Buoyed by solid finances, roaring exports and low unemployment, Germany increasingly sees itself as the only grown-up in Europe, responsible for bringing wayward children into line to hold the family together.
The children are not enjoying it. Some, such as the Cypriots and Greeks and many Italians and Spaniards, are openly resentful of ‘Mutti’ (mum), as Berlin officials privately call Chancellor Angela Merkel. Others, such as the French, are sulking.
The mood among German politicians and officials is one of economic self-confidence tinged with a sense of parental duty to provide the eurozone with stiff-backed leadership, even if that makes them unpopular in Europe.
“German policymakers have taken to their new-found status with something close to gusto,” Simon Tilford, chief economist at the Centre for European Reform, said in the latest edition of the London-based think-tank’s bulletin.
“They routinely tell other eurozone countries how to run their economies, citing Germany as a model for the currency union as a whole.”
The view from Berlin, set out by a range of policymakers who spoke on condition of anonymity, is that Germany has a unique responsibility for the survival of the single currency area as its biggest and most dynamic economy.
The subtext is that since the Germans are the main bailout contributors and have most to lose in any collapse of monetary union, they must ensure that their partners cut their deficits, implement reforms and avoid mistakes that could sink the euro.
German confidence in the ability of the European Commission and the European Central Bank to hold to a firm course without yielding to political pressure is limited.
Hence Berlin’s insistence on involving the International Monetary Fund in all eurozone financial rescues and its own willingness to play bad cop, even if that means Merkel being burned in effigy or dressed in Nazi uniform by protesters.
Some European partners and many economists argue that her recipe of a synchronous fiscal contraction across Europe is deepening recession and raising unemployment and could turn the sovereign debt crisis into a social and political tsunami.
“Prolonging austerity today risks not achieving a reduction in deficits but the certainty of making governments unpopular so that populists will swallow them whole when the time comes,” French President Francois Hollande warned last week.
“I perfectly accept that European countries have to be rigorous, and France first of all. But not austerity, because sticking with austerity would condemn Europe not just to recession but to an explosion.”
In Berlin, such comments elicit a rolling of eyeballs. From Merkel on down, German leaders feel the French have not taken the measure of the crisis facing Europe and their own economy.
“There is a lack of will, a lack of awareness. What is needed is an emergency U-turn,” said a Francophile German lawmaker, adding: “There is still no clarity over their deficit reduction plans.”
German leaders like to remind visitors that a decade ago their own country was depicted on the cover of The Economist weekly as the “sick man of Europe” for its rigid labour market, ineffective bureaucracy and low competitiveness.
“We are quite a good example of a success story,” says one senior politician who was in opposition in 2003 when Social Democratic Chancellor Gerhard Schroeder pushed through a tough overhaul of labour laws and reduction in unemployment benefits.