Is This June 1940 All Over Again?

Rome, Italy. 5 December. I am back in Rome, the eternal city, under new management facing a €30 billion austerity plan. Rome, that is, not me.

Niccolo Machiavelli, that great sixteenth century Florentine strategist once said that “...every type of government...should consider beforehand what adverse times may befall him and on what people it may have to rely in times of adversity, and should in its dealings with them act in a way in which it judges that it will be compelled to act should misfortune befall”. As €-Day approaches, 9 December, 2011, there is a lot of ‘befalling’ going on at present. Make no mistake, at this week’s Euro-Armageddon Summit a new power map of Europe will be drawn.

The failure of Europe’s institutions to cope with Euro-stress is leading to a power shift of historic proportions as a new/old balance of power re-asserts itself. It will be a Europe of a winner and losers, of ‘ins and outs’, of creditors and debtors. Even if enacted in the name of the European Union paradoxically forced integration could well mark the beginning of its end. Listening to some of the rhetoric flying around got me thinking; are we facing the economic equivalent of June 1940?

Germany is dominant (by default – no master plan), France subordinated, Britain isolated and puppet governments installed in both Greece and here in Italy. For a historian it all has a very familiar ring to it. There are some anomalies. Polish Foreign Minister Radek Sikorski has told Britain that, “we would prefer you in, but if you can’t join please allow us to forge ahead”. Minister Sikorski once accused me across a Washington table of being too pro-European. Politicians are always ‘pragmatists’ with principle. And, I really wonder if the Polish people identify as readily as He does with His ‘we’ and His ‘us’?

Of more consequence Chancellor Merkel has said rather ominously that “politics has failed” in Europe. Steady, Chancellor. And, President Sarkozy has called for a new EU treaty “re-founding and rethinking the organisation of Europe”. Meanwhile, out-manoeuvred British Prime Minister Cameron has said at one and the same time that a) if the greatest British-marginalising shift in European power politics since 1945 takes place outside a new treaty Britain is happy to acquiesce in its own demise (Churchill is spinning in his grave); whilst b) murmuring darkly that “Britain will defend its national interests” in the wake of last Friday’s failed Paris meeting with Sarkozy.

Two scenarios are likely to emerge from 9 December. Scenario one would see a new German-led core operating at the expense of Europe’s periphery. The forced German-led hybrid integration that Merkel favours will see all the European debtor nations forced to accept a fiscal straightjacket under Berlin’s direction with France and the Commission providing a fig-leaf of legitimacy. In time there will be no alternative but to create a European Finance Ministry. In the absence of effective Europe-wide political oversight democracy will be progressively eroded to the point where the only election that really matters concerns who gets elected in Berlin.

In such a scenario the British will stay out and no doubt fight – politically. Over time London would probably slowly get its act together and begin to build a counter-coalition around Europe’s periphery and beyond and reconstitute old strategic relationships in pursuit of a new strategic end – the containment of German influence. London and Berlin would thus once again find themselves strategic political adversaries.

Scenario two would see Berlin reach out not only to Britain and the EU peripherals but also to those in the wider European Economic Area (EEA) in pursuit of a new pan-European political and economic settlement. Germany would express grave concern about the legitimacy of the Eurozone and the implicit dangers to democracy therein if Berlin is seen to lead overtly for too long. Berlin might even suggest national parliamentarians replace Euro MPs in the European Parliament as part of a new European Constitution (yes, it will return). Euro-MPs are so far distant from the European peoples the X-Factor has more political legitimacy than they do.

Critical will be the relationship between London and Berlin because Germany understands that there are many Europeans within the Eurozone deeply disturbed by Germany’s power and Britain’s exclusion. If Berlin can do a deal with London then that will ensure the all-important strategic reassurance both Berlin and Europe needs to legitimise the profound change from which there is now no escape. Strategic reassurance would also be reinforced if Britain and France together strengthened their leadership of European defence. To that end, London needs to raise its strategically-illiterate, Treasury-driven eyes from the current account balance sheet and recognise that in its armed forces it possesses its one of two tools of critical strategic influence. The other being the City of London.

