The End of German Exceptionalism
The country is joining the European mainstream, with its political class struggling to counter rising far-right support and an economy that is no longer best-in-class. A sked what came to her mind when thinking about Germany, former Chancellor Angela Merkel once said , I think of airtight windows. No other country can build as airtight and as beautiful windows. With its history tainted, post-1945 Germany looked to its economy for a positive conception of itself. The goods Germany produced, such as those quality windows, allowed politicians to celebrate the country as an export world champion. Germany Inc., was a well-oiled capitalist-corporatist ensemble. Trade-union leaders and CEOs strategized instead of shouting at one another, and the success of German industry offered an unsullied source of pride. So did the fiscal conservatism and hawkish monetary policy that allowed the Federal Republic to master high inflation in the 1970s and 80s better than the rest of Europe and the United States were able to. Economic success provided Germany not only with a postwar identity but also with the power of attraction. During the Cold War, the promise of a freer, better life in the Federal Republic prompted East Germans to flee the Communist German Democratic Republic. When they toppled the Berlin Wall in November 1989, East Berliners first stormed Kurfurstendamm, the shopping street and temple of capitalism they had fantasized about but had never gotten to see. German leaders relied on the countrys economic might to power reunification, co-build the European Union, and welcome Syrians escaping civil war in 2015. Just three decades after reunification, per capita GDP in the former GDR is higher than in many regions in northern France. Unemployment , at 2.9 percent, is well below the U.S. or EU average, even though Germany took in a million Syrians in 2015 and another million Ukrainians in 2022. Berlin remains the biggest financial contributor to the EUthe organization Paris initially designed to keep postNazi Germany in check but that has now made war between its 27 members close to unthinkable. Yet an economy, even Germanys, is a slender thread on which to hang a national identity. When France struggles with unemployment, the French still have the revolutionary myth of 1789 and the Eiffel Tower. When Greece is on the brink of default, the Greeks still have Plato and olive trees. When the United States skirts another financial crisis, there is still the American dream and Beyonce. But what happens in an economy in search of a political raison detre, as the historian Werner Abelshauser once described the postwar Federal Republic, if its GDP suddenly stops growing? We are about to find out. Germanys economy is running out of steam, and not only because of COVID or because Russian President Vladimir Putin has turned off the gas tap. Together withand perhaps because ofits economic malaise, the country is living through a political earthquake. Germanys wealth, its exemplary parliamentary democracy, and its big efforts to confront its Nazi history are no longer keeping nativist parties at bay. Two years into the government of Chancellor Olaf Scholz, the far-right Alternative for Germany (AfD) is polling as high as 20 percent. This July, the AfD got its first mayor elected with 51.1 percent of the votes in the town of Raguhn-Jenitz in the eastern state of Saxony-Anhalt. George E. Bogden: Germanys unkept promise The AfD figurehead Alexander Gauland once said that Hitler and the Nazis are just a speck of bird poop in more than 1,000 years of successful German history. The AfD opposes weapons deliveries to Ukraine and wants to terminate economic sanctions on Russia. Split about whether Germany should leave NATO, the party agrees that all U.S. troops should vacate the country and the Ramstein air base be shut down. The party also wants the country to stop using the euro and dissolve the European Parliament. As the third-biggest contributor to the United Nations, Germany should have a permanent seat on the Security Council, the AfD program states. The party denies that climate change is human-made, wants to make abortions an exception, and wants to classify Afghanistan as a safe country, meaning that asylum requests from Afghans would be only rarely granted. The AfD co-leader Tino Chrupalla also wants schools to teach more German poems, even though, when asked, he is unable to name a single one. A recent poll shows that, notwithstanding this radical program, only 57 percent of Germans now say that they could never imagine voting for the AfDalmost the same percentage, incidentally, by which Emmanuel Macron won the second round of the French presidential election in 2022 against the nationalist Marine Le Pen. We are living through the end of German exceptionalism. The countrys economy is fragile, and the rise of the AfD makes its politics as unpredictable as those of Austria or Italy. In short, Germany is joining the