Germany’s Chronic Free-Riding

Back in October of this academic year I wrote a post prompted by Der Spiegel‘s reporting on the gross under-preparedness of the Germany military. It seems things have not gotten much better in the intervening months; on Thursday this week the Washington Post published an article with the headline, “Germany’s army is so under-equipped that it used broomsticks instead of machine guns.” Just one day later, writing for Foreign Policy, one Patrick Chovanec argued (a bit provocatively) that, “It’s time to kick Germany out of the Eurozone.” On the surface it might not seem like the two have anything to do with each other, but in fact the calamitous state of Germany’s military and the basis of Chovanec’s argument for Germany’s ejection from the Eurozone are both representative of the state’s chronic free riding.

The military case is fairly straightforward. As a member of NATO Germany can safely shelter under the security umbrella provided by the dominance of America’s armed forces, and as a country with a pretty good reason for having cultivated a post-war culture of international relations pacifism it can get away with letting other countries deploy to deal with far-flung regional crises (e.g. France in Mali, or NATO-but-not-Germany in Libya).

The economic case is less obvious, but no less present. Really you should just go read Chovanec’s piece in its entirety, but a condensed version might be something like: “Germany’s chronic surpluses have financed the massive debt loads of Europe’s southern periphery, and instead of forcing multiple countries to undergo painful internal devaluations it would be easier to have one country undergo a relatively painless re-valuation (in appreciated Deutsche marks).” Leave aside for a moment that the politics of this (and the Eurozone is fundamentally a political construction, not an economic or monetary one) are impossible – it’s certainly a more elegant solution than anything that has been tried or realistically considered so far. And so far, German policy has been laser-focused on allowing the country to enjoy the fruits of Eurozone membership while shouldering almost none of the costs. A Germany proactively interested in the Eurozone’s success would have ages ago tolerated serious inflationary activity from the ECB, it would invest and spend more domestically, and it would not have rammed punishing austerity down European throats.

Germany has clearly emerged as the economic and political hegemon of post-1989 Europe, but its policy choices relentlessly ignore a sense of concern for non-German interests.* At some point this will become politically unsustainable; German leadership in Europe cannot amount to a dogged insistence on “balanced budgets or else” or “the only solution is a diplomatic one”. Whether in economics or foreign affairs, if Germany is to continue getting the results it says it wants, it will eventually have to start itself taking steps to achieve them.

*Of course, a German policymaker might retort with, “How does that make us any different from any other country, and by the way think how much better Europe would be if everyone behaved like us.”