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Germany's Accidental Empire

Politics / Germany Jun 17, 2013 - 10:34 AM GMT

By: Andrew_McKillop


Historians say the Holy Roman Empire was founded on Christmas Day 800 AD but its maximum power and reach was from about 1200 – 1750 AD, weakened by “turf wars” with the Ottoman Empire in the east and rivalry with Louis XIV of France in the west, Louis XIV being the cousin of the last great Holy Roman Emperor, Louis I of Hungary.

Arms of the Holy Roman Empire
The Emperors used the double-headed eagle as a symbol of their authority.

Usually not placed on the high ground by historian explaining the fall or dissolution of the Empire, its arcane and complex money and finance system, or systems also weakened  it. For its core area – including today's Germany, Holland, Poland and Austria – the operating money systems were the Thaler-using, Guilden-using and Merck-using regions, but monetary control was woeful. Historians explain that while the 3 basic currencies remained stable in their correlation – and to a large extent in their international exchange rates – an immense chaos and instability held sway underneath this broad pattern. The coins issued by regional authorities of the Empire continuously changed in value. Some places had coherent systems of their own local minted coins, but others shared the coins of neighbouring territories or even the whole Empire.

Anyone thinking this sounds like the Eurozone and its north-south and east-west divides, is right.

Throughout the Empire, and beyond it, merchants and commercial activity spread the different moneys. Local authorities advised their citizens at what rates they should accept coins minted elsewhere, but top-down key events in the Empire's always troubled monetary history certainly include armed threat to the Empire from the Hussites – what can be called proto-Protestant zealots of eastern Europe. Prompted by Hussite threat, the Imperial Diet of 1422 held in Nuremberg created the Army of the Empire by demanding specific contingents of troops and payment for them from all parts of the Empire. After more than 12 years of war against the Hussites the Imperial Army put down their threat – but the Army was limited by how much money could be raised to pay for it. Regular high level meetings attempted to maintain funding, and therefore troop strength, but manning levels declined over the decades and then centuries. A special monetary unit – the Romermonat – was created to represent the monthly cost of maintaining the Imperial Army but this money unit, the Romermonat, suffered major inflation.

Today, European and international political commentators ask if Europe is now living in a modern German version of the Holy Empire, a German European empire?

In multiple interviews requesting anonymity in return for speaking with media, for at least the past six months European Commission insiders paint a picture of intensely sharp divergences of opinions on German dominance of the European Union, the critically divisive effects of austerity policies, and the relevance of supposed “key uniting themes for Europe” ranging from the euro currency and the competitiveness fetish to the Holier Than Thou low carbon climate-energy policy of the Union.

But there is a first question.
How has Germany come to dominate the European Union?

The shock answer to this – but almost any honest German politician (therefore a tiny minority of German or any other politicians) will say so - this happened entirely by accident. Germany has created or acquired an ‘accidental empire’. Very logically there is no master plan; there is no intention to physically occupy Europe, and no abiding or core German interest in the Thaler-Guilden-Merck money system, presently bundled together and called “the euro”.

The Romermonat for a standing, unified, all-European Army of sufficient size to count on the world scene has been calculated – and is too high. The accidental German Empire does not have a military basis, so the talk about a re-militarized ‘Fourth Reich’ is simple anti-German hysteria mongering, reducing the empire to exactly what it is – an economic empire in dire straits. But this again does not especially concern Germany – it is not in dire straits even if the large majority of all other EU27 member states are in crisis – sometimes what looks like terminal economic crisis. For extremely powerful historical reasons, almost “race memory”, Germans have a horror of weak money, national debt, and debt disaster. Despite this, they are in the midst of one.

Germany lived its own monetary and economic catastrophe, all alone in 1922-1923 and the role of war debt and reparations payments until 1933 have a sombre place in the national psyche. Although this is a long way back, Germans have a low tolerance threshold for bad management of national finances. This leads to non-German accusations of the country being arrogant or smug – or Holier Than Thou.

In Germany and other parts of the not-so-holy European empire, forebodings and  anticipation of a European catastrophe, with frankly stated fears that the Eurozone and even the European Union might break down or fly asunder, have caused the landscape of power in Europe to change fundamentally. Real and imaginary crises swirl across the TV screens of Europe, starting with the divide of Eurozone and non-Eurozone countries. These are drifting apart a lot faster than the world's tectonic plates. The example of the UK is especially tragi-comic. It is a member of the EU but not a member of the Eurozone and how “the zone” settles its own problems does not concern Britain, despite PM David Cameron trying to tell Europeans he is still “in charge of changing the European situation”. Non-Eurozone countries, not especially including or led by the UK, have tended to become strident about how much – that is how little – they intend to pay into any grand anti-crisis fund, or go on paying into current bail out operations. This split is also operating within the Eurozone countries, between the lender countries led by Germany, and debtor countries presently not led by anyone despite French pretentions that they have a credible “anti-austerity leadership policy”.

As a result, Germany the strongest economic country has become the most powerful EU state.

The question of whether austerity policies are dividing Europe does not need to be asked. The policy is economic suicide, only gives more and further ammunition to the Keynesians, and can easily provoke a breakdown of civil power and authority in the rising number of victim countries. This is of course very evident, but doing anything about it is not. Present austerity programmes are easy to call rank provocation because from a sociological point of view because they redistribute risk away from the banks, through the states, to the huge number of losers - the poor, the unemployed, the young and the elderly. This is an amazing new inequality layer added to the European economic empire's layer cake, but through only looking at it in national terms and categories the trees hide the forest.

