German Chancellor Merkel and French President Hollande in Berlin. (Tobias Schwarz / Courtesy Reuters)
In 2010 and 2011, the first two years of Europe’s sovereign debt crisis, Germany seemed to emerge as the continent’s dominant power, possessing an unrivaled ability to shape its neighbors’ destinies. Enjoying unabated economic strength, Germany agreed to bear the largest burden in the eurozone’s financial rescue, and so it was able to determine the pace and methods of managing the crisis. It also influenced the economic and budgetary policies of Europe’s debt-ridden countries, such as Greece and Spain, and it used that authority to impose an agenda of reform and austerity across the eurozone. Witnessing these developments, some observers went so far as to proclaim the onset of German hegemony and argued that only Berlin could solve the continent’s woes.
Although Germany is, to be sure, the most important European country for overcoming today’s problems, its abilities to project its power at the EU level are substantially restricted -- and they will diminish further in the months ahead. Germany’s position as the chief backer of the eurozone’s stabilization arrangements does not necessarily translate into political supremacy. And as the euro crisis has escalated and Germany has lost political allies, it will now have to accept that the common currency area will only partly conform to its vision.
The first reason Berlin will struggle to implement its plans for Europe is that political developments of the last six months have left Germany a rather isolated giant. In 2010–11, it was largely because of cooperation between Berlin and Paris -- and the close partnership between their two leaders that came to be known as Merkozy -- that Germany was able to set European policy and disregard the attitudes of other eurozone members, generally the southern countries with large deficits. Now, France’s new president, François Hollande, has advocated a European pro-growth agenda that clashes with German Chancellor Angela Merkel’s preference for austerity
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