For Britain this moment is defining. After years of drift and spin the strategic incompetence of its political and bureaucratic elite has left London faced with the most awful set of choices since 1940 when all it could do was fight on at great cost or surrender. If the Eurozone integrates the British economy will escape mass destruction, but British influence in and over Europe will be non-existent and Britain will be reduced to a second-class European state and we British second class European citizens. If the Euro collapses Britain’s influence will be strengthened ,but only over an economically-devastated Europe.

So, is it time to dust of the Spitfires? Certainly, the crisis is leading to old reflexes as Europe’s post-war institutions fail under Euro-stress. And, as an Englishman there is something deep, beguiling and tempting about standing on the White Cliffs of Dover, shaking my fist and bellowing defiantly, “very well, alone then”. But such a fantasy must be resisted – that was then and this is now.

December 2011 is not June 1940 and we need to ensure it does not become so. No, whilst similar power relations can be implied by the shift that has taken place it is important to limit references to Europe’s destructive past. It is most certainly a power struggle but the use of power today is very different. What we need is legitimate and shared grand strategy, the effective organisation of huge means in pursuit of an urgent end. Sadly, what we will I fear get is grand tactics; badly organised and insufficient means leading to a disastrous end.

Therefore, we must all be vigilant but avoid the stereotypes of history that stress always provokes. Otherwise, we may in time be condemned to relive our history and I would not wish that on anyone. For as Machiavelli said, “...in the actions of men, when there is no court of appeal, one judges by the result”. Today, Machiavelli might have added the actions of women...one woman.

Julian Lindley-French

€-Day: Just How Broke Are We Europeans?

Oslo, Norway. 2 December. €-Day approacheth and with it the Onion’s day of reckoning. Norway is not in the EU and yet strangely there is no visible sign that civilisation is about to collapse. Quite the reverse! Indeed, it is nice to be in a country that works. Being a once vaguely red-haired Yorkshireman Viking blood courses of course through my veins. That explains a lot you say. Göll (battle cry), as we Vikings say.

Of course, being a small country (population 4.9 million) with large natural resources helps. Even accounting for depletion Norway controls some 54% of North Sea oil reserves and 45% of gas reserves. More importantly the Norwegians have used the oil and gas bonanza sensibly for when Oslo can no longer call upon nature’s bounty. This sits in stark contrast with much of the rest of Europe which prompted me to pose a rather serious question at this rather serious moment; just how broke are we Europeans?

Someone should ask the question. British Chancer Osborne has just delivered his Autumn Suicide Note and the finance ministers of the Onion’s No-Go Zone met this week to fail to inject a trillion mythical and not enough Euros into the equally mythical European Financial Stability Fund (EFSF). Therefore, your faithful blogonaut pillaged six well-known havens of the dismal economics science to bring you the answer. The six dens of iniquity are in order of self-importance Euro stat, the Economist, the UK Office for National Statistics, Nation Master, the CIA (which knows everything, but tends to forget when it matters) and the Organisation for Extremely Careful Digits (OECD).

Right, pay attention. Apparently we must first distinguish between a national debt and a budget deficit. Still with me? The national debt is the accumulation of all budget deficits since the Battle of Trafalgar, or maybe even before (was there ever a ‘before’ Trafalgar?). The budget deficit, on the other hand, is the shortfall (for that read massive, gaping black hole) between what income a European government generates over a single year and what it spends. To me both seem pretty bad but then again I am only a Viking.

Now, according to Norse legend it is precisely the interaction between debt and deficit that is so exercising the Dark Lords of the Market Universe who seem so determined to bring the halls of Valhalla crashing down. They do this by lending their ill-gotten gains to the very politicians (the Dark Lords (and Lady) of the Political Underworld) who caused this mess in the first place. It is the no-longer electable in pursuit of the utterly corruptible.

