Aristocrat

I will argue that first, it is not Germany’s intent to conquer Europe through socio-economic power and second that, regardless of their intent, they are not succeeding in such a conquest. My argument will be primarily based on the model of European development in which Germany plays a leading role, and the interplay of this model with internal and external forces. I will discuss this in two sections. Firstly, how the EU’s economic model came about and its concept, and secondly whether current circumstances are to Germany’s benefit.

Since the inception of the EU, the model was based on having large core producing countries, such as Germany and France, and a periphery of countries that would act as consumers for the goods produced by the core. The ensuing enlargements of the community have expanded the periphery, creating a market for industrial goods both in the south and more recently in the east. The rationale behind the model was simple: the core producing countries would continue to strengthen their industries through exports financed by the widely used vendor financing model – the seller lends to the buyer so the latter is able to buy products from the former. At the same time, the core countries would – through the established institutions of the EU – provide subsidies to countries such as Greece and Spain so that they would build and develop their own industries and eventually be able to export and balance the deficit that came from excessive imports. This would lead, or so the plan was, to a robust European economy, which would benefit the core while increasing living standards, investment and industry in the periphery.

Where this model was lacking though was in achieving the goal of gradually establishing strong industry in the peripheral countries. In the case of Greece, it can be argued that this failure was largely due to mismanagement, often due to high levels of corruption, but other peripheral countries were also faced with competition from emerging economies in Asia. The European, and largely German, model did not account for the prospect of cheap production outside of this system and imported into the EU for a fraction of the cost. This created an opportunity for the periphery to seek goods producers outside of the core in Europe, hence further undermining the core-periphery model envisioned by the creators of the EU.

Germany created a system which would, and to a large extent did, strengthen their economy and make them one of the main players on the economic stage, but I would argue that the fact that current developments are not to their benefit are self-evident. Mass immigration from the periphery into Germany has already begun. There is visible chance of a breakup of the Euro. A German currency would be tremendously expensive for an export economy. German banks had to take the largest losses on holdings of Greek debt and they too rely on financing by the European Central Bank and the European Financial Stability Facility rescue fund. A potential failure of Greece would create a questionable moral precedent over how much of a Union, the EU really is, which would in turn lead to economic, social and other instability in other countries of the Union. If a fifty year investment by Germany through subsidies, institutions, financing and development into the European project were their means of conquering Europe, to put it in broad business rules: they bought too high and are selling too low. And that is no way to conquer anything.