Streeck: The European Union should unite democratic, sovereign nation-states

Interview with the German economic sociologist Wolfgang Streeck about the political figure of Angela Merkel, Germany’s positions on refugees and debt mutualization and the future of solidarity and Europe in neoliberal times

This is an interview, which Noémi Lehoczki originally did for Merce (Hungary) with Wolfgang Streeck. He is a German economic sociologist, prolific author and emeritus director of the Max Planck Institute for the Study of Societies in Cologne. Streeck’s research is focused on analyzing the political economy of capitalism, wherein he proposes to take on a dialectical approach to institutional analysis as opposed to the more rigid varieties of capitalism. He has written extensively on the political economy of Germany and more recently has involved himself in debates over the politics of austerity, the rise of what he terms the debt-state as a result of the neoliberal revolution of the 1980s and the future of the European Union

Neomi Lehoczki (source: Merce)

Mérce is a leftist online portal and the successor to the popular blog Kettős Mérce, which was founded in 2008 and developed into a news portal in 2017. The portal publishes news and opinion pieces that present society and politics in Hungary as well as international developments from a critical, left-wing perspective. According to the editorial team, Mérce is the only media outlet in Hungary that is exclusively financed by voluntary donations from its readership.

Mr. Streeck, In your latest book, Critical Encounters, you describe Angela Merkel as “a postmodern politician with a Machiavellian disdain for both causes and people”. Could you elaborate on this?

This refers to her style of politics, which is entirely event-driven and opportunistic, devoid of any substantive core: politics tailored to the moment, essentially devised by spin doctors and made possible by the country’s high economic performance — which is in turn the result of its economically privileged position in organized ‘Europe’. The reason why Merkel as a person is so good at this may have to do with her growing up in the GDR, totally apolitical, far removed from both social democracy and Christian democracy, the ideological poles of West German politics. (When she was a child her family moved from Hamburg to the GDR; her father was a Protestant minister who seems to have sympathized with the GDR regime.) It appears that this biography, and the fact that she was not aligned to any of the — West German – factions of her party, gave her a unique preparation for post-modern politics, where the management of impressions and popular sentiments is what matters. Typically, her closest aides are public relations specialists with no political background whatever. So Merkel could move from harsh neoliberalism as opposition leader to social-democratizing her party after 2003, as Chancellor of a Grand Coalition, or from being the Atomkanzlerin (the ‘nuclear energy chancellor’) who told people that as a physicist she knew that nuclear energy was safe, to being, within weeks, the chancellor of the anti-nuclear “energy turn” after Fukushima in 2011 etc. etc.

Angela Merkel’s times will be remembered on EU level not only with the remarable affirmation of Germany as an economic powerhouse, but also with the supression of the Greek dissent and Brexit (source: Pixabay, CC0)

Talking Merkel inevitably reminds the Hungarian people of the 2015 refugee crisis. Liberals worshipped her for her open borders policies, conservatives had hated her for Willkommenskultur. But are any of these positions justified at all?

This is another example for her virtuosity as a post-democratic politician. In the spring of 2015 she failed to get her party to agree to an immigration regime that would have supplied the German economy with urgently needed labor, given the very low German birth rates. She had also suffered a rare public relations disaster when on live television she told a young Syrian refugee, a girl, that she might have to return to Syria because “we unfortunately cannot take everybody”, upon which the girl started crying. In the subsequent uproar on Twitter Merkel earned the nickname, ‘Ice queen’. Then came the Budapest railway station, and Obama’s demand that Germany, having under Schröder refused to join the Iraq war (against Merkel’s vocal opposition), took care of the mostly Syrian refugees there (to help manage the mess the Americans had caused in the Middle East). Investigative reporting has uncovered that the order to the border police to let the Budapest refugees pass into Germany was originally only for one weekend. But when she saw the enthusiasm of parts of the German population about being celebrated internationally as models of virtue and solidarity, she decided to leave the border open, letting it be known that in the modern age, borders cannot be controlled anyway, and in any case everybody had a human right to come to Germany and ask for ‘asylum’. Only a few days later, she started negotiations with Erdogan on a deal under which Turkey would receive billions of euros from the EU for preventing refugees crossing the Mediterranean into Greece. When the negotiations took time — during which the AfD almost doubled its votes in a number of regional elections — Merkel told her party convention in early 2016 that “an event like September 4, 2015 must not be allowed to repeat itself” and that taking in the refugees was really a European and not just a German obligation. In this way she managed to present herself at the same time as angel of the refuges and shrewd stateswoman who got Turkey to protect Europe from being overrun by migration.

For many Hungarians Germany is a socioeconomic and political model to aspire to. In the current structure of the European Union, however, could the German model even be transposed into the context of the European periphery?

