The Consequences of German Unification for Europe

The reunification of Germany in 1990 was widely hailed as a revolution in Europe. It marked the end of the more than forty-year division of the continent into two rival ideological blocs, epitomized by the liberal democratic capitalist Federal Republic of Germany (FRG) on the one side and the communist dictatorship of the German Democratic Republic (GDR) on the other. The absorption of the latter by the former was also seen as a tectonic shift in the European territorial and geopolitical order. Already the continent’s largest and most populous state outside of the Soviet Union, the Federal Republic was given a huge territorial and demographic boost. This increase in size and population was accentuated by the disintegration of the Soviet Union itself a year later, and the manifest economic distress of its Russian successor state, which left the new Germany in a relatively much stronger position still. In that sense, the unification of Germany was potentially an even more seismic event than the creation of the original Second Reich in 1871, given that Bismarck’s progeny was balanced by the continued existence and in some cases growth of the Austro-Hungarian, Tsarist, British, French and Ottoman empires.

All this prompted many analysts, commentators, and not a few politicians to predict the revival of German assertiveness in Europe. Conor Cruise O’Brien famously foretold a statue of Hitler in every German town square. The British Secretary of State for Trade and Industry Nicholas Ridley notoriously suggested that European Union “was a German racket” designed to take over the continent. His boss, Prime Minister Margaret Thatcher believed that Germany “would once again, dominate the whole of Europe.” She even convened a special conference of experts to the prime minister’s country residence of Chequers in the summer of 1990 to brief her on whether a united Germany could be “trusted.” Mikhail Gorbachev, the Soviet leader feared that the “rejection of the post-war realities, that is the existence of two German states,” threatened “destabilization… not only in Central Europe, but on a larger scale.” The new democratic governments in Poland and Czechoslovakia fretted about demands for territorial revision, or the return of refugees expelled in 1945. At the very least, “realist” international relations scholars such as John Mearsheimer expected a return to the past patterns of multipolar great power rivalries, in which Germany would play an important, perhaps even a dominant role.

Initially, some of these concerns seemed to be vindicated. Chancellor Helmut Kohl took his time about recognizing the Oder-Neisse border with Poland once and for all. When Germany led the charge to recognize Slovenia and Croatia in late 1991, this was widely interpreted as a bid for hegemony in the Balkans on the basis of alliances dating back to the Third Reich. On the economic front, the costs of integrating the former GDR had a profound impact on the European Exchange rate Mechanism (ERM) by which most currencies in the European Community—as it was then—were supposed to fluctuate only within predetermined “bands.” German interest rates were kept up by the Bundesbank, forcing the British treasury to intervene to support the pound against the more attractive Deutschmark at a time when the country desperately needed lower exchange rates for exports as recession loomed. When Britain eventually crashed out of the ERM, the Germans were blamed for encouraging speculative attacks on sterling. It was widely believed that the Bundesbank was, to use David Marsh’s phrase, “The bank that ruled Europe.”

In the end, however, Germany did not really start to throw its weight about in Europe. Her analysis of the conflict in Yugoslavia, which she correctly blamed primarily on Serbian nationalism, and thus her decision to press ahead on Slovenia and Croatia, was eventually endorsed by the international community. Indeed, it was German restraint rather than German activism, which irritated her allies. Kohl stood on the sidelines as the international coalition ejected Saddam Hussein from Kuwait in 1991. When Germany did eventually intervene, over Kosovo at the end of the decade, it was very much within the framework of the NATO alliance.

There were three reasons why German unification did not produce the hegemonic tendencies that many had feared. First, after a short boom, the German economy stagnated for more than a decade as the Federal Republic struggled with the integration of an eastern half wrecked by forty years of communism. Other European economies surged ahead, especially the British and the booming states on the western and southern periphery, Ireland, Spain, and Greece. Secondly, a new and more radical wave of European integration— in large part driven by concern to manage unification—succeeded in embedding Germany within a framework of common institutions and shared norms. Margaret Thatcher’s warnings that the European structures designed to contain Germany would ultimately empower her, were ignored. Primarily at French insistence, the euro replaced the mighty Deutschmark and the power of the Bundesbank appeared to be superseded by that of the new European Central Bank. At the same time, Germany and the United States pushed the eastward expansion of NATO into the new democracies of the former Soviet Bloc. These measures were not accompanied, however, by a sustained push for a matching political union, even though this would then have been welcomed by the German elites, and perhaps by the population at large.

