The German question

George Soros's recent speech in Italy on the Eurozone crisis has produced a number of eye-catching headlines, notably "Three months to save the Euro". Quite a few people have also picked up on his interpretation of the EU's growth as a form of bubble, and as a "phantastic object" in the sense of something highly desirable and yet ultimately unreal. Soros has also provided a colourful and paradoxical warning about where German caution will lead:

So Germany is likely to do what is necessary to preserve the euro – but nothing more. That would result in a eurozone dominated by Germany in which the divergence between the creditor and debtor countries would continue to widen and the periphery would turn into permanently depressed areas in need of constant transfer of payments. That would turn the European Union into something very different from what it was when it was a “fantastic object” that fired peoples imagination. It would be a German empire with the periphery as the hinterland.

This is entertaining stuff, but it should raise a few questions.

In what sense is the EU a "phantastic object"? In Freudian psychoanalysis, an object is a mental representation. It isn't a real thing, but a symbol of that thing. The "phantasy" implies that this representation relates to unconscious desires that stem from early (i.e. childhood) development. In a looser sense, the object is something whose acquisition we believe will satisfy our profound desires, but which will inevitably disappoint because our expectations will always exceed the real thing that the object represents. A crush, in other words.

I think this is suspect because it implies that the EU project, which has historically often been termed a "dream", has here been turned into a hopeless love, an "infatuation" almost. While there may be some ardent Europhiles for whom the word "love" is appropriate, this hardly describes the hard-nosed, pragmatic view of the mass of Europe's peoples. The EU promised peace and prosperity, which were quite realistic desires. They have also been largely fulfilled. The Euro may prove to have been a mistake (at least as designed), and the resolution of the current crisis may have unintended political consequences, but I don't think this relegates the EU as a whole to the realm of the fantastic.

What is meant by a German empire? In the traditional sense, i.e. late 19th century imperialism, we know that what the Kaiser & co sought was a "place in the sun", in other words colonies around the world. Under the Third Reich, the focus for imperial ambition was the East up to the Urals. The rest of Europe was largely ignored by the Germans, other than when it posed a security threat, and came to be treated primarily as a source of first material and then labour. The New Order was more an enthusiasm of the far right in France and Benelux than the Germans themselves. (Mark Mazower's Hitler's Empire provides an excellent history of this).

Clearly, Germany is not about to revive such crude ambitions. Its economy depends on customers in the rest of Europe, not systematic pillage. If by "empire" Soros simply means that Germany will be the dominant nation in Europe, then this has been the case for centuries, even when it was fragmented under the Holy Roman Empire. The immediate post-WW2 period allowed this geopolitical fact to be pushed to the background, and for France to claim equal billing, but since reunification there has been no doubt who the 800-lb gorilla is.

Is the European periphery necessarily a German hinterland? The South of Europe has always been at a disadvantage to the North. For all the benefits that the Mediterranean brings, the coastal lands of the South are too dominated by barren mountains, limiting agriculture and impeding communications. In contrast, the flat alluvial plains of Northern Europe have always been more productive.

Ireland remains an interesting anomaly here. Geographically of the North, yet exhibiting all the features of a Mediterranean economy. It is in fact the most peripheral country in the EU and owed much of its growth since the 80s to parasitical "regulatory arbitrage" (i.e. lower corporation tax to attract foreign companies, particularly US ones, who wanted access to the EU). The UK avoids being peripheral simply because of the dominance of London, another essentially parasitical form. The hinterland starts beyond a line drawn from London, through Paris, Lyon, Bologna, Vienna, Prague and Berlin.

The reality is that the heart of Europe will always be round about Frankfurt. That's a fact of geography rather than a deliberate political choice, just as the heart of Brazil is Sao Paulo rather than Brasilia. The politics of Europe just reflects this material reality. The Eurozone crisis cannot change this, though it may bring that material reality more to the fore. To that extent Soros may be right to suggest that we are losing our fantastical illusions about Europe.