Why the Euro Crisis Divides Germans and Americans
BERLIN—During the last five years, relations between eurozone countries have become increasingly acrimonious as they have argued about the causes of the crisis and how to resolve it. But the crisis is also causing tensions to increase between Europe, and in particular Germany, and the United States. Since the beginning of the crisis, many Americans — from former U.S. Treasury Secretary Timothy Geithner to Nobel-Prize winning economists such as Paul Krugman and Joseph Stiglitz — have vociferously criticized the German-led response. Germans, meanwhile, have long been dismissive of these criticisms. But during the last few weeks, the animosity between Germany and the United States seems to have increased further. For those of us who care about the future of the transatlantic relationship, this should be worrying.
Many Germans view Americans’ criticisms as unhelpful at best and cynical at worst. They often suggest that U.S. critics of German and eurozone policy — embodied by Paul Krugman — simply do not understand Europe or the euro. For example, in a recent interview with the German weekly Spiegel, German Finance Minister Wolfgang Schäuble said that although Krugman might have won a Nobel Prize in economics, he has “no idea about the architecture and foundation of the European currency union.” Others suggest that U.S. critics are motivated by a kind of anti-German racism. In an acidic recent profile in the Süddeutsche Zeitung, Krugman was accused of being part of an “anti-German hate campaign.”
The spat between Krugman and Schäuble might suggest that this is an argument that runs along straightforward left-right lines. After all, Krugman is equally vociferous in his criticism of right-wing “austerians” in the United States, and for that matter of the Conservative government in the United Kingdom, as he is of the Merkel government. But although that might be reassuring for concerned Atlanticists, it is too easy. It is true that the debate about the crisis is in part one between Keynesianism on one hand and neo-classical, neoliberal, or ordoliberal economics on the other. But the reality is that there is a remarkably broad anti-Keynesian consensus in Germany that includes the center-left as well as the center-right. This consensus is the reason why foreign critics, including Americans, tend to generalize about the “Germans.”
The difficult question is to identify why Americans and Germans have such different views of the euro crisis. While many Americans would say they think in more strategic terms, for example about the consequences of a “Grexit,” some Germans argue that they simply have different economic interests. After all, whereas Germany’s economic interests are those of a creditor country, the United States is — like Greece — a debtor country. This may for example influence different attitudes to inflation, which creditors tend to oppose and debtors tend to support. But if this really is the key fault line, it is even more worrying for Atlanticists. After all, this is a fault line that splits the West down the middle, with the eurozone “core” (that is, creditors) — together with China — on one side and the United States, the United Kingdom, and the eurozone “periphery” (that is, debtors) on the other.
However, even if Germans are right that criticism by present or former members of the U.S. government such as Geithner reflect the economic interests of the United States or those of debtor countries in general, it does not explain why Germans are so dismissive of criticisms of academics such as Krugman or Stiglitz or of the “simplistic” coverage of the euro crisis by newspapers such as The New York Times. (In a recent article a reporter for the Frankfurter Allgemeine Zeitung described The New York Times as “the foreign policy mouthpiece of the U.S. government.”) Germans should engage with the substance of criticisms by such independent voices instead of simply dismissing them with ad hominem arguments or seeing them as part of a conspiracy against Germany. That way, perhaps Americans and Germans can have a reasoned discussion about the substance.
Hans Kundnani is a senior transatlantic fellow with GMF’s Europe program, based in Berlin. Follow him at @hanskundnani.
The views expressed in GMF publications and commentary are the views of the author alone.