In Frankfurt “everyone is waiting for the house prices to go up”. So said a woman who lives there, when asked how the Germans are reacting to Brexit.
But she added that no “plane-loads of bankers” have yet been spotted arriving from London. People are still “deeply shocked” the British have decided to leave the EU, “but are waiting to see what will happen. People think it won’t be so bad, so it won’t actually make a big difference to anyone.”
Waiting-while-hoping-things-will-somehow-not-turn-out-too-badly is a characteristic mode of existence for the Germans (and not only for them, as the absurd story of deciding where to build a new runway in the south-east of England reminds us).
But in Berlin it is noted with trepidation that Brexit means Germany’s true allies within the EU, on economic questions, are now reduced to the Netherlands, Sweden, Finland, the Balts and Poland (when not ruled by its present government).
Most of the other members are either incapable, like France and Belgium, of reforming their own economies, or are seen by Berlin as Club Med scroungers, whom German politicians have promised not to bail out at the expense of German taxpayers, even though the preservation of the euro renders such bailouts inevitable.
For Berlin this is an alarming situation. For although without Britain, German appears even more dominant within the EU, it is not dominant enough to exercise the “leadership” which is so easily demanded by people watching from afar.
As Hans Kundnani has recently pointed out, Germany “could paradoxically be weaker” as a result of Brexit. For while Germany accounts for 28 per cent of the eurozone’s GDP, France still accounts for 21 per cent and Italy for 16 per cent.
The possibility of anti-German alliances between weaker EU nations – what Bismarck called the “cauchemar”, or nightmare, of coalitions – is increased by Britain’s departure.
Our decision is, in short, something of a blow to Berlin. So it is likely that the Brexit negotiations will be conducted with a degree of asperity on the German side.
Nikolaus Blome, deputy editor-in-chief of Bild Zeitung in Berlin, this week supplied me with a magnificently terse account of how Brexit is seen in the Chancellor’s office:
1. Brexit is pretty high on Merkel’s agenda. All her staff are afraid that a soft and neat Brexit (too favourable to the UK) will ignite new cherry-picking by member states of special privileges for themselves, with Germany footing the bill.
2. The German government will be a tough negotiator. Most probably, there will be no compromise on free movement of people.
3. If the UK is not to compromise on immigration and free movement of people your government will have to negotiate a new trade deal with the EU. “It will be a lot of fun,” Merkel’s people are joking – given that more than 27 parliaments in the member states will hold a vote on the deal, including Wallonia.
4. Merkel thinks Mrs May is a serious person. But I simply don’t know anybody in our administration who thinks the same of Mr Johnson.
5. The German government sees itself in a position of strength. Once Article 50 is invoked, time is clearly playing against the UK.
6. Merkel is not ready to listen too much to German car manufacturers or other industries with a high rate of exports to the UK. Relations between big business in Germany and the chancellery are pretty dire.
This sombre analysis is shared by Charles Grant, Director of the Centre for European Reform, in his recent paper Why the 27 are taking a hard line on Brexit.
One should add that it is normal, at the start of a negotiation, to indicate that one is no push-over. For Merkel, who next September faces a general election, it is essential to be seen to stand up for the country she leads.
Wolfgang Münchau, writing this week in the Financial Times, is rather unusually for that newspaper quite optimistic about the prospects for an “amicable divorce”, and about how Merkel will play this: “She may pretend that she wants to be tough on Britain — but once German jobs are at risk I would expect her principled position to crumble.”
But David Cameron repeatedly made the error of expecting Merkel to help him more than she either could or would, and it would be a pity if Theresa May were to repeat that mistake.
The Chancellor is still trusted, by her voters, to take care of fiendishly complicated problems, without bothering them with the tedious details. As I remarked some time ago about her, in an unusually well-informed piece entitled Nine things the British don’t understand about the Germans:
“Here is a politician with a genius for getting people to believe she is on their side, and to vote for her, without actually telling them what she thinks. Seasoned journalists have said in despair that she can hold an hour-long press conference while saying nothing they can use. She has been Chancellor since 2005, and during the euro crisis she demonstrated her remarkable ability to keep the show on the road. My guess is that people feel at ease with her in part because she declines to ask various questions about the future of the nation state which the German people do not want to answer, and won’t even feel ready to start tackling for another generation. She just gets on with securing as good a deal as she can for Germany.”
