Once the economic powerhouse of Europe, Germany has stagnated since the 1990’s. But as VOA’s Zlatica Hoke reports, a sluggish economy is not the only cause of the current mood in Germany.
Two months ago, German newspaper reporter Heinrich Wefing returned home to Berlin after a two-and-a-half year assignment in California. One of the first things he did was take his little daughter to a neighborhood playground. “She was sitting on my shoulders and she was singing and laughing and we met like 20 or 25 people on the street on our way to the playground and no one talked to us and no one even smiled,” says Mr. Wefing.
He adds he did not expect to find his fellow Germans to be as open and friendly as people in San Francisco, but neither did he expect them to be even more reticent than before: “From that moment on, I noticed that there were no smiling faces on the streets and I got the feeling that there was a kind of depression in this country.”
Heinrich Wefing is not the only one noticing depression in Germany. Recent media reports have reflected on it in some detail. Most blame the economic situation for the nation’s mood. Dorothee Heisenberg, an assistant professor of European Studies at Johns Hopkins School of Advanced International Studies, says German reunification 14 years ago was a blow to the economy from which it has not yet recovered.
“It’s hard to know exactly how to count and when to count, but it’s approximately $ 500 billion over these 14 years and that is a tremendous amount of money for an economy to continue to give off,” says Professor Heisenberg.
Some money was spent on rebuilding the infrastructure and economy in eastern Germany, but most was used to pay various benefits for eastern Germans, including pensions, health and unemployment.
“In Germany it is part of the Constitution, part of the basic law, a law that says all of the federal states have to stay in relative equality of standard of living between each other. So these were not voluntary payments, but they were mandated to bring up these new states up to the regular level of the richest states,” says Professor Heisenberg.
But efforts to make eastern Germany as economically viable as the west have failed. The country’s gross domestic product per head, once among the highest in the European Union, is now trailing behind 10 other European nations. Unemployment, hovering around 10%, is up to 25% in some cities. People are worried that the expansion of the European Union to the east where labor is cheaper may draw industries and jobs away from Germany and increase unemployment.
Dorothee Heisenberg says for decades Germany’s power and influence were based on its wealth. A sluggish economy is undermining that power and with it Germany’s ability to support European integration: “Yes, it was economically interesting for Germany to have this export market, but that wasn’t all that was motivating the strong pro-integration stance. It really was a moral feeling why they had to integrate with Europe, that Germany by itself could not be trusted and certainly on military stuff. However, its ability to convince the other countries to go along with some of these bigger leaps in integration is more limited now because it does not have the power of the purse."
While many analysts link German economic problems to the cost of reunification, European expansion and even the adoption of the common European currency, others say signs of the decline showed up earlier. Klaus Larres, professor of international relations at London University, says since the late 1970’s, the Germans have not kept a competitive edge in engineering, computer, medical, biological and other industries.
“And only gradually, basically for the last two years, they have woken up to the fact that they need to do something about that and also reform the university and education sector to make very thorough education take less time, for example, so that German students can actually compete at the same age bracket with other countries, rather than being five years older than comparable students from other countries,” says Professor Larres.
Most Germans agree only major reform can get the nation out of its slump. But they also know that reform means giving up some, if not most of the benefits they are accustomed to receiving. Chancellor Schroeder’s reform plan Agenda 2010, targeting health, education, labor, tax, social security, welfare, unemployment benefits and pensions for major cuts, has met with stiff resistance.
Professor Klaus Larres says stalling on austerity measures will only prolong the agony: “There’s the insight that the reforms are necessary, but they are not prepared to pay for these reforms, which are quite painful. And that means at the moment that the government is backtracking slowly, and it looks as if they were implementing only a fraction of their initial reform ideas. And if that is the case, in the next few years, these reforms will not be able to turn around the German economy as was originally envisaged.”
But some analysts say economic stagnation does not approach disaster. Dorothee Heisenberg notes Germany is not in actual recession and is still the number one exporting country in the world: “When you go to Germany, yes, people are unemployed, but it is not a country in crisis. It’s still a nice place to be, a nice place to work. There is no sense, as in Argentina, that the world is falling apart and we don’t know anything.”
A casual observation of daily life gives no real impression of decline. Heinrich Wefing says Berlin cafes are crowded, the Philharmonic Hall is sold out and Mercedes-Benz and BMW car shows continue regularly in the refurbished central avenues. So many people don’t see why they should give up their benefits.
Germany may not be as bad as some people think it is, so why all this gloom, asks Mr. Wefing: “When I left, there was this huge euphoria about this new capital for Germany and there were a lot of projects and some of those projects might have slowed down. Some buildings that were planned weren’t built because of the economic problems of Germany, but it’s not that you get the feeling that things are really running down – not at all.”
There is little reason to fear they will, says American historian Steven Ozment. If we look at the entire German history, not just its past century, he says, we can see that Germans have always been able to overcome adversity.
“Germany has in its own history repeatedly accomplished reforms and has assimilated to other cultures around it, has learned from other cultures, has incorporated from other cultures in such a way as to make one hopeful that this is the mainstream German history,” says Professor Ozment.
For now the idea of relinquishing the security of their welfare state makes many Germans cringe. Berliner Heinrich Wefing hopes they will soon learn it is possible to take risks and still smile.