German industrial and financial power is the key to understanding the
complex and often confusing international manoeuvres around the Crisis
of the Euro. Germany is Europe’s industrial powerhouse, the only
country that has survived the Great Recession with a healthy economic,
low unemployment, social stability and a favorable balance of trade.
The stability of the European currency is essential to a continuation
of this favorable economic situation, if this means extending more
credit to failing economies like Greece, Italy and others down the
line, as Chancellor Merkel told her own fiscally conservative party in
no uncertain terms on Nov. 15. Only within the solid framework of a
strong European Union can Germany, Europe’s principle creditor nation,
every hope to collect on her European loans and investments.
For Germany (and her American ally) the Euro-zone is ‘too big to
fail.’ And since the European Union lacks a mechanism like the U.S.
Federal Reserve Bank, only Germany is in a position to underwrite the
necessary major bailout. This is a financial gamble of historic
proportions, and it comes at a political price : German hegemony in
Bismarck Makes Germany a Great Power
Paul Kennedy’s classic The Rise and Fall of the Great Powers (1987)
classifies Germany as the hegemonic (or would-be hegemonic)
military-industrial power in Europe from the year 1870. That was when
Bismarck, the ‘Blood and Iron’ Chancellor of Prussia, tricked the
French Emperor Napoleon III into hastily starting a war that Prussia
had long been preparing for. After a stunning defeat (Napoleon was
take prisoner when the Prussians surrounded the main French army),
Bismarck crowned his somewhat reluctant feudal sovereign as Kaiser
Wilhelm I, ruling a vastly expanded, united German Reich (including
two captured French provinces and most of the Southern German-speaking
states) from his own capital, Berlin.
By the end of the 19th Century, efficient, scientifically-organized
German industry was challenging Britain’s outdated industrial plant
for economic supremacy. Meanwhile, Prussian militarism, supported by
this industrial and financial expansion, prepared for future political
hegemony and territorial expansion. During the 20th Century, two
drawn-out mechanized World Wars were required to prevent the German
Reich from transforming her industrial and financial power into
imperial domination of the Continent. The main factors that prevented
capitalist Germany’s ‘natural’ ascendancy to European hegemony were
military : 1) Geography. Situated in the center of Europe between the
vast Russian Empire and her ally the French Republic (still a major
military power), Germany was obliged to fight on at least two fronts
in both 1914 and 1940, as well as at sea against the formidable
British Navy. 2) the rise of a new, and vastly richer
military-industrial power, the United States, allied with France and
Defeated, Divided and Demilitarized, Germany Rebounds
In 1945, the demilitarization and division into East and West of post
WWII Germany was designed to prevent yet another attempt at hegemony,
but by 1960 (the year I bought my first VW !) West Germany’s
industrial plant had risen from the ruins, modernized and become
competitive with U.S. industry. Moreover, demilitarization freed up
huge amounts of German capital, whereas Germany’s conquerors, the U.S.
and the USSR, were draining their economies in a costly arms race.
Moreover, West Germany found an unlikely support from ex-enemy de
Gaulle of France, who forged a close alliance with Chancellor Adenauer
while carrying out his independent, anti-US foreign policy, during the
Cold War. By the 1970’s, W. German leader Willi Brandt dared to break
the ice of the Cold War with his independent Ostpolitik, opening up
lucrative German trade with her Warsaw Pact neighbors. Today, Germany
and Russia are staunch allies and trading partners to the point where
Immanuel Wallerstein talks of a ‘Paris-Berlin-Moscow Axis.’
United Germany’s Great Gamble
When the Soviet Empire collapsed and the two Germany’s were reunited
in 1990, far-seeing West German capital took the risk of investing
huge amounts in integrating and modernizing the impoverished East. The
West German investors’ bet paid off — so successfully that a former
East German, Angela Merkel, is now ruling a populous, rich, and
powerful united Germany, where she presides over the Berlin
Chancellery established at by Bismarck back in 1871.
Chancellor Merkel, like Bismarck a Conservative, has dragged her
centrist coalition, uniting all factions of German capitalism, into
another daring bet. The terms ? Bail out the Euro zone and end up
owning it : achieve hegemonic power, without militarism. Using
diplomacy and ‘soft’ power, the Chancellor will now collect that debts
of the Greeks and Italians owe the Frankfort bankers as effectively as
the U.S. Marines collected the Central American debts for the N.Y.
bankers a century ago. Only, instead of sending gunboats, Merkel has
used canny diplomacy and financial clout to engineer the fall of
Papandreou and Berlesconi, Europe’s two most long-serving and popular
Prime Ministers. (Papandreou was brave enough to call her bluff and
announce a popular referendum on the Euro at the Nice summit, but then
he shamefacedly backed down). That crafty manipulator Bismarck (who
after 1870 actually preferred diplomacy to war) would have been proud
of his disciple.