But there is also something more personal, for many Germans, about Brexit. They follow events in the UK more closely than we follow events in Germany. Indeed, from the perspective of a British news editor, Germany is not a country rich in events.
So my friend Professor Doctor Moritz Hagenmeyer, who was born and brought up in Hamburg and practices there as a lawyer, but whom I got to know when he was reading for the English bar in London, is not merely a leading authority on German and EU food law, but knows more about cricket and English beer than I do. He emails:
“Leaving the EU may well become detrimental to the UK economy and the country may head towards insignificance. This is something we would regret… The negotiations will consume a lot of time and energy that could certainly be invested elsewhere for much better goals. What intrigues a lot of us most is how Scotland will handle the situation. There is no precedent. Will England respect the vote of the Scotsmen?”
Sebastian Borger, London correspondent for the Berliner Zeitung, who has just visited Frankfurt, Nuremberg and Vienna, observes that many politicians in London do not realise how closely they are being listened to in Germany and Austria.
He said Sir Michael Fallon’s brusque veto, at the end of September, of closer European co-operation on defence, had made a very poor impression, and is still being referred to.
Borger added that “Boris Johnson is still a laughing stock”, and went on: “I’m not sure his reputation will ever recover to the extent that he’s taken seriously.”
Johnson’s reputation deserves a separate piece, and will get it in a fortnight’s time. Meanwhile it can be said that many Germans of Anglophile inclinations share the shock, anger, and bereavement felt by British Remainers at the referendum result. Like them, they are inclined to blame Johnson for leading his compatriots astray, and are convinced that the United Kingdom has inflicted severe economic damage on itself.
The German economy, except for some of the biggest banks, is very strong. A constant and very impressive process of industrial modernisation takes place. But economic strength is accompanied by a kind of political paralysis.
For the European federalism which will be needed, in the long term, in order to uphold the euro, seems beyond the realms of political possibility.
Yet to become a normal nation state seems equally difficult. Not only history but geography counts against it. Germany has more neighbours than any other country in Europe: nine with whom it shares a land border and about the same again which can easily be reached by sea.
Each of these neighbours is smaller than Germany. If they are not to feel frightened of German power, a system of peaceful co-operation is required. If the EU did not exist, Berlin would most likely need to reinvent it.
The success of Alternative for Deutschland in recent regional elections poses an awkward question. At the start of September, AfD pushed Merkel’s Christian Democrats into third place in Mecklenburg-Western Pomerania, which includes her own constituency.
AfD possesses many similarities with UKIP: it is a populist insurgency which takes votes off both the main parties. But while UKIP’s threat to the Conservatives was parried (albeit not quite as Cameron intended) by holding the referendum, no such expedient is available to Merkel. Apart from anything else, referendums are regarded in Germany, for historical reasons, as an utterly disreputable device.
The likelihood is that in next September’s general election, the two main parties – the Christian Democrats and the Social Democrats, which are currently in coalition with each other – will find their shares of the vote decline. AfD could well (despite internal quarrels) come third, with three other parties – the Greens, the Left and the Liberals – also clearing the five-per-cent hurdle needed to enter the Bundestag. A fragmentation is taking place.
Economic strength is not being used to come up with a particular policy for Europe, or for anything else. The euro has been made to work for German industry, but not for most of the other members.
As Leon Mangasarian, who lives in Berlin and will next year bring out, with his co-author Jan Techau, a volume entitled Germany’s Leadership Responsibilities: Servant Leadership as political strategy, puts it:
“The real question is how does Germany gear up its leadership without scaring the daylights out of the rest of Europe. But, more importantly, without scaring the daylights out of itself after 70 years of highly successful and comfy leading from behind.”