New Order

The party of order has won. A split in Syriza is now likely and a new Greek government of national unity the most probable outcome. I suspect Tsipras will remain at the helm, partly because the eurogroup want to tie him to a personal guarantee of implementation, and partly because the leaders of the mainstream Greek parties lack credibility and don't want to accept a poisoned chalice. The specificity of the terms of the agreement, and the insistence on reimposed inspection and homework-marking, are humiliating for the Greeks. If this isn't quite a Carthaginian Peace, it certainly echoes the punitive and counter-productive attitude of Versailles in 1919. It is even faintly redolent of the arrogance of the Allied takeover of Iraq in 2003, with its talk of "de-politicising" the Civil Service. What is perhaps most disturbing is the evidence that the eurogroup were never sincere during the negotiations, and that all key decisions were dictated by Germany.

However, it is misleading to call this as a "coup", as power has not be seized. The power was already in the hands of the Troika and had been since 2009. Syriza have always had a poor hand, but they thought (not unreasonably) that the rest of the eurozone would reckon an easing of austerity to be a fair price for a genuinely reformist government. In the event, Syriza's "impudence" has only produced a more vindictive imposition, both to preserve the fiction of beneficial austerity and isolate any political initiative outside the orthodoxy. That orthodoxy is now as much ordoliberal (the adherence to established rules) as neoliberal (deregulation, marketisation etc). As a consequence, talk of a fissure in Europe has shifted from German-Greek relations to German-French relations, though the evidence from Varoufakis (who is, admittedly, not a disinterested observer) is that the French failed to stand up to the Germans when it mattered.

This is hardly surprising. The French crisis of confidence over recent decades has a number of causes, from stylised declinisme (equal parts nostalgia for De Gaulle and the soixante-huitards), through anxieties about modernity (the role of women, laicité, Islam and the rise of the FN), through fears of creeping Americanisation and cultural homogenisation (notably the advance of English). But at root, there lies a fear that in a German-dominated EU France will be marginalised, with its natural supporters (Italy, Spain, Portugal and Greece) exiled to the periphery and Germany buttressed by a hardcore (Kerneuropa) of Austria, The Netherlands, Finland and the Baltic states. This begins to stir uncomfortable memories of both the foreign policy failures of the later years of the Third Republic and the pathological denial of Vichy: a failure in its historic objective of constraining Germany followed by an abject humiliation.

There is a suspicion that the relentless face-punching of the Greeks is meant to be an exemplary lesson for the French. If the attitude of France in the aftermath of 1989 was essentially one of skittish worry - that Germany would be distracted by reunification and so neglect the joint project of the EU - the attitude now is one of sphincter-squeaking anxiety at Germany's evident willingness to lead. The claim last week that Angela Merkel was in a cleft stick - terrified of being the leader who oversaw the first substantive reverse for Europe, in the form of a Grexit, while simultaneously terrified of alienating popular opinion at home - looks absurd in retrospect. She was always going to get a deal, and always on whatever terms Germany chose. The pro-Greek rhetoric from Hollande and Renzi on Sunday, like the subsequent claim that France was the active midwife of the agreement, was just face-saving.

Three years ago, Perry Anderson put the emerging German role into historic perspective: "To work, the Union requires the state that is a different order of magnitude in population and wealth to give it coherence and direction. Europe needs the hegemony of Germany, and Germans must cease to be shy in exercising it. France, its nuclear arsenal and seat in the Security Council now of little relevance, must adjust its pretensions accordingly. Germany should handle France as Bismarck dealt with Bavaria in that other federal system, the Kaiserreich, soothing the lesser member with symbolic awards and bureaucratic balances under Prussian primacy". This view is coloured by Anderson's increasingly unsympathetic view of the French, but he is also aware of the inherent weakness of Germany and how its obduracy reflects immobility: "The new hegemon may be flexing its muscles. But it remains a lame one, unable either to dismantle the monetary union generating disorder, or to move beyond it towards a political union in which it would have to accept fiscal transfers its electors refuse".

Absent any vision for the EU beyond the preservation of order and a respect for rules, the Germanification of Europe proceeds incrementally: a slow march through the institutions. As Eric Bonse puts it, "The old complaint of a 'pro-French bias' in Brussels has fallen by the wayside; German personnel policy has won the day. Almost all the strategically important positions are now held by Germans, and understandably this is not received with universal enthusiasm. ...  A special characteristic of this casting is that some lead roles are reserved not for Germans but for politicians like Tusk or Juncker, who have close ties to the German government. ... all EU actors – and not just the Germans – are integrated into a regulatory framework that turns them into German Europe's pawns." Historically, France and Britain were the leading providers of the senior civil servants of the EU Commission, which reflected the larger governmental expertise of those two states in the second half of the twentieth century. No more.

Though Germany had long enjoyed indirect influence via the Bundesbank, the launch of the euro and the establishment of the Frankfurt-based ECB brought more of the German style of administration into the workings of the EU. In particular it shifted the normative framework away from the counter-cyclical policies of Keynsianism, while placing a greater emphasis on regulating monopolies and cartels (e.g. its attitude towards US tech companies). That combination of belt-tightening and market intervention is central to the Greek agreement. As Bonse notes, "German Europe is not chiefly held together by individuals, but by rules – just as the 'ordoliberal' school of thought demands. Yet these rules have brought Europe neither growth nor stability. They are fragile, in need of enhancement or even failing. They are also no longer recognized by all EU countries – in fact, quite the opposite: Greece, alongside the UK and Hungary, is more or less openly laying down a challenge to the rules. In short: German Europe is stronger, but at the same time more vulnerable, than ever before".

While some have opportunistically tried to corral Greece with the UK as a dispute over sovereignty and subsidiarity, the Procrustean fate of the country is actually symptomatic of Germany's failure in its leadership role, not a difference of views over "ever closer union". The corrosion of democracy does not arise solely from the flaws of the euro itself, but from the limiting beliefs of Ordoliberalism. Europe is moving from the republic of ideas, which was founded in Paris in 1789, to a republic of rules, which was constituted in Frankfurt in 1998. The French feel powerless to resist this, while the British are concerned solely with self-interested exemptions. Everybody else is making their peace with the new German order; some more messily and painfully than others.