Schäuble and the German Mindset

What drives Germany’s approach to Europe and EU policy-making? A great way to understand this is to look at Wolfgang Schäuble’s actions during the Eurozone crisis. The strong-willed German Finance Minister was one of the most prominent actors in the recent agreement on a third Greek bailout. Schäuble’s attitude towards Greece and the Eurozone crisis has found widespread support among German public opinion and is a good indicator of the German mindset.

Schäuble’s confrontation with his Greek counterpart, Yanis Varoufakis, over the seemingly never-ending crisis, appears to have exhausted his  patience. The negotiations between Greek Prime Minister Alexis Tsipras and Greece’s creditors, including Germany, are a poker game. Spectators are left to guess who is bluffing and how many hands are still to play. The stakes are high: a possible outcome is a Greek exit from the Eurozone, which many fear will tear Europe apart.

Some critics say the third Greek bailout deal is a trap for Greece and for Europe

Some critics say the third Greek bailout deal is a trap for Greece and for Europe

Hyperinflation and World War II

World War II remains an important trauma in the German national psyche. I spent a year in Germany during college. During that time, I was surprised to see that a sense of responsibility for the war is still ingrained in the minds of Germans. For Germany, hyperinflation in the 1920’s and the lack of political leadership in the Weimar Republic were key factors on the path to Nazism, and therefore should be prevented from happening again at all costs. Schäuble is a guardian against both: he is a proponent of a strong Euro (he has been named “Europe’s foremost ayatollah of austerity”by the Economist) and rarely deviates from Chancellor Merkel’s leadership.

Germans’ fair share of austerity

A large part of the coverage by European media has focused on the impact that austerity measures are having on daily life in Greece. What is mentioned less often is that Germans have had their own fair share of austerity, too. Structural reforms, in particular a major labor market overhaul, were deployed in Germany in 2003-04 in order to reduce unemployment and strengthen the welfare state.

This reform package, also known as Hartz IV, was championed by former Chancellor and Social Democrat Gerhard Schröder. It created greater incentives to work by deeply transforming job training, job search and unemployment benefits. Hartz IV is credited for having halved the number of unemployed Germans in ten years. But it has also been criticized for creating mostly part-time or temporary jobs, greater income inequality and poverty, even among Germans with a job.

Over a decade after reforms that significantly impacted their quality of life, Germans reject a write-off of Greece’s debt and refuse to bear the costs generated by the inaction of the country’s political class.

Schäuble’s negotiations fatigue

Schäuble has been at the negotiations table with Greece since the beginning of the crisis in 2010. He is the longest serving Finance Minister of the Eurozone during this crisis, beating current European Commission President and former Luxembourg Finance and Prime Minister Jean-Claude Juncker.

During that period, Schäuble has seen the Greeks use all sorts of negotiation tactics and has made clear that he does not trust them. The long and hectic schedule of late-night summits would have taken a toll on anyone. Juncker himself snapped after Tsipras announced the Greek referendum that took place on July 5.

To this you have to add the attacks, which became personal for Schäuble when he was compared to a Nazi by a cartoon in a Greek newspaper. A recent backlash against Germany on social media (with the hashtags #ThisIsACoup, #BoycottGermany and #StopBuyingGermany) is unlikely to make him any more sympathetic to the Greek position. After all, Schäuble is supported both at home and abroad (by Eurozone countries like Finland, the Baltic States and Slovenia). A poll conducted by ARD Deutschlandtrend in Germany, published on July 13, showed that 64% of Germans approve Schäuble’s behavior, more than Merkel’s herself (62%).

“The Grasshopper and the Ant”

La cigale et la fourmi (photo by Bibliotheque Stanislas Nancy, CC BY-SA 2.0)

La cigale et la fourmi, the characters of the fable (photo by Bibliotheque Stanislas Nancy, CC BY-SA 2.0)

The way in which the German mass media have depicted the crisis negotiations and Greece itself over the past few months reflects widely-shared clichés about Greece: a country riddled by corrupt politicians playing games to avoid change, an undisciplined people that spends time at the beach rather than at work, and that enjoys a quality of life that the Germans feel they have long lost. A satirical video that went viral this week lists these misconceptions as shared by the media.

The perception of Greece as the proverbial lazy Grasshopper is also promoted by German political leaders, so much so that German-Greek liberal politician and former MEP Jorgo Chatzimarkakis decided to resign from the German Liberal Party in 2013 and create his own party in Greece.

Even on a personal level, Schäuble’s law and order background (he used to be Minister of the Interior) and firm defense of German taxpayers’ money, contrast sharply with Varoufakis’ lavish lifestyle and no-tie dress policy.

Such a level of distrust in the Greek people is surprising, though. According to the 2011 census, there are 250,000 Greeks in Germany. They are the fourth largest group of foreigners in the country, after Turks, Poles and Italians. These numbers have risen in the last few years as young Greeks leave home  for European countries with lower unemployment.

A deep belief in a strong Europe

Schäuble has always been a strong advocate of European integration. For him, as for many Germans, an EU built around a Franco-German core remains a priority. His recent declarations on a possible Grexit put his commitment to Europe into question. The German opposition blamed him for risking to split Europe by blackmailing Greece. Others suspect he wants a Europe dominated by Germany.

But I am willing to bet that in Schäuble’s mind, a Grexit may be the price to pay for furthering European integration. The current crisis underlines the absence of a real banking and fiscal union in the Eurozone. To remedy this, Schäuble has long advocated for the creation of a Eurozone Parliament and a European budget Commissioner. Other observers have also interpreted his declarations as a tactic to scare other countries and keep them in line, which also would speak to his commitment to Europe’s unity.

One thing is for certain: the poker game is not over, but Schäuble, and Germany, have the upper hand and are unlikely to change their poker faces.