Being a tad miffed the Dark Lords are hiking the cost of ‘their’ money to remind our Dear Leaders that they will have to pay for at least one lunch in their lives. Trapped in the middle are the so-called ‘squeezed’, you and me, who have to service the interest on innumerable, clearly innumerate and quite probably inebriate free lunches by paying more tax, selling off the state that apparently we use to own to someone else or having our savings crushed by the rapacious banks that caused this almighty mess in the first place.

So, Great Hammer of Thor, here are the facts! Let me start with the Americans by way of Euro-comparison. Johnny Yank now has a budget deficit of some $15 trillion or €11.3 trillion which is some 10.7% the size of the US economy with a national debt of 65.2%... Believe me that is big. So, the Yanks are loud, proud and broke, but I suspect we have not heard the last of those people and if anyone seriously expects them to pay they will be nuked – pay-back for the Americans will mean Armageddon. Go ahead, make my day!

Then there is that mythical island long spoken about around Viking fires. The British budget deficit will peak at around 12% of the size of the economy in 2011-12 (Europe’s largest). However, there is some debate over the size of the national debt. The CIA puts it at 59% the size of the economy, the UK’s Office for National Statistics at around 61%, whereas Eurostat has it at some 76.5% (the Euro-Aristocracy could never count properly). This is due mainly to disagreement about how the British account for defence expenditure. However, as I am not aware the British are any longer spending money on defence I will stick to the lower estimate. Either way Britain is broke, weak and confused. Situation normal, all fudged up. Keep calm and carry on.

The great fortress of the Dark Lady Germany has a budget deficit some 5.3% the size of the economy and a national debt at 57.4%. For some reason this apparently means the Germans are rich. However, Berlin has decided that as the centennial of the sinking of the Titanic is fast approaching (April 2012) a re-enactment will then take place. Berlin will sink the good ship Euro with a new treaty. Germany will thus not be rich for long. Meanwhile, Europe’s other ‘leader’ France has a budget deficit some 8% the size of the economy and a national debt at 85%. France is not of course broke but suddenly will be after next May’s presidential elections. Then paying off of French debt will be then deemed by Paris to be Europe’s historic duty. Nous sommes tous Europeens maintenant, mais vous devez payer! Thankfully, we Vikings control Normandy.

The ‘best’ of the Onion’s rest speak for themselves. Belgium has a budget deficit at 5.6% and a national debt some 85.4% the size of the economy. At the very heart of the Onion Belgium now has an historic opportunity to make Europe an image of itself; utterly broke, utterly divided with no effective government and doomed to fall apart unless by some miracle it can persuade all other EU states to scrap themselves and create a federal Europe. I suppose it is the time of seasonal good will and we are approaching Christmas and there are certainly enough turkeys around these days to vote for their own demise. Ireland meanwhile has a budget deficit of 12.2% with a national debt of 38%, which is an awful lot of Guinness. Dublin is thus broke but thankfully has a time-honoured alibi; blame the British.

And what about Club Med? Spain has a budget deficit of 8.5% and a national debt of 41.6% - good at football and tennis, sadly not so good at economics. Portugal has a budget deficit of 7.6% with a national debt of 62.6% with absolutely no means to pay it back. Hasta la vista, baby, or whatever the Portuguese equivalent. Meanwhile, Italy has a budget deficit of 5.4% but a national debt of 100.8% (one set of figures has it as high as 120%). Chaos reigns in a very broke Rome – so it is business as usual then. Meanwhile, the poor old Greeks will bear no gifts for many a Trojan moon. Athens faces a budget deficit of 9.8% and a national debt some 94.6% the size of the economy.

Norway? The Norwegians have a budget surplus (yes a surplus) some 11% the size of the economy. And even though Oslo has a national debt some 60% the size of the economy it also has the world’s largest sovereign wealth fund.

So, just how broke are we Europeans?  Well and truly muggered! So, either Norway offers a fellow Viking asylum, or I invade.

Just call me Sven!

Julian Lindley-French

Does Germany Really Want to Save the Euro?

Vienna, Austria. 28 November. Does Germany really want to save the Euro? The great Austrian strategist Count Metternich once famously said that when Paris sneezes, Europe catches cold. Today, he would probably substitute Berlin for Paris.

