In the past, Germany has been both a model and a partner for Spain. But there have been deep-seated changes in how Berlin views southern Europe, and seen from Spain, it is as if Germany has decided southern Europe is a burden that prevents it from going global and needs to be dumped.

This piece first appeared in the Financial Times

On May 9, when European Union leaders approved the rescue package embodied in the European financial stability facility, Spain saw the light at the end of the tunnel. Six months later, it is looking like it belongs to an incoming train. Seeing how the story unfolded in Greece and Ireland and watching the crisis heading for Portugal, it is no wonder that the dominant sentiment in Spain is concern. But more than that, the prevailing feeling is one of frustration with Germany.

With the May agreement in its pocket, the Spanish government went home and put together a reform package that had everything required to get Spain out of its collision course: government expenditure reductions, labour market reforms, public sector pay cuts, pension freezes, an extension of the retirement age and a rise in value added tax. Subsequently, the government, with the aid of the central bank, decided to rein in regional and local government deficits, forced regional saving banks to merge and made public its bank stress tests. Most of the measures are now in place. Spain's current problems start not at home but rather abroad – in Germany, to be precise.

In the past, Germany has been both a model and a partner for Spain. In its transition to democracy, Madrid adapted and adopted German institutions such as the Länder power-sharing arrangements and the principles of a social market economy. Even in foreign policy, Spain tried to mirror Germany's wise combination of Atlanticism and firm support for European integration. In the 1980s Felipe González supported the deployment of cruise and Pershing missiles, while Helmut Kohl supported Spain's accession to the European Community.

Thanks to the vision of González, who supported German reunification when Margaret Thatcher, François Mitterrand and Giulio Andreotti were fiercely opposing it, Spain and Germany developed a true strategic relationship. But, starting in the late 1990s with José María Aznar and Gerhard Schröder, the bilateral relationship began to cool; then José Luis Rodríguez Zapatero and Angela Merkel let it die. Now, sadly, Ms Merkel's decisions are damaging Spain, turning Germany into a rival.

Max Weber famously made the distinction between an ethics of conviction and an ethics of responsibility. In the former, typical of science or religion, all that counts is being right; in the latter, more common to politics, it is the consequences of one's actions that matter. This antithesis perfectly captures the current debate about a permanent crisis resolution mechanism for the eurozone. In an ideal world, Ms Merkel's proposal to have investors, and not only citizens, suffer the consequences of their investment decisions is both fair and rational. Yet, as we are seeing, there is a good chance that in real life the eurozone could be killed precisely by this proposal to make it work better. This would be no small irony. But it highlights the extent to which religious zeal has replaced political vision in Germany. As the saying goes: fiat iustitia, pereat mundus (let there be justice, though the world perish).

Even more problematic is that such German recklessness points to deep-seated changes in how Berlin views southern Europe. During the 1980s and 1990s, the European integration process resulted in a virtuous circle of growth: the periphery grew faster than the centre, significantly catching up in terms of average per capita wealth; but Germany and others benefited substantially, because that growth was based on their exports and foreign direct investment. This seems to be irreversibly broken now. Germany is looking to Russia and to China as the markets for its exports, but rather than placing its bilateral relations with Moscow and Beijing at the service of the EU as a whole, it seems that it is going solo.

Seen from Spain, it is as if Germany had decided southern Europe was a burden that prevents it from going global and needs to be dumped. True, Spain is at the European periphery, but Europe itself is bound to be increasingly the periphery of Asia. Therefore, this Alleingang (going solo) policy can hardly work. In a century dominated by Asia, no European country will be able to make it on its own. A weaker Europe, especially if the eurozone breaks down, will mean a weaker Germany. This is not only about Spain or southern Europe's survival, but about Europe's as a whole.

 

This article has been widely quoted since its publication in the Financial Times, including by Martin Wolf and others in the same publication, as well as in the EconomistEU Business, Terra Argentina, Agence France-Press (published for example on The Local).

 

Read more on: Wider Europe, Economic Crisis

The European Council on Foreign Relations does not take collective positions. This commentary, like all publications of the European Council on Foreign Relations, represents only the views of its authors.