Thirdly and in relation to that, the Germans themselves showed no signs of wanting to dominate, or even to lead in Europe. The experience of Nazism, the Second World War and of allied and self-re-education had wrought a fundamental change in the character of the people. They ritually affirmed and genuinely believed in a commitment to “work together” with their European “partners.” Indeed, the long pre-1871 tradition of federalism under the Holy Roman Empire and the German Confederation, together with the experience of the Federal Republic after 1949, made the Germans uniquely well suited to life in the European Union. Far from seeking a military role commensurate with its new diplomatic and economic weight, the Germans remained reticent about the use of military force. They preferred to think of themselves, in Maull’s phrase, as a “civilian power,” which transcended traditional geopolitics and played to their economic and cultural strengths, through conflict prevention, post-conflict reconstruction, and the spread of peaceful norms. The marked improvement in German economics after the turn of the millennium only accentuated the belief that the country put traditional power politics behind it.

This is reason why US hopes that Germany would become an active partner in managing European and global problems were gravely disappointed, not because Washington and Berlin differed on what needed doing, though they sometimes did, but because the Federal Republic remained structurally and culturally incapable of “stepping up to the plate.” In the 1990s, US policy makers were disappointed by German refusal to engage more robustly with Saddam Hussein’s territorial aggression, or Serbian ethnic cleansing in Bosnia. “War—that is something we lave to the Americans”—this phrase from a RAND study on German public opinion summed up the prevailing attitude. Washington’s irritation turned to fury in 2002–2003, when Chancellor Schroeder invoked the “German way” against “playing around with war and military intervention.” After Barack Obama’s election in 2008, fresh hopes that the new wind from Washington would produce greater German engagement in Afghanistan were quickly dashed. Neither German unification, nor the growth of the German economy a decade later, in other words, led to an increased assertion of political and military power.

The real consequences of German unification for Europe lie elsewhere, and not all of them are well recognized, even among policy-makers. The introduction of the euro, with its one size fits all interest rates, and the consequent tsunami of cheap mainly German capital created an unsustainable boom on the periphery of the currency union, which spectacularly unraveled from 2008. Ireland, Greece, Spain, Portugal and Cyprus have all been driven into various forms of international receivership, in which Germany—as the principal creditor—calls the shots within the common currency. The result has been to cast Berlin, very much against its own instincts in a leadership role, while increasingly sidelining an economically—and especially fiscally—ailing France. Without wishing to, the Bundesbank has once again become the bank, which controls Europe. And because German unification took place without a subsequent European federal political union, Berlin’s economic power now threatens to undermine the democratic will of the populations under her supervisory arrangements. All this is well known, even if the responsibility for this state of affairs, and the way ahead, are both furiously debated.

What is much less widely understood is the huge geopolitical change wrought by the eastward enlargement of the European Union and particularly of NATO during the 1990s. Ever since the Franco-German rapprochement after the Second World, Germany has faced no threat from the west; now the admission of Poland and the Czech Republic provides her with a vital buffer against the revival of Russian power. This marks the end of the Mittellage, as traditionally understood, the central location which has sometimes been a blessing but more often a curse, as the country grappled with predators on every side: the Ottoman Turks from the 15th to the 17th centuries, the France of Louis XIV and Napoleon from the 17th to the early 19th centuries, Stalin’s Russia and the Soviet Union in the 20th century, and so on. To be sure, Germany remains at the heart of the continent, but of a pacified, almost sedated, Union rather than of the ferocious cockpit of old. “For the first time in its existence,” Hans-Friedrich von Ploetz the state secretary at the foreign office pointed out as the enlargements got underway, “Germany is surrounded by allies, not enemies, who don’t see us as a threat anymore.”

This holiday from history dulls German senses of emerging dangers to the south, from terrorism and failing states, and the east, from the resumption of Russian great power ambitions in Eastern Europe, the Baltic and the Caucasus. Thus it was Germany, more than any other power, which put the brakes on a stronger response to the Russian invasion of Georgia in 2008. Germany is among those stalling on the Ukraine’s admission to NATO. It was Germany, which surprised Washington, London and Paris by staying aloof from the NATO coalition of the willing in 2011. Germany also rejected the aborted intervention in Syria two years later before it had even started. This military reticence goes hand in hand with a robust defense of economic concerns, be it interest rates in the common currency or the privileging of export sales over human rights in the EU’s relations with dictatorships such as Red China. The result, Hans Kundnani observes, has been to turn Germany into a “geo-economic power,” which is hardnosed enough when its vital commercial interest are involved, but which takes refuge in its ‘civilian’ status when the military going gets rough.

German unification has thus produced the best of all Germanies historically, but the worst of all the possible outcomes envisaged by the main western protagonists in 1990. America gave the green light for unification, but did not reap the dividends of global partnership it expected. Deeper European integration at French insistence did away with the franc, while facilitating continued German economic dominance through the common currency. The broadening of “Europe” wanted by Britain to slow down the Franco-German drive to closer union, and dilute German power, has rendered the Federal Republic safer, and thus more strategically selfish, than ever before. In other words, it was not so much the unification of Germany which transformed Europe, and empowered Berlin, but the measures designed to manage it.