I have just spent the weekend with close German friends in beautiful Vienna. The sense of pending doom was everywhere. Much of the blame for this was placed on the very narrow legalistic approach Chancellor Merkel has adopted in this crisis. Her focus on a ‘new treaty outside the treaty’ is seen as the financial equivalent of discussing patio design as the house burns.

The Euro may be beginning the death-dive from which it is unlikely to recover. The costs of Italian borrowing reached record highs last week, Belgian and Hungarian national debt was reduced to junk status and even a bond auction for mighty Germany flopped. And yet Berlin continues to insist on disaster-defying ‘red-lines’ that seemingly have little or nothing to do with the danger of the moment.

Vienna knows a thing or two about death dives. In the nineteenth century the death-dive of the Austro-Hungarian Empire led to the ‘shot that rang round the world’. By trying to hold onto a swathe of the Balkans its final dying act led indirectly to World War One.  It was the mother of all unintended consequences that swept the ruling Hapsburgs away. A relatively minor shock brought the whole rickety edifice crashing down. Just like the Euro today. In fact it was a miracle Austria-Hungary endured as long as it did. This was due to a mixture of luck, geopolitical convenience and a few able leaders and statesmen such as Count Metternich. Absent of any of the above and the empire’s fate was sealed.

However well-meaning Chancellor Merkel may be, ‘able’ is not a word I would associate with her leadership thus far of what is fast becoming an existential European crisis. The French and Germans last week failed to agree a common strategy and thus failed to reassure the markets. In a clear sign of the times my sources within the European Commission tell me the minor ‘nobility’ of the Euro-Aristocracy who work therein have been told to say nothing that might harm the Euro, whilst being encouraged to consider how best they might protect their own savings. Nice people. Of course, the rest of we Europeans are being left to the dogs. That is what aristocracies do at times of crisis – look after their own. It is the Brussels Onion at its very worst, and there are some who actually want these people to run our lives.

The thing about crises is that the choices they generate are never comfortable.  I found last week’s picture of ‘Merkozy’ instructing Mario Monti, their new man in Rome, quite nauseating. Naked German and French power and electoral politics are clearly at play behind the pretence of Berlin and Paris to be speaking for Europe. As a Briton I also find it galling that the world’s fifth or sixth largest economy has been deemed by the disaster-defying duo simply not to exist. Although much of the blame for that I lay at the door of PR-Meister Cameron who has been ‘outed’ by this crisis as a very little leader of an increasingly irrelevant country. Above all, as a Dutch taxpayer, I find it particularly distasteful that two so narrowly-motivated foreign politicians are deciding the future fate of my hard-earned money.

That said someone has to act. The stakes are now simply too high. Debt defaults, bank failures, single-market destroying currency swings are just around the corner, maybe even widespread social unrest. Indeed, if the investors who have hitherto provided the bridge between what EU member-states can afford and what they spend really take fright the EU itself could be in danger. And yet Chancellor Merkel seems strangely immune to the immediate, the need to reassure the Dark Lords of the Market Universe and fight the fire which is threatening to engulf us. We get lots of strong posturing (finger-pointing, stern faces etc.) but little by way of strong leadership.

Maybe Berlin has made a secret choice; Germany would prefer the Euro in its current form to collapse, the unreformable southern Europeans to be pushed out and the currency rebuilt around a northern, western European core. Maybe it could even include the British. Now there’s a thought.  Did Cameron and Merkozy do a deal?

Certainly, Berlin's behaviour means the very real prospect now looms that the whole rickety Euro edifice will come crashing down. Just like Austria-Hungary. If Berlin does indeed have a Plan B it should perhaps consider one other truism of legalism; the law of unintended consequences. Vienna learnt that the hard way.

Nice patio, Chancellor. Shame about the house.

