Part I: How Germany is destroying itself and the EU

The European Union is an empire. This empire is now failing economically and civilisationally. Economically, it is falling behind other advanced economies world-wide since at least the 2008 Great Financial Crisis. In this regard, the EU resembles previous empires which were still expanding geographically as their foundations had begun to crumble. EU economic decline has been across the board. Since the introduction of the euro in 1998 the EU has had markedly lower aggregate and per capita GDP growth than almost all advanced economies world-wide.

Over the last ten years, the EU’s economic decline has accelerated, with the EU-US growth gap widening and the three largest EU economies becoming the sick siblings of the world economy. In the fast-growing tech and digital transformation sectors there is not a single large-scale EU company able to compete with US or Far Eastern tech giants, and the EU is lagging behind in the development of EVs, life sciences and even solar energy technology. The bloc is rapidly de-industrialising due to the EU’s energy and climate policies.

Germany in particular is facing her greatest economic crisis since the Second World War, from which it is unlikely ever to recover. This is not an exaggeration. What is in doubt today, more than at any previous point for 250 years, is Europe’s position within the developed world. Europe is de-developing, and moribund Germany is leading the way.

Europe today is where it is, because EU politicians failed to consolidate the steady economic achievements of the EC era, and in the 1990s fell prey increasingly megalomaniac ambitions which were defined increasingly in terms of political and moral leadership rather than economic prosperity.

There are at least four such grand delusions, beginning with the euro. I will cover the next three in further columns.

Today, the euro: The driving motives behind monetary union were political more than economic. Marketed as a vehicle for monetary stability, it was aimed to further EU integration and driven by the imperial idea that the EU should have its own international currency which, in time, could emulate the US dollar as the word’s reserve currency. It failed in all three respects.

Following a brief period of apparent stability, the single currency triggered a major sovereign debt crisis. The euro was eventually saved, but at enormous costs, both in terms of the misallocation of financial resources and by inflating the money supply and accustoming Europe’s political class to loose monetary policy and the idea that ever-higher public debt and deficit levels for major social and economic experiments could be “painlessly” financed by compliant central bank intervention and debt mutualisation. And while the imperial dream of the euro was shattered by the euro crisis, the moral hazards of monetary state financing by the ECB had been unleashed.

The then head of the ECB, Mario Draghi, an ex-Goldman banker, had been pantouflaged into international central banking to safeguard the interests of the banking class. With his multi-trillion “whatever it takes” bond purchases QE programmes he handed Europe’s political class a drug they quickly got hooked on. EU policy, from that moment onward, would be infused with the hazardous illusion that all financial problems could be glossed over and dangerous social and economic policies forever be financed by the forbidden fruit from the Frankfurt money tree. Europe’s political class, over time, fell once again victim to the oldest fairy tale in monetary policy: The religion of the money tree.

Monetary union was Franco-German in design but made possible and sustained by Germany’s post-unification quest for a new regional and international role. They were the sickly paradoxical grandiose designs of Germany’s otherwise dull and political class which over time began to lay claim to moral leadership in Europe and even the world at large – delusions. This “moralising crusade” reached their height during Germany’s brief and fragile export-induced economic mini-boom in the mid-2010s. That mini-boom persuaded otherwise unimaginative and progressively economically illiterate German career politicos that anything may be possible and that after two world wars and decades of atonement it fell to Germany to assume moral leadership internationally.

How was it that post war West Germany’s political class which had deliberately abjured brilliance and adventure for the sake of stability, personal comfort and international respectability, would suddenly go in once more for grand ambitions and large-scale political designs? The catalyst was re-unification: The German political class gradually grew dissatisfied with West Germany’s postwar role as an economic powerhouse but a political dwarf. They desired a new role on the international stage that would give a bit of lustre for the notoriously uninspiring leaders of the newly reunited country – an ambitious role for which the limited scope of West German foreign politics had ill-equipped them. That explains why their ambitions soon began to outstrip their abilities. They were ambitions, I shall argue, which were the neurotic expressions of a softening German mind which, constrained by an excessively moralised political culture and looking for new meaning in an age of waning European prosperity, power and culture and civilisational pre-eminence, ended losing all appreciation of their country’s and Europe’s limited economic resources set against limitless political objectives.

Put simply, in their tragi-comical way, Germany’s political class began to display once more an astounding inability to grasp the basic causal relationship between means and ends. Paradoxically, in that regard contemporary German politicos, always so overzealous never to be German again and so desperately determined to be good internationalists, came full circle, only to make again the same fundamental error their less outwardly inhibited ancestors had made in both world wars. In particular, apart from the euro, these gave rise to at least three further grand delusions in Germany’s misguided great design for the EU which unfolded between in mid-1990s and the mid-2010s.

Politically, the main driver of these megalomaniac delusions of adequacy, was the German Green Party whose ideology gradually infiltrated the entire German political establishment including all significant political parties except the opposition AfD which was quickly and effectively stigmatised as fascist and right-wing extremist and which still is not yet perceived as a respectable alternative by parts of West Germany’s electorate. 

This explains why the German Green Party — which is, ideologically, little more than a coalition of climate alarmists, globalists, dehydrated sexual libertines and New Age utopians — has never obtained more than 14.8 per cent of the vote in a federal election (its peak result in 2021), came to dominate German and EU politics beginning with Chancellor Merkel’s long and progressive ‘Green’ Chancellorship. Green policies entered mainstream German politics because Merkel, who was widely misperceived within her own party and beyond as a rather dull but solid consensual middle of the road provincial East German party political hack, was at heart despite her public image a shrewd calculating opportunist whose historical and economic illiteracy made her blind to the explosive social and economic risks of policies fuelled by corrosive counter-cultural socially degenerative ideas without measure. More on this in my column next week.

(Ends Part I)

Dr Gunnar Beck is a legal academic and practising barrister specialising in EU law.  He has been Reader in EU law at the SOAS, University of London since 2005, and also taught at Oxford University, the LSE and MCC in Budapest. He was an MEP from 2019-2024 for AfD and deputy legal adviser (EU law) at the London House of Commons until 2010.