The ‘Reluctant Hegemon’: Germany in the EU’s Post-Crisis Constellation

Abstract

The financial crisis and the subsequent sovereign debt crisis in the eurozone has caused a fundamental shift in the EU’s internal power balance. The economic weakness of France and the other two larger Eurozone countries Italy and Spain has pushed Germany as the largest Eurozone member state with the strongest economic performance into a dominant position as agenda-setter. The German chancellor Angela Merkel has been reluctant to accept her country’s new unintended position as a hegemon in the EU. Under her leadership the EU has responded to the crisis by creating a new complex policy framework with multiple levels of responsibility. The new setup poses substantial risks for Germany’s future position in the EU. Germany’s insistence on putting fiscal austerity at the heart of the EU’s emerging post-crisis agenda has alienated many member states, particularly those who face grave social consequences as a result of the crisis. Moreover, the German ambition to push the eurozone towards full political integration risks dividing the EU’s membership base into a core euro insider vs. a periphery outsider group. The strengthening of the supervisory powers of EU’s institutional level has as of yet unpredictable consequences for sovereign national policy-making. This chapter argues that the post-crisis internal setup in the EU poses the substantial risk of long-term political isolation for Germany if its leaders fail to present a broader vision for the future of the EU. At the same time Germany’s good relations with countries in Central and Eastern Europe present an opportunity for the country to form new leadership alliances and to counter renewed fears of a ‘German Europe’.