Julian Lindley-French

Dead Politics: Europe's Enemy Within

Alphen, the Netherlands. 21 November. One of the great doyens of nineteenth century British foreign policy Lord Salisbury could turn a phrase or two. Speaking of Britain in the 1870s he may well of been speaking of Europe (and the British bit of it) today when he said “…the commonest error in politics lies in sticking to the carcases of dead politics…we cling to the shreds of an old policy after it has been torn to pieces, and to the shadow of a shred after the rag itself has been torn away”.

The Banquoesque ghost of Lord Salisbury stalked Chancellor Merkel and Prime Minister Cameron in their 18 November Berlin talks. They talked of “decisive action” and of “working together”. Far from the making of strategy the talks were in reality about the mutual covering of domestic political rear-ends. My sources tell me a deal was done by which Cameron would accept some change to the Lisbon Treaty in Germany’s favour in return for a relaxation for Britain of what is known as the Working Time Directive. Berlin has thus provided London with a political fig-leaf to cover yet another British retreat. Berlin was thus non-business as usual, Euro-inertia at its very worst. More toy bazooka than big bazooka. Indeed, given the scale and nature of the struggle with the Dark Lords of the Market Universe, the meeting was little more than the strategic equivalent of re-arranging deckchairs on the Titanic. Britain out, Germany up, Europe nowhere.

On Friday night I attended the annual dinner of the Oxford and Cambridge Society of the Netherlands and I saw yet again the strategy-free malaise at the heart of the Euro-Aristocracy. The speaker was a senior British-born judge at the European Court of Justice. After making the usual sad ‘it’s all Britain’s fault’ apologia to impress his Continental friends he suggested that had Britain joined the Euro a) the project would have been strengthened (perhaps); and b) that Club Med would have found it far harder to have broken the rules (no way). My Continental colleagues of course gratefully accepted his offer of British guilt; pass the buck is one of Europe’s less endearing qualities. The white flag of surrender had been raised for the price of a free dinner.

However, his remarks did for me raise two fundamental questions. How do we break out of the Euro-inertia and dead politics that are killing effective crisis management? What would it take to get all EU member-states working together towards something like a credible solution? Now, I am neither an economist nor a politician, which is probably just as well given the mess that has been created by the marriage of dismal science and dismal appliance. What I am is an historian and strategist; I understand failure and thus the need for a change of plan. Put simply, we need to shift the centre of gravity of this crisis from the Euro to the single market and how to make it work better.

Plan B for Europe would have three basic elements: First, a new crisis leadership group is needed to foster fiscal discipline, political unity of purpose and leadership legitimacy. Chancellor Merkel should have insisted that in this existential crisis confronting all twenty-seven EU members it is vital London joins Berlin and Paris.  It would be leadership overseen by a new Special EU Council of Ministers to replace the proposed Eurozone organiscramble that came out of the 26 October summit. For too many years France and Germany have actively excluded Britain from their EU leadership tryst. For too long the British have pretended that what happens on the Continent has ‘nuffing to do with us, guv’.

Second, the creation of a bad sovereign debt bank would buy time for the debt recovery and thus give all-important growth a chance. 50% of all Club Med debt would be placed in this off-shoot of the European Central Bank to be guaranteed by the northern and western European taxpayer and overseen by the new Special Council of Ministers. The International Monetary Fund (IMF) would also guarantee this bad debt bank.  The new bank would probably also have to include some Belgian, Irish and dare I say French and British debt and must thus be seen as a long-term structural change to the Union, requiring an amendment to the Treaty on European Union to which London should agree.

Third, strict new rules for all Euro members aqre needed allied to a mechanism for the suspension of any member-state that breaks them from either the Euro and/or the single market. The creation of technocratic governments in Greece and Italy whilst expedient must be seen as mere stepping stones to a democratic future committed to sound financial governance. Technocracy is an alluring danger in Europe. What matters is that democratic governments better adhere to rules and thus avoid a repetition of this disaster. That means meaningful and credible compliance across all twenty-seven EU members.