Unremarked by most, the Eurozone-Rest of Europe divide is also religious. Nearly all the PIIGS countries of the Eurozone are deeply Catholic, while non-Eurozone countries and Germany are heavily dominated or influenced by Protestantism. At the same time there are two leading ideologies on austerity policies. The first one is the Angela Merkel consensus model, where decisions – even wrong decisions - always take a long time until some kind of consensus appears, also reinforcing the message that it is Germany which decides. To the extent this is a deliberate strategy, it can be interpreted as designed to send that message.

But this ignores why Germany takes so long to decide and unveils the second ideology. The Protestant Ethic dating from Martin Luther – a key player in the demise of the Holy Roman Empire's ideological unity – says that spending more money than you earn is not just a question of pragmatism, but also of underlying ethical values. Certainly since the time of the German sociologist – Max Weber – what can be called the sociological view embodied in the Protestant Ethic is also called 'pure economic rationality'. Holders of that economic orthodoxy see themselves as Protestant teachers instructing Catholic southern European countries on how to correctly manage their economies.

This has already created another ideological split because Protestant 'honest dealing' in no way squares with the robber baron ethics of the Cyprus bail-in, designed and operated with full German support. Worse still, the strategy does not seem to be working. Even more unsettling to Germans, they are cast as the lenders of last resort when TSHTF.

The ideological split cuts down a further layer by exposing the roles of chance versus planning. The Protestant Ethic is at the least risk averse. Even the mention of a term such as “the risk society” is shunned by any German politician wanting to be re-elected. At its simplest the reason for this is that  the term ‘risk’ signifies that we know about and can cope with uncertainty, but “risk society” is a far more threatening and bigger concept evoking a situation where individuals and enterprises are not able to cope with “systemic” uncertainty and its unpredictable consequences. As German opinion polls show in the run-up to the Sept 2013 general elections, many voters fear that systemic risk is what the Eurozone – and even the Union – now means.

Risk aversion is castigated by a huge number of economists and political economists, especially American. For them, it is the denial of modernity. The history of western society and economic progress since the Industrial Revolution can be cast – at least until about the 1970s - as a long period during which there was plenty of room for experimentation. Errors were made, for sure, but modernity triumphed.  Modern German political economists have a completely opposing view, saying that since the 1980s or before, and due to the success of modernity we now face consequences for which “there are no answers”, among them climate change and the urgent need for decarbonized energy.

Climate change and the financial crisis are seen by an important segment of German intellectuals and political thinkers as fundamentally related. For them, the financial crisis is an example of the victory of a certain strand or interpretation of modernity, related to the still ongoing and unsuccessful remake of Western ideology since the fall of communism, where by default “the market” became the only solution for all problems. This neo-liberal solution said that the more we increase the role of the market, the better, but now we see that this model is failing and we don’t have any answers.

Drilling further down, for example to Goethe and Nietsche, the apocalypse streak in German culture jumps to the surface. Not making a distinction between a risk society, and a catastrophe society, can be explained by this. In a catastrophe society the motto is ‘always too late’, but in a risk society future catastrophes are anticipated in order to prevent them from happening. Unfortunately any imagined potential catastrophe is by definition not supposed to happen – the financial system could entirely collapse as the Eurozone unwinds, or several nuclear power plants could explode threatening the whole of Europe with fallout – but there is no way to experiment with this. Claiming the precautionary principle is paramount makes risk calculating impossible. We are supposed to anticipate something that “cannot happen”,  which is an entirely new situation.

Staying in Germany and with the German psyche, Angela Merkel as recently as 2010 said she did not believe that Greece, Spain and other PIIGS countries posed a major risk to the Eurozone, or that nuclear power plants were risky, dangerous and expensive. In both cases, she made a “180 degree turn”, in the nuclear case a few weeks after the Fukushima disaster of March 2011.

The exact set of new responses, attitudes or values, policies and programmes that come out of the 180 degree turn do not -unfortunately- have to be the right and best ones. For sure, Merkel looked into the eyes of real or potential catastrophes and suddenly new things became possible. Already however, at most two years on from Angela's ideological coming out on Greece and nuclear power, the results are for the least ambivalent because they can be used different ways. Concerning the Eurozone crisis, they can be used to develop a new vision for Europe, or used to justify leaving the European Union. For nuclear power and Germany's Energiewende the supreme irony could be that Germany seeks to “Europeanize” the new debt racked up by de luxe energy transition.

Doing nothing until “consensus exists”, due to catastrophe, is for the least sloppy planning but we have to fear this behaviour is hard-wired into the human psyche, not only German society.  But as German politicians are now able to say, and still hope to be re-elected, Europe was thrown together on a big pile of institutions, laws, and economic regulations coming faster and faster, but nobody asked what the European Union means for individuals. What do individuals gain from the European project? Answering that question is becoming the new and real challenge, over and above the thrilling fireside chat about catastrophes, but with frighteningly sure and certain panic whenever, or if ever a real catastrophe arrives.

By Andrew McKillop


Former chief policy analyst, Division A Policy, DG XVII Energy, European Commission. Andrew McKillop Biographic Highlights

Co-author 'The Doomsday Machine', Palgrave Macmillan USA, 2012

Andrew McKillop has more than 30 years experience in the energy, economic and finance domains. Trained at London UK’s University College, he has had specially long experience of energy policy, project administration and the development and financing of alternate energy. This included his role of in-house Expert on Policy and Programming at the DG XVII-Energy of the European Commission, Director of Information of the OAPEC technology transfer subsidiary, AREC and researcher for UN agencies including the ILO.

© 2013 Copyright Andrew McKillop - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisor.

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