As Germany comes to celebrate the 25th anniversary of the fall of the Berlin Wall it emerges ever more as the European Union’s masterminder, as well as the most popular country on the planet, supplanting the U.S. How could a country that was labeled as the ‘sick man of Europe’ up until a decade ago turn again into an economic and political powerhouse?
Nowadays Germany came to primacy in continental Europe by acting as a ‘civil power’ – the leverage being its economic and political clout, not its army.
The huge economic effort that the Bundesrepublik undertook in the aftermath of the reunification would draw all its energies for the next twenty years. According to economists and international observers, at the root of Germany’s economic troubles experienced throughout the second half of the Nineties up to the Great Recession lies the ‘shock’ provoked by the reunification, along with a too rigid job market, a generous welfare system and a restrictive monetary policy.
As the new millennium unfolded Germany recorded consistent progress on multiple indicators – from pro-capita GDP growth to the curbing of the federal public debt.
In a globalizing world in which conquest has given way to influence Germany has discovered the path to European primacy without employing an army – in contrast with previous attempts carried out by Kaiser William II and Adolf Hitler. XXI century Germany is no longer a “fascist power”, rather it is a “geo-economic power” that pursues its national interest openly and without caring to look for compromises – the burden falls on the other EU member countries, which have to accommodate for Berlin’s stance.
A very much less ‘altruistic’ Germany successfully implemented both an efficient geo-economic strategy that carried out much-needed structural domestic reforms and at the same time a geo-political strategy built upon a solid economic diplomacy through which Berlin set up strategic partnerships with key geo-economic players. By doing so Germany favored its exports and secured its energy needs. Berlin maximized its soft power.
Germany’s key socio-economic stakeholders – namely political parties, trade unions and the organizations representing manufacturing and services companies – agreed on four critical long-term goals for the country to be attained: the maintenance of the social market economy model; the defense of the industrial base; the fostering of innovation through research and development; the promotion of the country’s international reputation and the search for new trade markets worldwide. Germany’s economic recovery proves that it is feasible to invert one’s course, thus becoming competitive once again.
Now in spite of the hype around the ‘German example’. the German Ordnungsystem – that is its peculiar ordoliberal system of rules and values – cannot be replicated.
What other European (and non-European) countries should do is to study the German paradigm so to take advantage of the best practices that are instrumental to their path of reforms – with a firm commitment to boost competitiveness. Take Italy for instance. The Belpaese, led by Europe’s youngest Prime Minister Matteo Renzi, needs to set up and implement a geo-economic national strategy aiming at “shaping globalization” – favoring its comparative advantages (middle and high-end manufacturing; agri-food business and its natural and cultural heritage) and implement a long-run foreign policy based on efficient economic diplomacy – which is exactly what Germany did.
Sure enough Germany is not immune from troubles. Just to name a few, its economy is too dependent on exports, its government shows one of Europe’s lowest level of public investment and its population has been shrinking since 2003. Moreover, its growing leverage on the European level is raising more than few concerns.
However, it must be recognized that 25 years after the fall of the Berlin Wall and the end of the East -West divide, a united Germany boosts a success story. Berlin kept up with the challenges posed by globalization through an upgrade of its economic and social system while keeping at the same time its proper set of values and its national identity.