As an Englishman who pays his taxes to the Dutch state I am willing to make the necessary sacrifice for the common good. However, before I do so I need to be convinced that my money will be used to work a sound plan of action and not simply despatched down yet another profligate black rhetorical void beloved of the self-serving Euro-Aristocracy.  Critically, Plan B could see Britain stay in the EU.  The alternative is that  London permanently accepts second-class status within the EU, even as it remains the second highest net contributor.  Neither the French nor Germans would ever countenance such injustice.  Millions of my fellow Britons would bring down a British government rather than accept that...and I would be amongst their fold.   

Cameron and Merkel missed a trick in Berlin. What is needed is real, radical and concerted action. What we got is more dead politics.

Julian Lindley-French

Playing the Race Card

Alphen, the Netherlands. 17 November. Racism exists. Racism is wrong. It must be confronted and eradicated. However, dealing with racism should not be at the expense of fundamental civil liberties or freedom of speech. That is what is happening in Britain as hitherto irritating political correctness tips over into something much more sinister. There was once a time when English law distinguished the criminal from the stupid. No more it would appear.

This week alone a series of media frenzies on race illustrate just how out of balance the British elite have become on this subject (the media ‘luvvies’ in the BBC are forever lecturing the country about racism and it is utterly nauseating). The England football captain John Terry is under criminal investigation (yes, a criminal investigation) for an alleged racist remark made during a football match against Anton Ferdinand, even though Mr Ferdinand himself did not bring any charge. Yesterday, the Football Association brought charges against Luiz Suarez of Liverpool for an alleged racist slur against Manchester United’s Patrice Evra. At the other end of the spectrum Sepp Blatter, the Silvio Berlusconi of FIFA, suggested there was no problem at all with racism in football when clearly there is. And, much more seriously two men are on trial in London for their alleged part in the racist murder of Stephen Lawrence, a young black man back in 1993.

Racism clearly is a problem in Britain. However, seen from the Dutch side of the North Sea the obsession of the British elite with racism seems unbalanced and dangerous. The Dutch take a much more common sense approach to it and whatever the insinuations of right-winger Geert Wilders, Dutch society seems far more balanced in the way it deals with racism. The tragedy for me as an Englishman is that the tipping of political correctness into legal repression will not make British society any happier. Indeed, attempts to use the law to mask a failure of policy will simply drive racism underground. And, in some respects reinforce the sense amongst the decent but squeezed middle that they are now part of an oppressed majority in which their legitimate concerns about mass immigration and the failure of government to deal with it is somehow racist. I travel regularly to Britain and each time I hear basically the same message; political correctness is getting worse, minorities are being favoured at the expense of the majority, freedom of speech is being crushed by draconian laws.

Now, I write this as someone who has been at the sharp and wrong end of prejudice and discrimination. I know what it feels like and, believe me, my life today is still blighted by it. However, a fairer society will not be achieved by trying to legislate racism away. Racism is driven by fear and at this time of acute economic stress the resort to law is simply another example of a failure by the political class across the political spectrum to serve the interests of the people of Britain as a whole, irrespective of colour and/or creed.

The Left experimented with mass immigration on the British people in pursuit of a multicultural fantasy. All they did was to create yet more ghettos. The Right experiments with notions of economic liberalism to drive down employment costs whatever the human cost. Meanwhile the so-called UK Border Force is in the headlines for suspending passport checks and thus failing to properly control immigration. The result? Britain is fast becoming a country divided utterly against itself.

There is no silver bullet for racism. The only way for government to address racism is to establish a bipartisan, long-term policy that progressively removes the fear and mistrust that is driving it. First, properly re-establish border controls based on an immigration policy that is seen to work. This government is failing that test badly. Second, move away from the multiculturalism which has exacerbated the problem towards a long-term process of integration. That will mean on occasions confronting some practices which challenge the very foundations of Britain’s legal philosophy and culture, such as the informal use of Sharia Law and forced marriage. They have no place in Britain and cannot be justified on the basis of culture. The role of education has a critical role to play. Third, when racism is openly stated with a clear intent to incite race hatred and violence then and only then apply the full force of the law.

