September 19, 2005

A strong Germany is bad for Ireland

Posted in Celtic Tiger · 3 comments ·
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If you want to understand the next leader of Europe’s most powerful and important nation, get your hands on a copy of Stasiland by Ann Funder.

This brilliant book deals with the emotional scars left on the entire East German population by the Stasi – the state secret police.

The Stasi spied on neighbours, friends and families. It ran a system of informers and snitches so extensive that even the KGB thought it was over the top. As a result, East Germans were a terrified people locked into their socialist paradise.

I remember as a student getting a train from East Berlin to Prague in the summer of 1989 – a few months before the regime collapsed. As the train snaked through the still bombed out remains of Dresden, I struck up conversation with my fellow travellers – a husband and wife. After a few minutes, the man told me that their son was in prison for the crime of trying to leave the country.

His wife told him to be quiet because, although I was clearly foreign, the Stasi were everywhere. He didn’t open his mouth again and remained almost frozen, eyes fixed on his plastic shoes, for the rest of the journey.

This is the paranoid twilight world in which Angela Merkel grew up. It is a world a million miles away from the traditional, cosy, corporate world of the Christian Democratic Union party that she now heads.

The party is dominated by Catholic west German men and she is the daughter of a Lutheran pastor. She is an outsider. Close colleagues suggest that she does not trust people; and given where she has come from, it is not hard to see why. Yet this diminutive physicist from the East could well be the key to the future direction of Germany and Europe.

East Germans – her people – suffered more than other Germans in the past 100 years. They experienced close to 60 years of totalitarianism, first under Hitler and then under a series of Moscow stooges who imprisoned them both physically and mentally up to 1990.

During unification they had to suffer the humiliation of being the pathetic, grabbing little brother that existed on handouts from a grudging sibling in the West.

The social dislocation of unification has been traumatic for the majority of Ossies (as they are still known in what was West Germany). However, this very experience is what makes Merkel different.

She has seen her people go through a most unedifying transition, when they lost their country, their jobs and their sense of dignity. If they could withstand it, the westerners could withstand some degree of turmoil, albeit something much milder, like reform of their welfare state.

She is a politician devoid of nostalgia.

Like many central Europeans, she has no political heritage to draw from. Her ideological slate was blank in 1990, and she is more persuaded by free-market economics than the �cradle to the grave” welfare system – the so-called Rhineland capitalism – that dominates traditional German politics.

She is more like the free marketers of the Baltics and the Czech Republic than the traditional CDU corporatist supporters. She has no longing for the West Germany of the 1970s and 1980s with its high wages, high social security and generous handouts, because she never experienced it. So when she says she will change Germany’s economy, she means it.

If she does manage to get the world’s third largest economy back up on its feet, should we in Ireland rejoice? Conventional wisdom would say yes. Germany is Europe’s powerhouse, it controls our monetary union, surely a strong Germany is a strong Europe and a strong Europe is good for Ireland?

Well yes, up to a point, but on closer analysis we see that Ireland thrives when Germany is weak and falters when Germany is strong.

The reason for this is that we have for years been the jockey riding two horses – the European nag and the American jennet. We are financially and politically tied to the EU and Germany via our currency and EU membership, but are culturally tied to the Anglo/Americans via our business culture, trade flows, investment decisions and language.

When both horses are going together all is well for the jockey, but when the horses move apart the jockey’s position gets very uncomfortable. Over the past ten years Europe and America have drifted apart economically and politically and a pattern has emerged that makes Ireland unique in Europe. We are the only EU nation that does better when the EU is weak rather than strong.

So we should applaud German fragility and fear German strength.

Because we are part of the Anglo American rather than European business cycle, we get a great deal when Germany is on its knees and America and Britain boom. Our interest rates fall to German levels, giving us a free lunch, yet our main markets remain buoyant.

Our euro exchange rate also falls when Germany is weak, so we – as an exporting nation – are more competitive on world markets and look cheap to our American multinational investors.

Also, as Germany no longer builds our roads via EU handouts, its budgetary position is of no consequence for us (I accept that this looks ungrateful, but we are talking Realpolitik here � a word the Germans invented).

Probably the greatest benefit to Ireland from a weak Germany has been people. Because unemployment is so high in Germany, it closed its doors to workers from the new eastern EU countries for a period of five years. This means that these immigrants had to go somewhere else. They came here, an influx of white, Christian immigrants – perhaps the last great movement of such people the world is likely to see.

We got the best, the cream of the immigrant crop. The young Polish, Baltic, Czech and Hungarian immigrants who eschewed closed Germany in favour of open Ireland are educated, culturally similar to us and their children will integrate effortlessly here.

These immigrants are the next Ryanair Generation and they are emigrating by text. They are coming here happily on cheap flights prompted by messages from their mates, using prepaid mobile phones. A quick glance at Ryanair’s new destinations announced this week from Stansted (which serves Dublin), reveal that nine out of the 12 are central European cities.

Thus, although we are Europeans in the geographical sense of the word, we should hope this evening that the German electorate does not give Angela Merkel an overall mandate to reform the country. A hung, indecisive Bundestag would be good news for us. To paraphrase the old nationalist slogan: Germany’s difficulty, Ireland’s opportunity.


  1. Aidan Kehoe

    You should really have phrased that in a way that doesn’t
    look like you would be rubbing your hands at Germany’s
    misfortune. Your points are good, but the presentation is
    guaranteed to have any German reading it swearing at you,
    and more suspicious of Irish motives in general.

  2. juergen franz

    remarks from juergen: Realpolitik, David? There is a
    huge price to pay for all of us EU citizens should the
    current ” Economic Sickman of Europe” remain in bed
    for too long. Watch this space !

     

  3. leon08

    For a German, an interesting comment to read. I don’t wish any crisis like the present Irish one to any country, however after reading such a comment obviously I do not feel overly sorry either at the extreme reversal of fortunes. In a way, your predicition proved true. Germany’s astonishing return to economic strength paralleled with the Irish crash.
    Apparently, the migration wave you were talking about will not have been the last. With German unemployment at 18year-low, on its way to sink a lot further and the Irish back around 15%, I guess some Easterners might exchange Ireland for a more thriving place in Central Europe soon!

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