D J Webb
With Greece and the Ukraine frequently in the headlines, it seems we are witnessing international events that could well have a formative impact on international relations in the decades ahead. Just as with a shift in tectonic plates in the earth’s crust, the political geology is changing. Russia’s chafing at its treatment has been discussed in many places, but as central to international affairs is the rise of Germany and the potential for disagreement on key international issues between Germany and the US.
The European Union
We can begin our discussion with the Western alliance under US leadership. This is underpinned by an array of institutions, including the EU, NATO and also the role of the IMF. In the view of the Americans, Europe is a cacophony of nations, 28 nations, to count those in the EU, that are difficult to herd in behind the leadership of America. Consequently, the European Union makes a more coherent whole out of Europe, one that is able to agree on key international positions with the US and then implement them globally in a united fashion.
It is also true that the EU is viewed by many Europeans as a counter to US hegemony. Some argue that the US fails to realize the real nature of the EU. However, to the Western élite, the EU forms part of the Western alliance under US direction, even if the form it takes is of an organization that is occasionally able to stand up to the US.
The contradiction is therefore inherent in the organization: the EU is both part of the US-led Western alliance, while it is also an organization with the potential to rupture that alliance, or turn that alliance into something that has twin centres of gravity, where the US has to pay some attention to European views. Tensions with the US are implicit in the structure.
An additional consideration is that powers like France have sought to use the EU to bind Germany into the West. This is important because, following 1991 and the reunification of Germany, the EU was always going to be different. The collapse of the Soviet Union meant the EU needed the US less. The hegemony of an enlarged Germany was going to be harder to prevent within the structure of the EU. This has nothing to do with hysteria over German power in the manner of some eurosceptics. Germany’s rise to geopolitical prominence is a natural consequence of its population size, its industrial prowess and large GDP, its central geographical position in Europe and its geopolitical circumstances.
It isn’t even all that clear that the Western alliance has any real point now that the Soviet Union is no longer with us. One could argue, therefore, that following the demise of communism, the tensions inherent in the EU challenge to the US would always eventually mean the end of US political dominance in the European continent. From being, at least in part, a tool for US control of Europe (and of Germany) and a tool for France and others to anchor West Germany into the wider structure of the West, the EU naturally now becomes a vehicle for German power, first economic power, and eventually geopolitical power, as continental European nations fall into line behind Germany’s bid for regional hegemony.
That the EU is a structure that aims to restrain Germany over the long term is clear from the introduction of the euro. France insisted on this as the price for allowing German reunification in order to ensure that Germany remains part of the project of forging a united Western alliance. The curious thing is that the very introduction of the euro ensured that German financial power would rise quickly to dominance over the weaker euro members, thus accomplishing the opposite of the aims of the French. You clearly cannot stop a nation from becoming more powerful by making them join a currency union. Germany now dominates the currency union.
Military and financial relationships
The one thing in the way of a German rise to hegemony is its lack of military spending. This means that European nations still depend on the US for a guarantee of their national sovereignties. While this is the case, the Western alliance hangs together. Consequently, following the rupture of the Iron Curtain, the Western military alliance, NATO, has not been folded up. Its retention represents an attempt to keep the West together, and maintain ultimate US dominance over the whole structure.
Yet NATO’s stated reason for existence is collective self-defence, and logically this means self-defence against Russia. As long as Russia is a threat to the West, the Western alliance remains viable, and indeed necessary. The maintenance of NATO ensures that Russia’s hackles remain up, posing a threat to Germany more than to the US. The threat appears only notional at present, but that may not be the case in two or three decades’ time.
The other key institution that promotes US power is the IMF, one of the Bretton Woods institutions, based in the US. The voting shares in the IMF give majority control over it to the Western powers, a fact that vexes developing nations, including China, India, Russia and Brazil. The advent of the euro appeared initially to present a threat to the dominant role of the US dollar, but it has since become clear that this is no longer really the case. The IMF has also been “captured” to some extent by the Europeans, in that the organisation is usually presided over by a European, thus ensuring that the wider interests of the Western alliance, including those of the Europeans, prevail.
The eurozone crisis
A somewhat tired configuration of international relations was therefore the backdrop going into the eurozone crisis. Clearly Germany is going to take a bigger role in the future. Even if they are reluctant to do so, their hand has been forced by the eurozone crisis. The various discussions on the southern European bailouts have ultimately been decided, not in Strasbourg, but in Berlin. In the Irish bailout, Ireland was required to submit its budget plans to the German government for approval, showing where the real power lay. It was even reported that, when Ireland prepared to “burn the senior bondholders”, German and French negotiators in Dublin screamed at the top of their voices at the Irish leaders, insisting on a bailout of German banks by Irish taxpayers.