Above all, re-establish the faith of the majority that there is some semblance of balance.  The playing of the race card is ever more evident. Last night I happened to be watching a programme on a Dutch TV channel about policing in my home town Sheffield. A policeman stopped a car because its driver was uninsured. The driver was an African immigrant who immediately produced a newspaper that alleged police racism as a defence. Thankfully, the police officer was himself black and was having none of it but too often the mere suggestion of racism is enough to deter the authorities. This simply leaves the majority angry and bitter stoking racism where it may not otherwise exist.

I am no nostalgist. I have no sense that the past was somehow better. All I want is for British society to function on the basis of mutual respect and tolerance. That is not happening. And, until the British elite restore some balance to how they deal with racism it will only get worse.

Julian Lindley-French

Dear Mr Kauder, A Polite British Word of Advice - in English

Alphen, the Netherlands.  16 November, 2011

Dear Mr Kauder,

I read with interest your disrespectful public comments about Britain at the CDU conference yesterday. I particularly enjoyed your line about preventing we British from 'getting way' with our opposition to the proposed German politicians rescue plan, sorry, the financial transaction tax.  For the record I of course respect both you and modern Germany and I understand this to be a difficult moment.  However, with 400 dead British soldiers in Afghanistan and over 2000 grievously wounded, a lot of them because Germany was not prepared to pull its weight therein, lecturing we British about 'solidarity' is what we would call a bit rich.

Quite simply we British have been doing too much of the dying for Europe these ten years past for a mission in which we were all meant to be equals. Clearly, solidarity in the German you now claim Europe speaks only extends to your selfish pursuit of money, not the dangerous bits for which you seemingly expect we Britons to pay the ultimate price in great numbers.  And now you wish to further damage our fragile economy to save you from a folly we warned you about many years ago. That is precisely why we did not join the Euro. It is called sovereign choice.

Your cheek seemingly knows no bounds because not only do you want our money, but to exclude us from your nice little leadership pact with France that challenges European democracy to its core. I think in America they call that taxation without representation and they recently got rather annoyed about that.

Now, I am more than prepared to do my bit for Europe and as a Dutch taxpayer I know I will have to pay, but in return I expect your country's leadership to get its act together and face facts; the German taxpayer is also going to have to pay.  So, no more of this ridiculous anti-British rubbish simply to mask your own country's incompetence.  Let us stay focused on the economics of the matter and then we might find a way forward together.

Attacking we British in such an egregiously unfair way when Germany has shown so little solidarity with my country or respect for it over so many years will only make us fight back and you will pay a price for that. Surely, you Germans have learned by now never to under-estimate we British. Treat my country with respect and you might get a respectful answer; treat us with contempt and we will show you what contempt means - in English.

If you wish to properly understand the situation you might wish to consult three of my recent blogs which have been published on leading European and American web-sites: No Taxation Without Representation; Solidarity: The Emptiest Word in Eurospeak; and my most recent, A German Europe or a European Germany?

You may learn something...maybe even just a bit of respect.

Yours respectfully,

Julian Lindley-French,

The Strategic Influence Game 5: A German Europe or a European Germany?

“I have always found the word “Europe” in the mouths of those politicians who wanted from other powers something they did not dare demand in their own name”.

Otto von Bismarck, German Chancellor, 1871-1890

Alphen, the Netherlands, 15 November. Germany has never found the leadership of Europe easy to attain or to execute. And yet Germany today finds itself the unrivalled leader of the European Union. Can Germany for once get leadership right?

Only at the very 1871 beginning of modern Germany’s uneasy existence was Berlin led by a man who grasped both the possibilities and dangers of German power. The very creation of the then German Empire rocked the rickety European balance of power to its core. And yet somehow Iron Chancellor Otto von Bismarck steered Germany (relatively) peacefully through a minefield of competing European interests. With his dismissal in 1890 by an unbalanced Kaiser Wilhelm II Germany and Europe began the long slide towards the twin and linked catastrophes of World Wars One and Two.

Today Germany is back. It would be easy to think that the ‘sudden’ emergence of Germany as Europe’s natural leader is a consequence of the Eurozone disaster. In fact Germany has been slowly recovering its position at the centre of European power politics since 1945. And yes power politics still exist in Europe even if masked by the political correctness of Euro-speak. The Eurozone Summit Statement of 26 October simply made German leadership official.

