The Great Debate

How many countries will Germany need to bail out before it has erased the guilt of the Holocaust? That is the provocative question posed by Thilo Sarrazin, a publicity-hungry maverick whose 2010 book attacking immigration shattered Germany’s political consensus and sold more than 1 million copies. Last week he returned to the scene of the crime with a new book called Why Europe Doesn’t Need the Euro. In a much-quoted passage, he says supporters of eurobonds are driven “by that very German reflex according to which atonement for the holocaust and the world wars will never be complete until we have delivered our entire public interest, and even our money, into European hands.” This title has raced to the top of best-seller lists and sent jittery markets into panic. Sarrazin is a narcissist who is more interested in self-promotion than serious analysis. But his views on Europe – as well as the political class’s reaction to them – tell us a lot about how the euro’s political travails have come about, as well as how they are likely to unfold.

An opinion poll last week provides just the latest proof that Sarrazin has his finger on the national pulse: Over half of Germans think their country has suffered by joining the euro, while 79 percent reject eurobonds as a solution to the crisis. Sarrazin – a former regional politician and Bundesbank governor who was stripped of his official positions because of his views on immigration – is not a man to do things by halves. His book breaks not one but two German taboos by linking Holocaust guilt with questions about the sustainability of the euro. (It is designed to be a refutation of Angela Merkel’s argument that the breakup of the euro would lead to the breakup of the EU.) But although – or rather because – Sarrazin is so good at mirroring public opinion, the German political establishment is falling over itself to bury his arguments: Peer Steinbrueck, the former finance minister (and possible candidate for chancellor), described it as “bullshit”; while the current finance minister, Wolfgang Schaueble, described it as “appalling nonsense.”

The antics of Thilo Sarrazin are a product of the constrained, elitist nature of German politics where – after the experience of National Socialism – many topics are declared outside the realm of political competition. As a result, all mainstream parties are in favor of Europe, the euro and the Atlantic alliance, and against war, inflation and nationalism. The result is a restricted political sphere where politicians have often been able to act against public opinion without fear of challenge – including the decision to replace the über-popular Deutschmark with the strikingly unpopular euro. But those who dare cross the threshold of political correctness – as Sarrazin has repeatedly done – tap into a vast reservoir of pent-up popular frustration. And because the establishment cartel turns them into outcasts rather than arguing with their views, this reservoir continues to grow.

What is worrying is that Germany’s leaders are now trying to treat foreign politicians who question German orthodoxy the same way they treat their own populists. When I was last in Berlin, I asked one of Merkel’s aides what he thought her greatest achievements during the crisis were. He replied: “We could teach the neocons a thing or two about regime change.” He may have been joking, but the brutal way that Merkel and Sarkozy used markets to topple Berlusconi and Papandreou has been replicated in the treatment of other leaders. First, Angela Merkel tried to dismiss François Hollande – not simply saying she disagreed with his views on the fiscal compact but refusing to meet him during the election campaign (the implication since the election is that it is all right to campaign in French, so long as you govern in German). And now they are trying to turn Alexis Tsirpas – the firebrand leader of the Greek anti-austerity Syriza party – into a non-person. A chorus of European politicians are trying to scare the living daylights out of the Greek people in the hope that the electorate will give a mandate to the mainstream New Democracy party, which had supported the bailout package. My hunch is that this approach is unlikely to deliver a mandate for New Democracy, and even if it succeeds, it could be undesirable. If European leaders want a sustainable deal that keeps Greece in the euro, they would do better to bind parties like Syriza into an agreement than to tie themselves to an ancien rĂ©gime that has already lost much of its credibility.

One of the ironies of the last few days is that Angela Merkel allegedly asked the Greek prime minister to call a referendum on whether Greece should stay in the euro. Back in December, Angela Merkel and Nicholas Sarkozy forced George Papandreou out of office for suggesting just such a referendum. At the time, I believed that allowing the political process to unfold might have given Papandreou a mandate for standing by his agreements with the EU. However by suspending the political process and imposing a technocratic government, Merkozy did lasting damage to the legitimacy of formal politics in Greece and has created the conditions for populism to flourish.

The situation in Greece shows how Europe’s technocratic tendency is leading to a strong populist backlash. The traditional “Monnet method” of European integration – named after the French founder of the EU who tried to turn political issues into bureaucratic ones – has dramatically narrowed the political space in member states without creating any widening of the space for politics at a European level. Telling a politician such as François Hollande – who has received a mandate to renegotiate the fiscal compact – or Alexis Tsirpas in Greece that “there is no alternative” sends a terrible message to European publics: They can change governments but not policies. The markets have a legitimate fear that unless leaders take the necessary steps toward integration, the EU will collapse. But this approach of imposing rules on the grounds that there is no alternative in fact risks creating a full-blown rebellion, making it harder for countries such as Greece to undertake reforms.

So far, Germany’s willingness to bankroll the European project has kept the show on the road. But the most worrying feature of the Sarrazin story is that it shows how even in Germany, the power of pro-European elites is challenged. The rise from nowhere of the Pirate Party – a ragbag collection of Internet activists with no political program to speak of – that is now polling in double digits in some regional elections shows how fluid German politics has become. It is unlikely that the anti-charismatic Sarrazin will end up becoming the German equivalent of Holland’s Geert Wilders or Austria’s Joerg Haider. But the refusal of mainstream politicians to make the case for European integration or to engage in full-throated political competition with their opponents could pave the way for someone equally undesirable to claim that mantle. It would be a tragic paradox if the German establishment’s guilt over past extremism hampers its ability to overcome the populists of the future.

PHOTO: Former German central bank executive and controversial author Thilo Sarrazin leaves after he attended a news conference to present his latest book Europa brauch den Euro nicht (Europe Doesn’t Need the Euro) in Berlin, May 22, 2012. REUTERS/Tobias Schwarz