It is important not to be confused by German claims that southern eurozone countries must pay all their debts “because treaties must be adhered to” and “the EU treaties prohibit bailouts”, and so on. The smokescreen is that, culturally, the Germans are stick-in-the-muds who do not agree with any deviation from rules. Nothing could be further from the truth. Had the treaties been adhered to, there would have been no bailouts; Greece, Ireland and the others would have defaulted on their debts; the senior bondholders (banks in Germany and elsewhere) would have taken a large hit; and an economic depression could possibly have resulted throughout the EU.
That is what “sticking to the rules” would have implied. Instead, the Germans insisted that Irish, Greek and other taxpayers take on more debt in order to bail out the German banks from having to bear the burden of their own investment decisions, thus extending the situation long enough to ensure that the central European financial institutions had time to prepare financially for any eurozone exit by the likes of Greece.
This was pure power politics, something that the German chancellor, Angela Merkel, claims to eschew. More money was lent to Greece and Ireland, nearly all of which went in principal and debt repayments to German and French banks, with the new debt imposing fresh burdens on their economies. The twist is that the new debt is mainly to eurozone governments, the European Central Bank and the IMF, thus making it harder for the southern eurozone countries to default on the new debts. German banks got off lightly, and the financially troubled nations took on all of the burden of the bailouts. In the case of Greece, in particular, the result has been to turn the country into a debt colony of Germany, a tragedy now playing out before our eyes.
The role of the IMF in the bailouts was interesting. This organization is committed, by its own rules, only to bail out countries on a sustainable basis. To take part in a bailout that leaves the country more indebted while less able to grow again is a fraud. Yet the IMF is under European management, and the main interest of the IMF was, not to stabilize Greece, but to defend the euro. The IMF, discreditably, helped to force the Greek taxpayer to bail out the German banks. Clearly Germany and the US both agreed that the eurozone banks were more systemically important to the global economy than Greece, and so the interests of Greece were abandoned. Interestingly, all the non-Western directors of the IMF subsequently lodged a protest about the Greek bailouts, which were transparently not designed to help Greece. The world seems to be wakening up to the fact that financial institutions like the IMF are just agents for the West’s wider agenda in the lull before China emerges as a substantial geopolitical competitor of the US.
The Ukraine crisis
The Ukraine crisis has involved both the EU and NATO wings of the Western alliance. Clearly Russia sees the Ukraine as a subordinate country, and regards the sweeping ever nearer to Russia’s borders of NATO and the EU as an existential threat. Consequently, EU attempts to bring the Ukraine within the EU orbit were highly provocative, setting off a chain reaction of events that ultimately led to the toppling of the elected Ukrainian president and his replacement by candidates effectively chosen in Washington.
It is not all that clear that either the EU or NATO have ever really wanted the Ukraine as a member. But geopolitical games being played in Kiev have dangled that prospect before a gullible Ukrainian population. Of these two threats, NATO is the more dangerous in Russian eyes. NATO has been expanded, not exactly to threaten Russia, but to keep the Western alliance intact under US control. Germany is ultimately kept under the US wing by the existence of NATO.
Here too, the “rule-based” international framework the Germans claim to like can be called into question. A former US secretary of state, James Baker, recorded in his memoirs that the Soviet leader, Mikhail Gorbachev, was assured that NATO would not be expanded up to Soviet borders. This (verbal) agreement was violated with the accession of the whole of Eastern Europe, and even of Estonia, Latvia and Lithuania, which had previously been Soviet republics.
Germany’s claim that the Ukrainian crisis is dangerous because “you can’t change borders” also falls foul of the comparison with Germany itself. The reunification of Germany is the major change in international borders that has expanded the power of a single country. A further example is German support for the independence of Kosovo from Serbia. The Germans don’t seem prepared to acknowledge the comparison with the Crimea, which, like Kosovo, sought to be detached from the country that it was in.
Unlike the eurozone crisis, the Ukraine crisis is one where Germany is to some extent on the back foot owing to its military weakness. Germany has greater economic links with Russia than does the US, but if it came to military intervention in the Ukraine, only the US could do it.
Germany is also distracted to some extent by the eurozone crisis, and worried that the joint US and EU imposition of sanctions on Russia will harm the economic recovery of the eurozone. The result is that Mrs Merkel, while making anti-Putin noises, has been trying to restrain the US from overtly stirring up the Ukrainian situation further, and, in particular, from supplying weapons to the Ukraine in a way that would fuel the conflict.
Interestingly, Mrs Merkel speaks Russian and is the West’s pointman when it comes to dealing with Russia, but she can only play this role in so far as a military solution to the conflict is avoided. The divergence of US and German interests in the Ukraine raises further questions over the viability over the long term of the Western alliance. It seems likely that without NATO and without the US involvement, the Germans could reach a mutually acceptable deal over the Ukraine with Moscow. To that extent, NATO has begun to imperil, rather than defend, Germany’s security.