The facts speak for themselves. The 2011 German economy at $3.3 trillion or €2.5 trillion is at least 30% bigger than that of either France or Britain and thanks to reforms in the mid-naughties structurally far more efficient than either. At 81,729,000 the educated German population is again 30% bigger than the two other members of the EU’s so-called ‘Big Three’. Critically, Germany is the world’s second largest exporter with exports accounting for some 33% of national output. For all the current German angst the Euro has been the great German wealth creator. Indeed, Germany’s 2011 trade surplus stands at $20.7 billion or €15.2 billion, some 66% of that exports to its indebted Eurozone partners. Quite simply, the Euro has offset the high cost of German production and created a customs union (Zollverein) for German exports, which was Germany’s 1914 war aim.

So, the EU has done for Germany what two disastrous wars could not, cement Germany as the natural leader of Europe and by extension supplant Britain as the natural European strategic partner of the United States. But here’s the rub; just when Europe needs decisive German leadership Berlin is unable to deliver. Indeed, having gained the power and influence that her political forebears dreamed of not-so-Iron Chancellor Merkel is probably incapable of exercising it either for the good of Germany or Europe.

First, the German Constitution is a direct descendent of the 1948 settlement imposed by the victorious allies upon a defeated Germany. Its very purpose is to prevent the concentration of power in one set of political hands in one Berlin place at any one time. Consequently, Chancellor Merkel possesses nothing like the domestic political authority of either President Sarkozy or Prime Minister Cameron.

Second, the current generation of German leaders are the heirs of a political culture that was so successfully ‘de-nazified’ they still find the concept of German leadership at worst abhorrent or at best uneasy. The whole point of German power is not to have strategic influence, especially of the ‘nasty’ military variety and especially over other Europeans. Germany will thus endeavour to ‘rule’ through the European Commission.

Third, having gained more from the Euro than any other EU member-state the German people are not at all interested in paying to rescue it, demonstrating the limits to their (and Germany’s) ‘Europeanness’. This explains Chancellor Merkel’s reluctance to let the European Central Bank act as the lender of last resort to the Euro-rule-breaking southern Europeans. It also explains her efforts to get countries that have far poorer GDPs per capita to pay for the still-born European Financial Stability Facility.

Equally, there are signs that Germany is slowly re-learning the art of Realpolitik. The opening of the Nordstream gas pipeline last week suggests a new strategic energy relationship with Russia which will concern Central and Eastern European states. The democracy-defying Franco-German presumption of Eurozone leadership suggests that Berlin might be overcoming some of its power reticence. And, the implicit anti-Britishness that has long been a factor in German foreign and security policy has been evidenced by the effective exclusion of the EU member-states with Europe’s strongest financial market from Franco-German leadership of this first order European crisis.

Consequently, Berlin and London are now on collision course.  On 14 November both Chancellor Merkel and Prime Minister Cameron made speeches calling for fundamental reform of the EU.  However, whilst Merkel called for "...not less Europe, but more" and an overhaul of EU treaties to force fiscal union, Prime Minister Cameron called for the aviodance of "grand plans and utopian visions" and saw the future of the Union as having the "...flexibility of a network, not the rigidity of a bloc".  They meet soon; that should prove interesting. 

For all that history is only so eloquent when considering Germany and Germany’s place in Europe. Berlin’s leadership must therefore be given the benefit of the doubt so long as there is any doubt left about how Germany intends to exercise strategic influence. Germany is no longer ruled by the Kaiser or Hitler and the wars are now but distant memories. Germany is a model European democracy and shows no signs of wavering from a path set for it by the victorious allies.

But the question remains; a German Europe or a European Germany? Berlin will need to work hard to convince ALL Europeans that it knows the politically-correct answer to that most seminal of strategic questions, whatever the temptations for domination afforded by the Eurozone crisis, whatever the democracy-destroying expediency of the moment.

Julian Lindley-French