Two Bloodless Beheadings
The deposed Greek and Italian heads of government have now been
replaced by ‘technocrats’ subservient to the German-dominated European
Union Central Bank. The Chancellor has just dispatched teams of
German bankers to ‘advise’ them, much as U.S. Embassy staff ‘advised’
the Mexicans and Nicaraguans : pay up or else ! The advisors are there
to make sure that the technocratic puppet regimes carry out the most
stringent austerity measures and force the Greek and Italian working
people to pay the debts previously contracted by their own bankers and
rulers. This may not prove to be easy.
Meanwhile, the future implications of Merkel’s historic ‘beheading’ of
two European heads of state may be as far reaching in their own way as
the double beheading in Tunisia and Egypt. To begin with, Germany’s de
facto imposition of these super-national ‘receivership’ regimes means
an end to democracy and national sovereignty for Greece and Italy.
Ancient Europe’s two historical Great Powers, the fountains of
European civilization, the cradles of democracy and of the rule of
law, are henceforth vassals states under the regency of German and
North European banking capital.
From an international perspective, Merkel’s diplomacy and soft power
have succeeded in dominating two countries where Hitler’s hoards came
a cropper. As for Germany’s once-vulnerable Eastern front,
Wallerstein’s Paris-Berlin-Moscow Axis has literally been sealed in
concrete with the recent innauguration of the Nordstream pipeline,
which will provide Germany with an endless supply of cheap Russian gas
and a bottomless market for Mercedes and VWs. And this time around,
the U.S., whose precarious finances also depend on the stability of
the Euro, will have to support Germany, even if this means reinforcing
a rival German-dominated European economy more powerful and productive
than the declining American economy. Merkel’s Bismarckian diplomacy
has thus succeeded in removing the three principal historical
obstacles to German economic-military hegemony : 1) the geographical
necessity for a Central European Power to fight a two-front war ; 2)
the unmatched military and economic power of the United States ; 3)
inadequate access to modern petroleum-based fuels.
New Possibilities for Struggle ?
From the perspective of the European class struggle, this new
situation creates new possibilties. For over a year now, the Greek
youth and working classes have been striking and rioting against being
forced to ‘pay for their crisis’, and now the Italians, with a long
history of self-organization, will be called upon to defend their
interests as well. These inevitable struggles will take place in the
revolutionary atmosphere initiated in the Arab Spring and now gone
global with the ‘Occupy Wall St.’ movement of the 99% -ers. No more
illusions about capitalism’s ‘trickle-down’ effect. Moreover, the new
technocratic rulers of Greece and Italy and their bean-counting German
advisors will be hard put to cope politically with rebellious
populations who will see themselves as debt-slaves to the creditor
German banks. It would take a showman like Berlesconi or a populist
‘Socialist’ like Papandreou to continue to bambozzle the masses into
acquiesance, and now they are gone.
In this new situation in Greece and Italy, one can expect both a rise
of national resentments and splits in the national bourgeoisie
between ‘Europeans’ and local business interests (tourism, export
industries) who may support the working classes, perhaps demanding
exit from the Euro so as to devaluate their currencies and become
competitive again. If national resentment doesn’t turn into Chavinism
and if the bourgeois allies fail to dominate the popular front with
the 99%, these developments may open up new prospects for struggle.
The key factor will be internationalism. Only if the Greek and Italian
working classes are able to unite (and draw in the Spanish, Irish and
other European workers) will they escape from debt-slavery to the
German-dominated European banks.
Up to now, the European labor unions and the Left parties (Communists
and Socialists) have succeeded in confining class conflicts within
their national borders, while limiting resistance to ritual one-day
‘general strikes,’ and channeling discontent into local and national
elections. (Of course elections are now superfluous under appointed
receivership governments responsible to a European super-government).
Nonetheless, the entrenched, class-collaborationist national labor
unions and ‘Left’ parties — although rejected wholesale by Greek
youth and the Spanish indigñados — still have a powerful influence in
Italy and France. If more spontaneous, self-organized, horizontal
movements like the Arab Spring, the indigñados, and the international
‘Occupy Everything’ movement spread into Old Europe (including
Germany), the straightjacket hold of the official Left on European
social movements may be broken, releasing new energies and the
creation of international solidarity among the 99%.
This solidarity will be needed when the next financial bubble bursts –
as it inevitably will – and turns the Great Recession (from which only
the 1% have ‘recovered’) into a globalized Second Great Depression.