Berlin-London Spat

This article was published on the Guardian Comment is free website

Letting Germany back in

12 December 2008

Isolating Germany via the new Brown-Sarkozy axis does Europe, and Britain, no favours
Last week it was reported that Barack Obama had called David Cameron "lightweight" after listening to the Tory leader rant against Europe when the two men met in the summer. On Wednesday in Brussels the senior German centre-right politician Hans-Gert Pöttering was privately blistering about Cameron's anti-EU stance and did not care who was hearing him.
Now it is the Tory turn to enjoy a foreign politician attacking Gordon Brown. Peer Steinbrück is a doughty regional politician, a kind of rightwing SPD version of John Prescott locked in miserable harness with German conservatives in the barely coherent coalition in power in Berlin.
Under Gerhard Schröder, the SPD watched in misery as Labour became the new social democratic champion of job creation, growth and real wage increases. German industrial wages and social payments were frozen or cut under Schröder's policy to rebuild Germany's industrial capitalism. The policy worked and German exports boomed. But the political price was the SPD losing to Angela Merkel and a powerful new working class party – Die Linke – coming into being with up to 15% support in the 2009 elections, according to opinion polls.
Under German proportional elections, if their support holds up Die Linke will block any hopes of victory for the SPD. Hence the need to fog-horn away about Anglo-Saxon capitalism. For much of the German left, Britain, Bush, unregulated finance, Iraq and criticisms of Germany's CO2-emitting industrial capitalism are a combined target of choice.
In fact, Steinbrück has had to bail out German banks and financial institutions that are just as guilty of toxic lending as the City and Wall St. Germany was terrified that at the European Council today the CDU-SPD's defence of German car, chemical and coal industries – which has led Berlin to backtrack on ambitious EU targets for CO2 emissions – would be in the firing line.
It is very convenient to make headlines about Brown and pander to Tory views that massive cuts in social expenditure are the way out of the crisis. Merkel's principal rival in the CDU is Friedrich Merz. He has called for Brown-style tax cuts, but of course the Daily Mail will not front-page rows inside German politics.
Another, more worrying, factor has to be taken into account. The French press this week reported briefings from the Elysee which were scornful of Merkel's refusal to join with Nicolas Sarkozy, the EU Commission, and most EU members as well as the incoming Obama administration in the kind of fiscal, public expenditure and borrowing policy mix Brown has advocated. When Steinbrück denounced Brown's "Keynesianismus" he was flying in the face of the broad world view that a dose of Keynes, not Tory public spending cuts, is what is required.
Sarkozy's public dismissal of Merkel and the arrival of a Brown-Sarkozy axis in EU affairs is deeply unsettling in Germany. It is dangerous politics. Despite the Tory glee at Steinbrück's criticism, London should get over to Berlin quickly. In the long run Germany's open-market economics based on a strong social state is closer to Labour than either French rightwing statism and protectionism or the Chicago Friedmanites now taking control of Cameron, who is badly out of his depth on economics.
Britain will not profit from a Sarkozy-Merkel quarrel. Obama must be looking in despair (and Putin with pleasure) at a European Union unable to find unity on a core policy and European political leaders criticising each other in public or in open briefings.
There is little chance that the London media establishment, which knows no German and remains locked in a tabloidesque second-world-war vision of Germany, will bother to understand or explain the intricacies of German politics. One hint: the German word for debt - "Schuld" - also means "guilt". Since Luther's day, to be in debt was to be guilty. It may be time for Mr Steinbrück, whose English is good, to brush up on his Keynes and forget his Lutheran economics.