European mainstream. And that means that trouble is ahead. I n late 2022, Germanys economy entered a recession that lasted at least until spring 2023 and may yet continue. The longer-term picture is worse: The Federal Republic is the only big eurozone member whose economy has not yet fully recovered to pre-pandemic levels. In fact, German GDP has roughly stagnated since 2019. And German manufacturing is the main problem: Industrial output lags pre-pandemic levels by some 5 percent. Read: Europes sleeping giant awakens If you ask Berlin who is to blame, there seems to be just one answer: high energy prices sparked by Russias war against Ukraine. The AfD and far-left Die Linke are nostalgic for cheap Russian gas, while the opposing center-right CDU and the governing pro-business FDP blame the Greens for insisting on turning off the countrys last nuclear-power plants this spring. Scholz decided to turbocharge renewables investment, and no one in Berlin expects the government to push back the exit from coal energy from 2030 to 2038, as initially planned. But high energy prices are not the only drag on the economy, nor are they new. German electricity prices have run significantly above the European average for at least a decade, and Russian gas was never really cheap, especially if you compare it with U.S. fracking gas. The reason Germany ceased to be Europes growth engine has less to do with Russian energy than with changing circumstances in the export markets where the countrys industrial champions once flourished. In the 2000s, former Chancellor Gerhard Schroder slashed unemployment benefits and created a low-wage sector to help German exporters increase their market shares across Europe. Since then, many other European countries, including France and Italy, have made reforms to cut labor costs themselves, and Germany faces tougher competition in its biggest export market and has been running a trade deficit in goods with other EU members since 2020. Outside the EU, made in Germany goods struggle to find new clients. Exports to China have been roughly flat since mid-2015 and may even start to drop, as President Xi Jinping has made clear that he wants to make his country less dependent on European industry. German car exports to China were down 24 percent in the first three months of 2023 compared with the same period in 2022. The U.S. is Germanys second-largest market after the EU, accounting for 8.9 percent of its exports, but to top off Germanys troubles, Washington is becoming more protectionist under Joe Biden. The Inflation Reduction Act, for instance, includes purchase subsidies for electric vehicles that primarily benefit buyers of cars produced in North America. So what can Berlin do if exports wont be driving German growth anymore? The obvious solution is for Germany to spend more. Greater investment could raise productivity in a country where the railways have the worst delays among major European countries and cellphone and internet connectivity are underfunded and therefore patchy . Investment could boost demand, and liberalizing policies could rebalance the economy toward services. But a dogma of balanced budgets and debt avoidance remains deeply anchored among German politicians and voters. Germans dont seem to feel much urgency around these questions at the moment. Unemployment is still low. In Mannheim, students are out and about, enjoying spaghetti ice cream, the local speciality, priced at 5.80, while the once slightly rundown Berlin Kudamm feels more and more like the manicured Avenue Montaigne in Paris. In March this year, Chancellor Scholz even said the country will soon see a new Wirtschaftswunder Germanys age of postwar growtha prediction that should leave any economist gasping. In short, the penny has not yet dropped. Germanys political elite hasnt been moved to take the risky step of running up debts and liberalizing at the same time. But until it does, the countrys economy will likely lag European growth. And if the economy ceases to serve as a source of national pride, political forces may thrive by brandishing more nativist concepts of German identity. M ore and more governments across Europe are led by right-wing parties: in Italy, Sweden, Finland, and soon possibly Spain. In all of these countries, the center-right no longer has qualms about working with the far-right. Now Germany, whose effort to confront its Nazi history seemed to inoculate its politicians from having to deal with a large far-right party, is also falling prey to populism and nationalism. Read: What Germany says about far-right politics The AfDs rise to 20 percent in the pollstwice what it commanded in the 2021 parliamentary electionshas many causes. The partys bastion is the formerly Communist east, where authoritarian attitudes and resentment of traditional parties feed off of feelings of having been the losers in Germanys reunification. But something broader is going on. For Germans, the hallmark of good government is Ruhe und