Generally speaking, one should be suspicious of the idea that national systems can be transplanted to other countries. Each country has to find its own way to peace and prosperity. This applies in particular in the present case. Germany, as a highly industrialized and export-dependent country, can be and is the growth and prosperity pole of the EU because its currency, the euro, is heavily undervalued, due to it being not just the German currency but also that of the entire Eurozone. While Germany has a huge export surplus, the Eurozone as a whole has an even trade balance. This is an ideal situation for a national economy whose prosperity depends on exports and therefore on a favorable exchange rate. Consider also that the European monetary union makes the markets of the other member countries effectively captives of the German economy: however high the German export surplus with, say, Italy may be, Italy cannot devalue against the German currency as it is also the Italian currency, foreclosing this path towards improving the competitiveness of Italian economy and its firms.

Moreover, there is now in the European Union a growing division between a center – Germany and, to an extent, France — and a periphery that includes the Mediterranean countries and Eastern and Central Europe, also the East Balkans and, soon, the West Balkans as well. This is a relationship of dependence both economically and geostrategically. The periphery of an empire can never aspire to become like the center; a center, in order to be one, needs a periphery, so it wants it remain just that. Moreover, economic convergence in a free international market is near impossible; there are strong forces of path dependence at work here. Generally, the stability of an empire depends on successful management of peripheral by central elites, including making sure that pro-imperial elites retain power in peripheral countries. This is what a good deal of the politics of the EU-empire is about and will be about in future years, not just in the South but also in the East (where Hungary for example seems to be able to play with the option of a rapprochement with Russia, a sin against which Poland is immune).

For years Germany benefitted from the euro without accepting debt mutualization on EU level. In the conditions of COVID-19 crisis, Merkel changed the line and became flexible ont that issue (source: Pixabay, CC0)

There are ongoing negotiations in the European Union about a loan that would finance the economic upboost to counter the COVID19 crisis. Most media coverage is about Poland and Hungary blocking the negotiations, while Germany’s role in the process is often overlooked. Germany previously had opposed Europe-wide debt mutualization — Why did they oppose debt mutualization before in the first place, and what had changed?

Debt mutualization among fiscally sovereign countries is impossible, and everybody knows it. No country can allow other countries to indebt themselves if in the end it may have to pick up the bill. As a minimum, debt mutualization would require some authoritative central mechanism allocating to participating countries differential rights to take up debt and controlling how it is used. No country seriously wants this. German policy, however, is flexible, especially under Merkel. In 2020 there was a real possibility that without some sort of financial transfer, Italy would leave the EMU and thereby ultimately put an end to the euro. The euro, however, is the German bonanza, and defending it has become Germany’s uppermost national interest, as defined by Merkel and the dominant social bloc she has forged, which includes the Social Democrats and the trade unions. So a way had to be found to give in to Italian (and French) pressures for some sort of international redistribution — a ‘transfer union’, as it is sometimes called. The Corona Recovery Fund serves to keep ‘pro-European’ governments in power in Italy, Spain and, in the longer term, France — a price worth paying from the German perspective. Note that no cash at all is involved; it’s all debt, and there is no decision yet how it will be serviced starting seven years from now — very likely, if you ask me, by more debt. Note also that each country gets something, Corona or not, even Germany and France. Note further that countries are liable only up to their share in the regular EU budget, not for the whole of the fund, and each country’s national parliament must approve the fund (and the national share in it). This is far from what the so-called Eurobonds were supposed to be like.

Merkel is leaving politics next year. Do you think Germany will remain a relatively stable country even after her departure, or the political turmoil that is prevalent on the continent will eventually reach Germany too?

The question is what you mean by stability. Will the CDU remain the biggest party? This is likely. Remember what I said about Germany being the prosperity pole of the EU. As long as the euro beefs up the German economy, the CDU will rule, from next year on very likely with the Greens. While throwing off the SPD may create an impression of change, policies will by and large be the same, a little more climate protection perhaps, some more quotas for women on company boards and the like. Rhetoric aside, the Greens will not demand changes in European and foreign policy; they will tacitly support increased military spending in honor of Joe Biden; and they will insist on refugees being treated as a “European” affair, not a German one, which will likely keep the AfD small. Countries like Hungary and Poland may come under more pressure than today for their family and immigration policies, but the CDU/CSU will make sure that this won’t undermine German influence in Eastern Europe or drive Eastern European countries into the arms of Putin. All of this may be different in a major economic crisis, perhaps caused by American decline or the next virus appearing on the scene. And, of course, tensions inside the EU are not to be discounted. Salvini may return, Macron may be followed by Le Pen etc. At some point the compensation payments Germany will have to make to other member countries may simply become so high that raising the money will cause major domestic conflicts. Then all bets may be off, also because the AfD may return in a politically more sophisticated version. German hegemony in the European Union was and is to a large extent built on promises on which Germany or the EU, largely run by Germany, will not be able to deliver, like for example a Europe-wide allocation of migrants by fixed national quotas, or permanent transfer payments to the Mediterranean countries.

