German dominance in Europe deconstructed

Our resident satirist considers how important the single currency is to Germany and how far the country will go to save the eurozone from collapse

The first four words of the German national anthem are not a hymn to Deutschland hegemony. They mean that patriotism is the highest good. A later verse sings unity, right and freedom. Unity because the German Empire declared in 1871 was the gathering-in under Prussia of a collection of German -speaking principalities. Their first unity had been in the Zollverein, the customs union which abolished the multiplicity of charges on goods criss-crossing frontiers and established a common currency.

In 1945, Anglo-American foreign policy was aimed at "keeping the Americans in, the Russians out and the Germans down". But de-industrialised Germany was a pensioner on support from outside. When Anglo-American policy changed in favour of cancelling restrictions on German heavy industry – its war-making potential – France needed a new safeguard. The answer was to place the coal and steel industries of the Ruhr under supranational stewardship, i.e. the Schuman Plan. The United States strongly approved and, despite denials, may even have been party to the preparations. The competition law which the European Union inherited from its predecessors was an American draft. Britain did nothing to frustrate the Schuman Plan but stood aside. Its European policy doctrine, inspired the French surrender in 1940, was "never beyond point of no return", also known as "limited liability".

The Schuman Plan of 1950 was the epitome of "the domestication of Germany", with the side effect of minimising German spending on defence. Germany prospered mightily. Monetary union, under a bank free of political meddling, was a next step. The less competitive economies of Germany's European partners, unable to protect themselves by devaluing, were opened up further by the euro. It is central to German success that the single currency should survive, even if this means the country's taxpayers stumping up. Hence, Germany's sustained insistence on (1) a central bank, which cannot monetise eurozone debt - in the German psyche, this equals inflation; (2) stronger fiscal discipline in the single currency area so that bail-outs become a thing of the past. The second rule means, in the immediate term, austerity in indebted countries and the soon to be in force eurozone stability pact - which gives teeth to rules, which have existed for ten years but have been loosely applied. As by Germany itself, but it can afford itself a bit of laxity.

German policy-makers have to steer between appeasing public objection to subsidising fiscally irresponsible southerners, keeping their parliament onside and avoiding trouble with the all-powerful constitutional court that regularly defines how far the country can go within national sovereignty and sustaining the eurozone. It is a sign of their determination that, despite recent history, they can even talk about the management of the budgets of weaker eurozone members being taken over. But they withdrew tactically. Germany is domesticated, ok as planned, but economically dominant - which was not in the plan.