Ordnung , calm and order. The three parties in Scholzs ruling coalitionthe center-left SPD, the Greens, and the pro-business FDPsquabble over everything, including whether to ban gas heating systems, how to deal with China, and whether to raise the child-benefits system. The result is neither calm nor order, at a time when inflation and the energy crisis are already destabilizing life in Germany. The party has also benefited from a backlash against Germanys progressive agenda on climate and migration. Despite the countrys reputation abroad as a climate champion, in a poll of seven European countries , Germans were the least willing among Europeans to switch to electric cars, cut meat consumption, or spend out of their own pockets to renovate their houses to save the climate. As for migration, racist views are ingrained in Germanys formerly Communist east, where more than 28 percent of survey respondents agreed that Jews have something special and idiosyncratic and dont really fit with us, and roughly 20 percent said that the crimes of the Nazi regime had been grossly exaggerated. Half of those surveyed wanted a ban on Muslim immigration. But the AfD has also been able to mobilize an anti-immigration electorate in big, rich, formerly West German states, such as Bavaria, the land of Siemens and Weisswurst , and Baden-Wurttemberg, home to Mercedes and Spatzle . Economic conditions as well as refugee crises likely have something to do with the rightward shift on this issue. In the late 1960s, when West Germany hit its first postwar economic recession and migrants from Southern Europe and Turkey started working in its factories, the neo-Nazi NPD won 9.8 percent in Baden-Wurttemberg and 7.4 percent in Bavaria. In the 1990s, when Germany struggled with high unemployment and refugees came from the former Yugoslavia, the far-right Republikaner easily won 10.9 percent in elections in Baden-Wurttemberg. Both parties vanished into irrelevance when the center-right CDU shifted its migration policy to the right. The eastern states of Thuringia and Saxony will hold elections next yearnational elections will follow in 2025and the CDU will need to decide whether it will continue marginalizing the far-right or start working with it instead. The AfD is leading the polls in Thuringia and polling a strong second in Saxony. The national leader of the CDU, Friedrich Merz, says he will not work with the AfD, but in Berlin many fear that the local CDU branches in Thuringia and Saxony may decide to do it anyway. Merz cannot prevent this if he does not want to risk splitting the party in two. G ermany is joining the European mainstream, with its political class struggling to counter rising far-right support and an economy that is no longer best-in-class. The two things that made postwar Germany unique in Europe are no more. Even Germanys football team, second only to the economy as a source of post-1945 national pride, is not what it used to be. Germanys declassement is a problem for the country itself, but also for the EU. When the blocs ancestor, the European Coal and Steel Community, came into being in the 1950s, its raison detre was to domesticate Germany and stabilize the continent with it. Later, the EU started to rely on Germany as its anchor. The German economy was strong enough to help finance the European project, and its politicians were often far-sighted enough to realize that advancing the EU was in Berlins interest. Now the rise of the AfD is pushing Berlin to become an unreliable partner in Europe. The CDU was once the champion of Schengen, the EUs policy to allow for passport-less travel across the continent. The partys leader, Merz, clearly concerned about covering his right flank, has now called for reintroducing passport checks at Germanys borders with other EU members, such as Czechia, in order to turn away migrants. The Scholz government surprised Brussels by torpedoing at the very last minute a decision to ban the sale of combustion-engine cars in Europe as of 2035. The FDP, which was the main force behind this decision, received a much-needed boost in the polls as a result. As the AfD criticizes the reckless spending of the Scholz government, the FDP and the chancellor are doubling down on spending cuts. Germany is becoming less willing to spend for itself and the EU. For a decade, pundits speculated that France, led by Le Pen, would put the European project to its biggest stress test. But instead the German speed car seems ready to cut across France to the chase. The AfD may one day accede to national government, but it cannot do so on its own. To work in a coalition, the party will almost certainly have to compromise on its most radical policy propositions, such as closing the U.S. military base in Ramstein. But even with the AfD merely exerting pressure on German politics, the EU must sooner or later face an adjustmentto a future in which Germany is no longer an economic and political anchor so much as a source of instability.