You are a harsh critic of the European Union, which is not ubiquitous on the left. In your view, why should sovereignty be an important value for the left in the 21st century, and may the principle of sovereignty coexist with the traditional left-wing value of international solidarity?

“The sovereignty of the people is the main enemy of neoliberalism”, as Chantal Mouffe puts it. Today’s globalism, which declares national sovereignty outdated, even dangerous and immoral, is nothing else than an attempt to exclude democratic politics from the governance of the economy, turning the economy over to a ‘free market’ on a global scale. That market is in fact not free but it is an empire, of huge firms operating globally but based nationally, almost all in the United States. Moreover, there is no lack of national sovereignty in that empire, only that it is the sovereignty of the hegemonic states, above all the United States, that lord it over the non-hegemonic, peripheral states. Anti-sovereign rhetoric is the rhetoric of the powerful afraid of the less powerful insisting on their independence and on the democratic will of their citizens. What the strong want to eliminate is the sovereignty of the weak, not their own sovereignty. The United States never intended to merge their ‘indispensable nation’ (Obama) into a globally de-nationalized world economy and society. The “New World Order” proclaimed by G. H. W. Bush after 1990 was to be an order, not without sovereign nation-states, but with just one sovereign nation-state, the United States. That state, acting as a world-state in waiting, was to take the place of the so-called Liberal International Order, which was allegedly multilateral but had in effect increasingly become unilateral and imperial.

As to the European Union, yes, I am a ‘critic’ of it, as you say, but not because I am against peace and cooperation among European countries, to the contrary. As a devoted ‘European’ I insist that Europe is not the same as the European Union, as much as EU functionaries and beneficiaries may try to make us believe this. I am a ‘nationalist’ only in the sense that I am against imperialist anti-nationalism, which I identify with hierarchical, non-democratic, techno-bureaucratic centralized rule over nations with different power and different historical settlements between their ways of life and capitalist modernization. I am all in favor of a European Union, but it should be a cooperative of democratic nation-states, and in order to be democratic they must be sovereign since without sovereignty democracy runs dry. I want a Genossenschaft based on voluntary cooperation, not an empire. If the EU continued to develop the way it did until the financial crisis, it would destroy the capacity of small countries to govern themselves while empowering the large countries and the Brussels bureaucracy to govern the small ones, inevitably, in the absence of democracy, according to their interests, ideologies, objectives etc. Current attempts to eliminate the requirement of unanimity for important questions of European policy would destroy the last vestige of national sovereignty, on the pretense that all European countries are the same and can be governed as a collectivity from above. But they cannot.

In fact, one reason why I am passionately against the kind of European Union as it has been shaping up for the past two decades is that Germany would inevitably be its hegemon, more or less hidden behind a deeply asymmetrical alliance with France. A German European empire lacks both historical legitimacy and the resources needed to compensate dependent peripheral countries for accepting German leadership, or better: control; this would lead to perennial tensions between Germany and the rest of Europe, as well as inside Germany. I would want Germany to live in peace with its neighbors, on the model of the Scandinavian alliance of democracies that have long been cooperating in the Nordic Council without needing a hegemonic state to discipline them.

Concerning ‘traditional left-wing international solidarity’, as you put it, what it meant was above all cross-national solidarity among classes, not classless solidarity among states. Organized workers in one country were to help organized workers in other countries in their struggle against capitalist exploitation, for example through solidarity strikes or by refusing to engage in wage competition with the workers of other countries. Why this should require abolishing national sovereignty at the state level escapes me. Countries should be helped to tax their billionaires — there are lots of billionaires precisely in so-called ‘poor’ countries — for example by the Left in rich countries fighting unlimited mobility of capital; but they should not have to depend for their advance on paternalistic handouts from other countries or some international organization. International solidarity cannot dispense with national struggles for worker rights and democracy, nor can ‘global governance’ deliver economic and democratic convergence between rich and poor nations or regions for free. Also, democracy and equality cannot be decreed from above by a benevolent international bureaucracy, be it located in Brussels or in New York; it has to be fought for from below and on the ground, which can only be a national ground. ‘Workers of all countries unite’ means fighting for democracy in your own country while helping as best as possible, as well as being helped by, others doing the same in their country. Solidarity and internationalism are important, but if they are vested in international markets and organizations all you get is neoliberalism and imperial control; they must be rooted in national politics and fought for from there, or they count for nothing.

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