European summit at the end of this month, we all seem to be reading between the lines of public statements made by German politicians and officials and quizzing them in private about what is really going on behind the scenes whenever we get the chance. Such is the necessity of understanding the internal dynamics of the German government (who is in and who is out? who has power over what? who does the Chancellor listen to?) that everyone is becoming an expert on German domestic politics.

It strikes me that it’s all a little like Kremlinology – that is, the study of the Soviet leadership during the Cold War. Back then, the lack of reliable information forced Western analysts to attempt to understand possible shifts in Moscow by decoding what they thought were secret signs such as the position of leaders at parades. We now seem to speculate about what is really going on in Berlin in almost the same way – what you might call Kanzleramtology. Of course, the Federal Republic is a democracy that is much less opaque than Soviet Union was. German politicians and officials give interviews to journalists to explain their thinking. Yet somehow we all still seem to playing a guessing game about German policy. For example, the FT suggests today that German resistance boosting the firepower of the eurozone’s rescue funds is softening – but there is no confirmation of this.

Perhaps the best example of this is the debate about Eurobonds last year. In the second half of the year, there was much speculation about whether German opposition to Eurobonds was softening. Many assumed – without any real proof except whispers from those in the know – that Germany was considering Eurobonds but, fearing moral hazard, wanted the rest of the eurozone to make commitments to maintain fiscal responsibility before it publicly agreed to them. But although the eurozone made some of those commitments, Germany never agreed to Eurobonds. As Wolfgang Münchau argued in his column in the FT last week and German officials confirm, the loss of France’s AAA rating will now make it much harder for Germany to accept eurozone bonds in any form.  As one official put it, the discussion in Germany is “not dead, but mute”. But was it ever a possibility or did we all simply imagine it?

The next debate among Kanzleramtologists may be about whether Germany may be becoming more open-minded on the role of the ECB. No German politician or official will admit in public that the ECB should become a lender of last resort, as many Anglo-Saxon economists think it should. But in private there is talk of a “de-ideologisation” of the debate about the ECB. Some officials even admit that they are relieved to see the ECB building a “wall of money” – something to which German economic orthodoxy is opposed – since Mario Draghi took over as its new president in November. But will this translate into a commitment to be a lender of last resort that, in order to convince the markets, must be public? Even if it will, what will Germany demand in return? Who knows.

 

3 comments

Daniel Florian 24th January 2012 at 04:01pm

Is it first of all not important to know that Germany is indeed important? Finally, at least, Kissinger knows who to call in Europe. Secondly, there is “Merkel’s Law”: the Chancellor only rejects new proposals in order to adopt them later because all alternatives have failed. I also believe that Merkel understands the principles of modern leadership - it’s unclear though whether she can successfully apply this knowledge. I’ve written more on Germany and the Euro crisis on my own blog - so if you’re an aspiring “Kanzleramtologist”, see what I think on http://www.danielflorian.de/2011/12/09/germany-and-the-euro-crisis/

Uli Speck 25th January 2012 at 09:01am

Excellent observation. There are two reasons why German politics are so opaque. One is the cozy relationship between journalists and politicians. Both rely on favours. That in turn makes journalists often a bit lazy to push politicians hard and to investigate. The second, more important reason is the lack of strategy in German policy making. It’s not only that the outside world doesn’t know what is going on. The actors share this uncertainty. German policy making—at least foreign policy making, but also the management of the euro crisis—is not guided by explicit principles and goals. It is the result of an attempt to balance outside pressure (EU, US, others) with pressure from inside (pacifist mood, concern over financial burdens and alike, etc). The outcome is very much shaped by momentary calculations and moods. And once the decision has been made, it will not be openly announced and discussed, because of fear of a backlash. The Merkel governement does everything to avoid taking a clear stance on anything, at least in public. So far the Merkel power machine is very successful in controlling German politics and pleasing German voters. There is little public criticism of Merkel, and there is little substantial debate on policies and politics in Germany.—All in all the German political public sphere is pretty different from Britain and the US where you have a lot more transparency and strategy, which is partly due to its dualistic character (left vs right).

Hans Kundnani 25th January 2012 at 03:01pm

Thanks both for the great comments. I agree that it’s not simply outsiders who are playing a guessing game - it’s also insiders and perhaps even policymakers themselves as Uli suggests. You also both make interesting points about the reasons for the opacity of German policymaking - the nature of German strategic culture and the specific approach of the Merkel government. Thanks for posting!

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