An additional fact about the politics on the international stage is that, while the West claims to be a united alliance, the Western powers are engaged in competitive grandstanding on the issue of the Ukraine. The UK is sending 75 troops on a training mission to the Ukraine, largely to remedy its failure to be involved in the recent peace talks in Minsk. If this remains only a training mission, it is tokenistic. Yet it signifies the irresponsible way the Western governments use international affairs to burnish their domestic legitimacy. The UK and, to some extent, Lithuania and Poland may be acting as proxies for the US as they seek to bid up the tensions in the Ukraine. The Lithuanians and the Poles have their own reasons not to wish to accede to Mrs Merkel’s attempts to sweep the issue under the carpet.
Finally, in terms of the Western alliance and its institutions, the IMF, which threw Greece “under the bus” in a lousy bailout, has repeated the trick in the Ukraine. A failed bailout in 2014 is being replaced by a second bailout now under negotiation, and there is little likelihood that this will financially stabilize the Ukrainian economy. Instead, what seems to be happening is that the IMF is playing the role of a belligerent in the conflict, engaged in direct financing of a war. It would make more sense to tell the Ukraine that they must first negotiate with Putin before receiving bailout funds, as any fresh outbreak of war would see the bailout overtaken by events.
Germany v. Russia
It is true to say that Putin is a thug, whereas Mrs Merkel is not. The Germans may be reluctant imperialists. In fact, a poll conducted in Germany in 2014 showed that 60% of Germans did not support a larger diplomatic role on the world stage for Germany. Nevertheless, Germany appears to have no choice, and when forced to do so, it has defended its interests in a way that has effectively subordinated other countries to Berlin.
It is true that the Ukraine has suffered a 7.5% fall in its GDP over the last year, and a huge collapse in the value of the hryvnya from around 8 to the dollar to around 33 at one point. Russia’s insistence on dominating the Ukraine bids fair to destroy the economy. But what about Germany’s actions in Greece? Greece has seen a reduction of around 28% in its GDP since the onset of the recession.
Germany is not waging hybrid war in Greece in the manner of Russia in the east of the Ukraine, but the subordination of Greece to Germany bears full comparison with, and even goes further than, the subordination of the Ukraine to Russia. There is therefore very little reason to believe German claims to be horrified by Russia’s behaviour in the Ukraine. One is a rising power, the other a declining power at present. That is wherein lies the difference.
The role of the recession
An economic crisis is always a good time for a shift in global international relations to speed up. Although it is true that, unlike in the 1930s, there are no communist parties or workers’ movements for Western élites to fear, and so crises can muddle on apparently indefinitely, it is also true that the economic backdrop creates a crisis of legitimacy for all the governments involved. Recession has weakened US economic hegemony and called into question the economic setup in Europe, which leaves the geopolitical framework curiously operating in a vacuum. At the same time, the eurozone crisis underlines the economic risks of too rapid a change in international politics. Global politics seems to be in some kind of hiatus, waiting for the rise of China, and in the meantime US hegemony continues by default.
The economic circumstances will play nursemaid to the emergence of a new form of global politics. There is no agreed long-term framework for global governance. Russia is patently waiting for the collapse of Western power, and looking anxiously forward to a dedollarized world. It is important to emphasize that, while Russia has declined in terms of its global reach since 1989, the country is not out for the count yet. Over the longer term, the ageing of the German population and slow economic growth in the EU may see Russia re-emerge as the most powerful country in Europe. It may feel to the Russians as if they are being treated as the vanquished of World War II and Germany as the victors—they may feel as if they have lost the peace after winning the war—but territorial size, a large population and natural resources mean that it is too soon to draw this conclusion.
The longer-term problem for the West is its embrace of political correctness, and, in particular, of the immigration of population groups that are hard to assimilate. Both Western Europe and the US are ripe for decline in these terms, while Russia still has time to reassert its fundamental strengths. We are told that by the end of the century, the UK will end up with a larger population and GDP than Germany, and will thus be the “paymaster” of the EU. However, this will have been “achieved” purely by immigration from the Third World, which is ultimately a weakening factor. Furthermore, the UK is not geographically central to the EU in the way that Germany is.
Taking all these factors together, the result, one that will play out over the rest of our lives, is likely to be the alienation of Russia from the West, an eventual breach between Germany and the US in international affairs, a reintroduction of national currencies throughout the EU, the rearmament of Germany at least to the extent where it can defend itself without a NATO guarantee, a possible collapse of the EU entirely and an emergence of blocs within what is now the EU in support of either Russia or Germany. We can see the latter dynamic beginning to play out in Greece and Cyprus. England plays a role in this largely as a sidekick to the US and a supporter of the US notion of a united Western alliance. Over the longer term, we may be asked by our politicians to choose between Germany and Russia. Libertarians should choose neutrality, in my view. In any case, the passing of the era of US hegemony is not to be regretted, given that the US has played its hegemonic role with much less style and caution than previous hegemonic powers.
